Plaintiff''s new brief in suit against BIS, Fed, Treasury, and bullion banks



By John Crudele
New York Post
May 29, 2001

Some of the alleged secret financial dealings
between the Clinton administration and the
financial markets could soon be made public.

No, Monica's not blabbing again.

These secrets could come out of legal proceeding
in Boston that has gotten absolutely no publicity
in this country although the foreign-language
press has been keeping people somewhat up to date.

The suit was filed by a guy named Reginald Howe, who is
a member a Texas-based group called the Gold Anti-Trust
Action Committee. Neither he nor the group is wacko.

Howe is a Harvard-trained, top-notch trial lawyer who is
alleging that the U.S. government, in cahoots with New York
banks, has purposely kept the price of gold artificially low
for six years.

GATA has been charging that the conspiracy was aimed
at keeping the dollar strong.

But it also -- perhaps inadvertently -- helped Wall Street
make billions on bullion by borrowing gold from Central
Banks at 1 percent interest rates, selling the gold, and
then investing the proceeds in other markets at much
higher rates of return.

Howe, with GATA's help, alleges in Massachusetts
Federal District Court that the maneuver was a sure-fire
rig as long as the price of gold didn't rise -- which the
government saw that it didn't.

A trial date hasn't yet been set by Judge Reginald C.
Lindsay, who recently heard arguments on whether the
case should go forward.

If it proceeds, the next important step will be "discovery."
That's when the gold bugs will get their anxious little
hands on government secrets.

If the judge cooperates and lets the goldies examine
the government's briefs, there is no telling what will be

* * *

Washington came closer to being honest with last
Friday's gross domestic product report, but the
government just can't seem to utter the word "recession."

That word kinda sticks in my throat too.

But ask any corporate leader in this country and you'll
find out how bad business really is. And more than a
few ordinary citizens might also give you an earful of
the truth. So how close did the Bush administration
come to admitting the truth?

Not close enough.

The latest GDP revision said that growth during the
first three months of this year was only 1.3 percent on
an annualized basis and not the 2 percent the
government originally estimated.

You might recall that this column immediately jumped
all over that 2 percent number, and Washington only
came around after very disappointing April jobs
figures. The D.C.-ievers were lauded for their
honesty. Well, take back the praise.

First, you have to understand that the 1.3 percent
growth is an annualized figure.

The government is really saying that growth in the
first quarter, by itself, was 1.3 percent-divided by
four quarters.

So the economy expanded in the first three months
of 2001 by a barely noticeable 0.325 percent.

Ah! but let's see how Washington managed to
eke out even that much.

First, the stata-magicians let stand some guesses
that the trade deficit improved during the quarter.
Those estimates are not likely to hold up,
especially since penny-pinching American
consumers were probably attracted to cheaper
foreign goods.

But the real magic in the GDP number has to do
with inflation.

The GDP's inflation indicator - which is called the
"deflator" -- assumed prices rose by just 2.5
percent since last year.

But another government inflation measure -- the
ever-popular Consumer Price Index - already has
pegged inflation as being a percentage point
higher than that.

Back when he was running for re-election in 1991,
old man George Bush tried to convince Americans
that the economy was doing much better than it
clearly was.

Annoyed voters knew better, so they kicked him
out of office. It would probably be wise for the new
President Bush not to follow in daddy's footsteps
on this one.