BAILING OUR FRIEND CHINA OUT OF THE YEN MESS
By JOHN CRUDELE
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HOW'S this for nerve?
The Chinese government has been selling its stockpile of yen even as officials in Beijing were chastising their friend Bill Clinton for not supporting the Japanese currency. In other words, the Chinese wanted the U.S. to stabilize the yen so they could get out without any more losses.
Hypocrisy. Gall. Call it what you want.
On the part of the United States and the International Monetary Fund there is only one choice word to explain how this happened - stupidity.
The international effort to prop up the crumbling yen didn't stand much of a chance with the Chinese bucking the trend. And now we find out, through a fine article in last Monday's Financial Times, that the Chinese expect to keep selling yen.
According to the FT, the Chinese have $140 billion worth of foreign currency and "is understood to have sold off billions of dollars worth of Japanese bonds to cut exposure to the yen."
It is clear from the article that the paper's source is a Chinese government official, who is quoted but not named.
By selling the bonds, the Chinese weakened the yen and caused the Japanese more hardship than necessary. Worse, through the sale of yen the Chinese were working in direct contradiction to the efforts of the rest of the world, including the IMF, which has been spending billions trying to bolster the Japanese currency and thereby the economy of Japan.
Worse, the FT reporter in China quotes government officials as saying "The thinking is to wind down the yen (position) slowly, but that decision is not politically driven. It is totally decided by the market. Our fundamental goal is to maintain the value of our reserves."
Well, that's wonderful for the Chinese. But as they were selling yen and causing the Japanese currency to decline more in value the move has been creating enormous problems throughout Japan, the rest of Asia and even here in the United States where - unfortunately - many financial institutions and companies are being hurt by the yen's slide.
So, are the Chinese remorseful about not towing the line? Let's look at more FT quotes: "We will sell more yen in the market...nobody yet can see the floor of the Japanese yen," says the unnamed official.
Ordinarily that would seem to be a very selfish move on the part of the Chinese and nothing more. A real "go to your room until you learn to play with others" moment.
But the action is much more ominous.
Keep in mind that right before Bill Clinton went off for an extended visit to China back in June, Chinese Finance Minister Xiang Huaicheng wrote in the People's Daily that Japan needed to show the "courage and wisdom" to halt the yen's slide.
And within hours, Washington - as if on a leash - was heading up a multi-billion dollar intervention to boost the yen. Most of the money used in the project came out of the pockets of American taxpayers because this country is the leading contributor to the IMF.
Clinton never visited Japan during that trip, but lesser Washington dignitaries have trekked there in morale boosting attempts.
I've gone almost the entire length of this column without mentioning those newspaper accounts about Chinese contributions to Democratic campaigns in 1996 that Attorney General Janet Reno won't investigate.
But just for the heck of it, let's follow the money trail.
Bill Clinton and the Democrats needed lots of money to win the presidential and congressional elections. Charlie Trie, Clinton's Arkansas pal who happens to be of Chinese descent, obliged by getting the Chinese to kick in $3 million. Half had to be returned as improper contributions.
Now, two years later, the United States and others are putting up billions to prop up the yen and the Chinese are bailing out without suffering any more losses.
Buying friends in Washington seems, at the moment, to be a very good investment forthe Chinese.
It's one down, but still three investigations to go for Hilton.
The company agreed yesterday to pay the government $655,000 to avoid a federal bribery trial in Kansas City. But immediately after the settlement was announced the state of Missouri said it was reopening its investigation into how the company obtained a license to operate a riverboat casino.
As readers know, this column has been tracking investigations of Hilton and its Bally subsidiary for many months. Those investigations continue in New Jersey, Florida and, alas, in Missouri.
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