GATA supporters invited to lunch with author of ''Pieces of Eight''

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Oops! He really shouldn't have said that, should he?

By Sean Corrigan
http://www.capital-insight.com
March 20, 2003

Not content with moves to restrict short selling, to allow
companies to break rules applying to share buybacks, to
sell their currency, and to mobilize state pension monies
massively to move the Nikkei off yet another 20-odd year
low, the Japanese let slip that they'd cut a deal with the
U.S. authorities to provide a little mutual assistance in
their attempt at subverting markets.

As the BBC reported:

"A deal was struck last week in the United States between
a former Japanese finance minister and the head of the
U.S. central bank, the Federal Reserve's Alan Greenspan.

"There was an agreement between Japan and the United
States to take action cooperatively in foreign exchange,
STOCKS and OTHER MARKETS (bonds? GOLD?) if the markets
face a crisis," Chief Cabinet Secretary Yasuo Fukuda
said.

In an oblique kind of confirmation, good old Reform-Man
himself, Finance and Economics super-minister Heizo
Takenaka also said the Bank of Japan and the regional
stock exchanges would be "watching the markets
closely during the current Iraq crisis."

"We will follow the prime minister's instructions, cooperate
with the Bank of Japan and exchanges, and respond
appropriately," he said.

But, this is all so-o-o embarrassing for that temple of free
economic activity, the United States, where all talk of the
activities of the President's Working Group on Markets, the
so-called Plunge Protection Team, is confined to "X-Files"
buffs, gold bugs -- and -- oh, half those working on Wall
Street, once safely ensconced behind a large scotch at
their favourite bar, safely out of earshot of the trading
floor manager or the regulators.

In the best tradition of the REAL Iron Chancellor, Otto von
Bismarck, we know never to believe anything until it's been
officially denied, so we were pleased to note that U.S.
Treasury Department spokesman Tony Fratto did just that,
stating: `The administration's views on markets on
interventions are well-known and there has been no change
in our view.'

Bloomberg reported that Fratto also refuted a report that
Japanese Cabinet Adviser Haruhiko Kuroda met last week
with Treasury Secretary Snow during a visit to Washington,
despite Fukuda himself claiming that he and Snow had
"talked about the necessity of taking crisis management
measures in currency and stock markets."

Snow, it seems, was "away" and Kuroda met with other,
conveniently unnamed Treasury officials instead, Fratto
said, and, in any case, the"discussions were routine
and touched on a range of economic and financial issues."

Have the Japanese managed to appoint themselves a
senior official who is either befuddled with senility, or who
simply cannot tell one gaijin -- however important -- from
another, do you think?

Or, rather, has Fratto based his comments on material
from the newly-redundant Iraqi Nuclear Weapons Fabrication
Plant, where the State Department fabricates the evidence
(not the actual WMDs!) for Secretary Powell to brandish at
United Nations meetings?

After all, the Bank of England's own deputy governor, Sir
Andrew Large with an impossible remit to try to assure
"financial stability" in an inherently unstable system --
told an audience of bankers only last week that the Old
Lady was "discussing" the stock market slump with
financial authorities in the both the United Kingdom and
the wider world.

"Major moves in all assets can be an issue," Large told
reporters at a conference organized by the British Bankers'
Association in London, Bloomberg said. "There is pretty
constant dialogue between all the different authorities
at a time like this, when you've got significant
fluctuations that everybody can see."

Backing him up, Robin Gordon-Walker, a spokesman for
the regulators at the FSA, added: "You would expect there
to be discussions between financial authorities under the
tripartite arrangements of the Treasury, the Bank of England,
and the FSA at times of market volatility."

You would indeed!

And if it's good enough for the Brits, the Japanese, the
Thais, Malaysians, and Koreans, it's also good enough for
the Europeans, as Bundesbank member Edgar Meister
effectively confirmed when he circulated a "memorandum
of understanding" around some 20 of his peers on the
Continent, outlining what steps to take in the event of a
banking crisis.

Now remember we live in a fractional reserve market
where all we use for money are promises.

Note too that we also have to worry about Warren Buffet's
"Weapons of Math Destruction" -- as the good Sir Andrew
was only the latest to tell us in his speech:

"In today's 'derivatised' world, the utilisation of
derivatives and complex forms of contract ... is just
about omnipresent. This is not a value judgment -- it
is a fact. I think we have to accept that any set of
accounts, however drawn up, is likely to be considerably
deficient, taken just as numbers, in terms of outlining
the economic realities of risks within the balance
sheet."

"However much it may be a matter of regret, and despite best
intentions, the transparency of today's accounts has become
less and the opacity greater than was the case in former
days, thereby giving a less than complete or reliable view of
overall risks."

In this world, with its complex intertwining of incredible
volumes of risk, all ready to interact with itself in
unpredictable and violent ways, you would wonder why the
Americans alone would prevaricate so much about undertaking
a little benign market "smoothing."

Then again, you might see that as an admission the system
itself is dangerously out of hack.

Worse, you might begin to suspect that the last 11 percent
rally in the S&P500 or the stunning 550-point reversal in the
FTSE were less to do with honest decisions to discount a
brighter future and more to do with subterfuge and official
manipulation.

And we wouldn't want you to think that now, would we?