[NYTr] Central banking's main purpose now: market suppression

[All the News That Doesn't Fit]

sent by Gold Anti-Trust Action Committee


Central banking's main purpose now is market suppression

October 3, 2007

Dear Friend of GATA and Gold:

The Financial Times story, appended here, about the eurozone's alarm
at its strengthening currency suggests a few things:

1) Worldwide currency devaluations are ahead -- competitive
devaluations if cooperative ones cannot be arranged.

2) Eurozone central bankers are getting awfully sarcastic about the
U.S. government's supposed "strong dollar policy," but sarcasm is
not likely to get them anywhere. The Europeans remain the craven
stooges of the American empire even as it starts to fall of its own
weight.

3) The most important developments in the world economy now are
plainly currency market manipulations by governments, increasingly
undertaken shamelessly, in the open. That is, when the central banks
work together in the name of preventing "exchange rate volatility,"
as the FT reports here, they are actually undertaking to rig all
sorts of markets everywhere. Indeed, the  primary purpose  of
international central banking now is  to prevent markets from
breaking out and thereby undoing the venality of the central bankers
themselves.

4) Notice in the FT's reporting here and in nearly all financial
market reporting how it is simply taken for granted that everything
the central banks do in the name of stabilizing markets is done  in
secret  -- from the G7 meetings cited in the FT story to the
distribution lately of ever-more-fantastic amounts of public credit
to private financial houses. The central bankers are conjuring up
and passing out all the money in the world to a financial aristocracy
whose only claim on the money is that it has taken the rest of the
world hostage. Yet the proletariat, which does the actual work of
the world, is not to inquire into the particulars. And how would
the proletariat even know to do so when the press itself doesn't
try?

All this is simply ruthless expropriation on a planetary scale --
and yet it is portrayed as the natural order of things.

CHRIS POWELL, Secretary/Treasurer 
Gold Anti-Trust Action Committee, Inc.

                       ***

Financial Times - Oct 3, 2007
http://www.ft.com/cms/s/0/f3ef4c12-712d-11dc-98fc-0000779fd2ac.html

Europe Urges Tough Line on Dollar

By Tony Barber and Ralph Atkins

Eurozone policymakers will urge the US and other countries at the
next G7 meeting to take a strong stance against exchange rate
volatility in an effort to halt the dollar's decline against the
euro, European Union officials said on Tuesday.

Finance ministers of the 13-member eurozone plan to forge a common
position in Luxembourg next Monday, 11 days before the meeting in
Washington of central bankers and finance ministers of the Group
of Seven leading industrialised countries.

European politicians and business leaders have issued increasingly
loud warnings about the dollar's decline since the euro rose above
$1.40 on September 20 for the first time since its launch in 1999.
The euro hit a high on Monday of $1.4281.

Jean-Claude Juncker, chairman of the eurozone finance ministers'
group, on Monday said that the euro's rise "tends to worry us a
lot" and that it was no longer acceptable that Europe was bearing
the brunt of "the consequences of the existing global imbalances."

Christine Lagarde, French finance minister, said in an interview
with Les Echos: "I'd really like to hear again [US Treasury secretary]
Henry Paulson saying loud and clear that a strong dollar is good
for the American economy."

The US has given no B-public signal yet as to what language it will
accept on exchange rates in the communique to be issued at the G7
meeting.

Such communiques must have the consent of all seven governments --
Canada, France, Germany, Italy, Japan, the UK, and the US -- and
Washington can count on UK support in resisting language that
implicitly questions the role of currency markets in determining
exchange rates.

The US is also keen to highlight the need for China to accept more
flexibility in its exchange rate regime to address the issue of its
vast current account surpluses.

In Europe, Jean-Claude Trichet, the European Central Bank president,
has become noticeably more B-strident in recent days in emphasising
the US interest in a strong dollar.

His comments may reflect ECB concern about fears of US inflationary
pressures after the Federal Reserve cut its benchmark interest rate
on September 18 by 0.5 percentage points to 4.75 percent.

Although eurozone inflation expectations might remain unaffected,
the US experience could strengthen the ECB's determination to hold
the line against eurozone inflation, which last month rose above
its target of an annual rate of "below but close to" 2 percent.

The ECB's governing council meets in Vienna on Thursday, when it
is expected to hold its main interest rate at 4 percent. With
eurozone growth showing clear signs of weakening and the global
credit squeeze clouding the outlook, the chances of another ECB
rate rise have all but disappeared.

While Mr Trichet's comments after Thursday's ECB meeting may
acknowledge the eurozone's changed prospects, he is likely nevertheless
to keep a hawkish tone.

Speaking in Malta on Monday, Mr Trichet said he had "noted with
extreme attention that the US Treasury secretary and ... the Federal
Reserve have said a strong dollar is in US interests."

Robert Barrie, European economist at Credit Suisse, said the
combination of a strengthening currency and weakening economy was
proving awkward for the ECB. Mr Trichet's comments might have been
"the start of attempts to embark on verbal intervention."

* * *

GATA is a civil rights and educational organization based in the
United States and tax-exempt under the U.S. Internal Revenue Code.
Its e-mail dispatches are free, and you can subscribe at
http://www.gata.org/.