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CORRUPTION UPDATES 60 Late May 2007: Draft Posting: Stay Tuned for More! The CORRUPTION UPDATES posts corruption news stories from California, the Nation and the World, and gives you the straight story. |
CORRUPTION UPDATES 60
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1) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE:
Mexico to boost tapping of phones and e-mail with U.S. aid
Calderon is seeking to expand monitoring of drug gangs; Washington also may have access to the data.
By Sam Enriquez
Times Staff Writer
May 25, 2007
From the Los Angeles Times
MEXICO CITY — Mexico is expanding its ability to tap telephone calls and e-mail using money from the U.S. government, a move that underlines how the country's conservative government is increasingly willing to cooperate with the United States on law enforcement.
The expansion comes as President Felipe Calderon is pushing to amend the Mexican Constitution to allow officials to tap phones without a judge's approval in some cases. Calderon argues that the government needs the authority to combat drug gangs, which have killed hundreds of people this year.
The system will allow authorities to track cellphone users as they travel, according to contract specifications. It includes extensive storage capacity and will allow authorities to identify callers by voice. The system, scheduled to begin operation this month, was paid for by the U.S. State Department and sold by Verint Systems Inc., a politically well-connected firm based in Melville, N.Y., that specializes in electronic surveillance.
They suggest that Washington could have access to information derived from the surveillance. Officials of both governments declined to comment on that possibility.
"It is a government of Mexico operation funded by the U.S.," said Susan Pittman, of the State Department's Bureau of International Narcotics and Law Enforcement Affairs. Queries should be directed to the Mexican government, she said.
Calderon's office declined to comment.
Nonetheless, the prospect of U.S. involvement in surveillance could be extremely sensitive in Mexico, where the United States historically has been viewed by many as a bullying and intrusive neighbor. U.S. government agents working in Mexico maintain a low profile to spare their government hosts any political fallout.
It's unclear how broad a net the new surveillance system will cast: Mexicans speak regularly by phone, for example, with millions of relatives living in the U.S. Those conversations appear to be fair game for both governments.
Legal experts say that prosecutors with access to Mexican wiretaps could use the information in U.S. courts. U.S. Supreme Court decisions have held that 4th Amendment protections against illegal wiretaps do not apply outside the United States, particularly if the surveillance is conducted by another country, Georgetown University law professor David Cole said.
Calderon recently asked Mexico's Congress to amend the country's constitution and allow federal prosecutors free rein to conduct searches and secretly record conversations among people suspected of what the government defines as serious crimes.
His proposal would eliminate the current legal requirement that prosecutors gain approval from a judge before installing any wiretap, the vetting process that will for now govern use of the new system's intercepts.
THE COMMITTEE SAYS:
Mexico Imposing Bush Rules for Illegal Searches
The powers Bush claims to have in the US, of arbitrary searches, arrests, endless "detentions," and torture are now being employed in Iraq, Pakistan, Egypt, and Mexico without a peep of complaint by the US government or Bush.
We used to have civil rights, or at least respected the idea of civil rights. We used to insist that countries we traded with respect civil rights as well.
Those days of American self-deception are finally over. Now we openly admit to the crimes previous administrations kept secret. Now we openly assist tyrannical governments to steal the rights, property and lives of their citizens.
Bush has spread his criminality across the world, and next door, into Mexico.
Search the Corruption Database under
Mexico
2) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
House tightens rules for lobbyists
The measures require greater disclosure. Democrats say they've demonstrated their commitment to ethics.
By Richard Simon, Times Staff Writer
May 25, 2007
The measure would require lobbyists to disclose campaign contributions that they raise from clients, friends and relatives — a priority of government watchdogs who want to illuminate the shadowy world of Washington's lobbyists.
But lawmakers balked at limiting their own ability to cash in on lucrative lobbying jobs after leaving Congress. They declined to extend to two years the current one-year ban that prevents defeated or retired lawmakers from lobbying their former colleagues.
The lobbying bill would require lobbyists to disclose the projects they are seeking to insert into bills. It would prohibit lobbyists who join congressional staffs from any official contact with their former employees for a year.
Lawmakers would be required to disclose negotiations for post-congressional employment and recuse themselves from working on legislation in which a prospective employer has an interest.
The measure also would prohibit a lawmaker's spouse who becomes a lobbyist after the lawmaker's election from lobbying the spouse's office.
It would increase fines from $50,000 to $100,000 for violations and add a new criminal penalty of up to five years in prison for a lobbyist who "knowingly and corruptly" violates the rules.
And it would bar lawmakers from attempting to pressure businesses into hiring lobbyists based on their political affiliation — a practice promoted by former House Majority Leader Tom DeLay (R-Texas) and others who sought to strong-arm lobbying firms into hiring Republicans.
It was approved 396-22, with 210 Democrats and 186 Republicans voting for it. Voting no were 15 Democrats and seven Republicans.
Rep. Marcy Kaptur (D-Ohio), one of the dissenters, said it was "just scratching at the surface of a problem that we must fix … too much money in campaigns."
Government watchdog groups cheered the requirement for lobbyists to report the donations they collect from employees, clients and others, a practice known as bundling.
Fred Wertheimer, president of Democracy 21, said passage of the bundling disclosure requirement — which was approved separately by a vote of 382-37 — showed that recorded votes are the "best friend of reform."
Democratic leaders worked hard to overcome resistance within their own ranks to the bundling disclosure requirement. Some Democrats fretted it would hamper fundraising at a time when it is likely to pick up for Democrats because of the party's new majority status.
Ken Gross, a Washington lawyer and ethics expert, called the measure "a meaningful bill," citing the new civil and criminal penalties. "The bundling provision will bring to light political activity that frequently occurs in a subterranean fashion."
THE COMMITTEE SAYS:
Dem Reforms Fall Short of Democracy
As the Above article well demonstrates, The Democrats are just as corrupt as the Republicans, except they are dedicated to presenting a false image of honesty.
It has come to the point where the people must impose honest democracy on our politicians and elections. These crooks can only be depended on to protect the system of bribery and corruption that sustains them and their parties in office.
Our Initiative will cut them off from their corporate-special interest feeding tube. Our voter-only campaign finance law will make politicians dependent on the funding of their local voters, rather than defense contractors and scumbags like Abramoff, to get elected.
This will go on until we stop the institutionalized corruption that has captured our politicians, their parties, and our government.
Unless we do this ourselves, our government will continue to be a tool for criminals, and our politicians will continue to lie to us about everything from the war, to eavesdropping,through earmarks.
Also See:
Corruption Updates 26, 1st article on page, 12-8-06, “LOBBYISTS SEE NO CHANGE UNDER DEMS CORRUPTION PRESENTED AS FORCE OF NATURE, DEM CORRUPTION NATURAL”
Corruption Updates 28, 1st article on page, 1-2-07: “LOBBYISTS HIRING-BRIBING DEMS SHIFTING FUNDS AND PERSONELL TO DEMS ASSURES NO REAL CHANGES"
Corruption Updates 30, 2nd article on page, “Democrats set back on earmarks” (REID TRIES TO KILL REAL EARMARK REFORMS)
Corruption Updates 33, 4th article on page, “Lobbyists find new Congress is open for business”
Search the Corruption Database under
Earmarks
Fake Reform
Big Money Politics
3) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
Inquiry widens into Justice Department hiring
The move follows testimony by a former Gonzales aide that she had considered politics in screening applicants.
By Richard B. Schmitt, Times Staff Writer
May 25, 2007
WASHINGTON — The Justice Department has broadened an internal investigation into whether aides to Atty. Gen. Alberto R. Gonzales improperly took into account political considerations in hiring employees, officials familiar with the probe said Thursday.
The expanded inquiry, conducted by the department's inspector general and its Office of Professional Responsibility, comes after testimony Wednesday by former Gonzales aide Monica M. Goodling.
She told a House committee that she had considered party affiliation in screening applicants to become immigration judges.
The Justice Department said it could find no record to support claims by Goodling that taking politics into account to fill positions on the immigration bench had been approved by department officials.
Gonzales was targeted for further criticism last week when a former Justice Department official testified that then-White House Counsel Gonzales and another high-ranking administration official had tried to strong-arm a hospitalized John Ashcroft, then the attorney general, into approving a legally contentious surveillance program.
In her testimony, she said she had "crossed the line" and inappropriately considered party affiliation and other political factors in reviewing the qualifications of applicants for assistant U.S. attorney jobs.
She also said she had considered political factors in helping to select immigration judges. She said she thought such action was allowed.
She cited a conversation she had with another Gonzales aide, D. Kyle Sampson, who said the department's Office of Legal Counsel had declared the practice to be lawful.
Justice Department officials said no such opinion existed.
They also denied Goodling's assertion that the hiring of immigration judges had been frozen after the department's civil division raised concerns about using a political litmus test.
"There is no disagreement within the department, including between the civil division and the Office of Legal Counsel, about whether the civil service laws apply to the appointment of immigration judges," said Dean Boyd, a Justice Department spokesman. "They do apply."
THE COMMITTEE SAYS:
Justice to Investigate Itself: We can expect no Justice
Also See:
Corruption Updates 34, 2nd article on page, “SCARY NEO-CON POLITICAL OPERATIVE REPLACES US ATTORNEY IN ARKANSAS”
Corruption Update 34, Jan., 31, 2006, 7th article on page, "ALBERTO FIGHTS FOR UNCONSTITUTIONAL PRESIDENTIAL POWERS"
Corruption Updates 35, 11th article on page, “DOMENICI FINALLY ADMITS TO UNETHICAL, IF NOT CRIMINAL, CONTACT WITH FEDERAL PROSECUTOR”
Corruption Updates 38, 1st article on page, “Fired U.S. attorney's testimony raises broader concerns”
Corruption Updates 38, 5th article on page, “LA TIMES OFFERS BUSH POLITICAL COVER FOR FIRING PROSECUTOR OF DUKE CUNNINGHAM”
Corruption Updates 39, 3rd article on page, “Rove's role in firings is focus”
Corruption Updates 39, 4th article on page, “Fed Attny Firing Report:TRIBUNE CO HAS MADE LATIMES A TOOL”
Corruption Updates 39, 5th article on page, “GOP official urged Rove to fire prosecutor”
Corruption Updates 39, 6th article on page, “House panel expands inquiry into prosecutor firings”
Corruption Updates 39, 7th article on page, “Gonzales is urged to quit 'for the nation'
Corruption Updates 42 , 2nd article on page, “Tobacco prosecutor says administration interfered"
Corruption Updates 42 , 5th article on page, “U.S. suggests cutting Abramoff sentence"
Corruption Update 43 2nd article on the page, "GONALES CAUGHT IN OPEN LIES TO CONGRESS"
Corruption Updates 46, 8th article on the page, "Prosecutor Posts Go To Bush Insiders:Bush packing US Attorney posts with biased insiders"
Corruption Updates 47, 2nd article on the page, "Gonzales has US Attorneys in Babylonian Captivity"
Read more articles About Abuse of the US Attorney
Search the Corruption Database under
US Attorney
4) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
Lawsuit planned to protect smelt
Published 12:00 am PDTFriday, May 25, 2007 BEE
http://www.sacbee.com/101/v-print/story/193463.html
SAN FRANCISCO -- Three conservation groups plan to sue the U.S. Fish and Wildlife Service to secure more protection for the Delta smelt, a tiny native fish that may be on the verge of extinction.
The smelt is now "threatened" under the U.S. Endangered Species Act and the groups want it uplisted to "endangered" in hopes of spurring more protections.
Early results of a spring trawl net survey found only 25 smelt, a record low and well below a seven-year average of 353. Government biologists expressed a "high degree of concern" in a May 15 memo and sought water operation changes.
The Bay Institute, the Natural Resources Defense Council and the Center for Biological Diversity served the wildlife service with a 60-day notice of intent to sue, based in part on the agency's failure last year to meet deadlines to consider a status change for the smelt under an earlier request.
Fish and Wildlife Service spokesman Al Donner said the agency doesn't have adequate resources for a timely response to all listing requests.
THE COMMITTEE SAYS:
Will the Tiny Smelt Clog the Mighty Canal?
Also See:
Corruption Updates 63 , 1st article on page, "Delta pumps halted"
Search the Corruption Database under
Water
Environment
Flood Control
5) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
Migden returns to Senate, faces questions on crash
Press conference halted after six minutes; she admits prior mishaps.
By John Hill - Bee Capitol Bureau
Published 12:00 am PDT Friday, May 25, 2007
Story appeared in MAIN NEWS section, Page A3
http://www.sacbee.com/capolitics/story/193550.html
State Sen. Carole Migden returned to the Senate on Thursday and continued to face questions about erratic driving that ended in a crash and the role her leukemia and chemotherapy might have played in it.
Migden, D-San Francisco, abruptly ended a press conference Thursday in her office with television and newspaper reporters after six minutes, without answering several questions.
The crash occurred after Migden's driving prompted several drivers to call 911. At least one of the callers reported that she had hit the median divider on Interstate 80.
A witness told The Bee that Migden cut him off twice, causing him to veer once onto the shoulder, just before the accident. Adrian Romo said that Migden came out of her Toyota sport-utility vehicle declaring that she was a state senator, and at one point insisted that Romo or another man had taken her cell phone, which she later found in her car.
The California Highway Patrol said it administered a field sobriety test at the scene that showed Migden was not under the influence of alcohol. But the CHP has not said whether it also required an exam by a drug recognition expert to detect other drugs, including prescription medicines.
Experts say chemotherapy and other cancer treatments can cause cognitive impairments, such as memory loss and difficulty doing more than one task at a time. But they say it would be unusual for them to cause visible disorientation or gross impairment of cognitive function such as that seen in Alzheimer's patients.
THE COMMITTEE SAYS:
What Kind of Drugs was Migden Really On?
The CHP Failed to Draw Blood after an Injury Accident. Why?
After a bit of research, I still cannot find the cell phone law, or how Migden voted on it. But the cell phone excuse does not ring true.
Although Migden was given a Breathalyzer test, she was involved in an accident involving an injury.She appeared intoxicated despite the clean Breathalyzer, and should have been tested for drug use.
Why was she not tested for drugs?
Also See:
Corruption Updates 57, 3rd article on page, "Migden rear-ends car in Solano County"
Search the Corruption Database under
Migden
6) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
PUC to look into deregulation
That's Legislature's job, top lawmakers say as plan evokes memories of energy crisis for some.
By Shane Goldmacher - Bee Capitol Bureau
Published 12:00 am PDTFriday, May 25, 2007
http://www.sacbee.com/capolitics/v-print/story/193406.html
The California Public Utilities Commission voted Thursday to open talks to return California to a deregulated retail energy market, despite objections from legislative leaders that it is "not within the discretion" of the utilities panel to do so.
"Frankly, it continues to astound me that we have choice in most everything in our lives but not electricity service," said the commission's president, Michael Peevey, who wrote the draft decision to begin studying deregulating the retail energy market, also known as "direct access."
"It is true that it's only been six years since we were in the energy crisis, and it is also true that crisis is behind us," Peevey said. "The rationale that justified the suspension of direct access, in my view, no longer exists."
Direct access was one piece of the complex 1996 deregulation puzzle passed by the Legislature, a system that led to the California energy crisis in 2000 and 2001.
In 2001, the Legislature in an emergency session told the PUC to suspend direct access in order to bring stability to the electricity market, with the suspension set to run through 2015, according to the Department of Water Resources.
Now, the PUC will study whether it has the authority to lift that suspension as early as 2009. If its answer is "yes," then it will study how to take that step.
The leaders of the Democratic-controlled Legislature, Senate President Pro Tem Don Perata and Assembly Speaker Fabian Núñez, as well as the lawmakers who head the committees overseeing the state's energy policy, said Wednesday in a letter to the commission that any such move "should be considered only by the Legislature."
But Norm Plotkin, executive director of the Alliance for Retail Energy Markets, which petitioned the PUC to bring back retail competition, welcomed Thursday's decision.
"We're pleased at the outcome and know there's lot of hard work ahead, but we're ready to engage," said Plotkin. "This is the first step in a long road to restoring consumer choice."
Matt Freedman of The Utility Reform Network, a consumer advocacy group, saw it differently.
"We're very disappointed that the PUC and the governor want to return California to the dark day of energy deregulation," he said.
Gov. Arnold Schwarzenegger has been a supporter of direct access, but his office has declined to comment on whether the PUC has the authority to lift the suspension.
The only dissenting vote Thursday came from Commissioner Timothy Simon, whose appointment to the PUC still must be confirmed by the state Senate. Though he generally favors competition, Simon said, "Introducing competition into electricity markets has not always brought about lower rates for electric customers."
Peevey, and the majority of the independent panel, disagreed.
"So I say to those who will totally ... oppose direct access, why are you afraid of healthy debate?" Peevey asked at Thursday's meeting. "Have you no confidence the average consumer can make rational, reasonable choices? And how can consumer advocates, and I use the term advisedly, claim giving people choice (is) anti-consumer?"
THE COMMITTEE SAYS:
PUC Exercises its Choice to Rip off the Public: "Direct Access" and "Choice" Code Words of Corporate Politicians for Open Thievery
Energy Corporations depend on Bribing Politicians, and a flood of friendly "free press" propaganda, combined with public stupidity and apathy to gain control over energy production Then they will bleed the public dry.
The press and politicians trumpeted deregulation last time, and you are about to hear them repeat exactly the same lies again this time.
I have the freedom to"Choose" which gas station rips me off. I have the "Choice" of which insurance company rips me off. I have the "Choice" of which HMO rips me off. I have the "Choice" of which telephone, Cable, and Supermarket rip me off.
So much for "freedom," and "choice."
"Free" markets are a dream, really an idea that can never be achieved. All Markets are established by rules and regulations, which determine the stability and characteristics of the particular market.
Many areas of Social Activity are not well served by a market-based model, and must depend on the united economic power of the Citizens.
Education, Energy, Medicine, Transportation, and road building will never provide benefits to all of our citizens if privatized.
Businesses will only serve the segments of society that bring them maximal profits.
Only the rich will be served, and the rest of us will be left out in the cold.
Contingencies exist which eliminate the market model's efficiencies. A serious drawback to privatizing Energy, telecommunication, transportation, and education, among many services privatized in recent decades, is the cost of replacement in a natural disaster.
If there is an earthquake, hurricane, or tornado, the only group capable of fixing the systems is the combined wealth of our citizens.
So, i'm sure the citizens will be required to public foot the bill for rebuilding the "privatized" infrastructures, in case of a major natural disaster.
The rich make the money, and the people pay the costs of doing business.
7) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
Dan Walters: Democrats stage two juicy duels
By Dan Walters - Bee Columnist
Published 12:00 am PDTFriday, May 25, 2007
http://www.sacbee.com/capolitics/v-print/story/193405.html
When the Legislature and then-Gov. Gray Davis reconfigured the state's 173 legislative and congressional districts in 2001 with the intent -- and the effect -- of eliminating two-party competition for seats, they created a vacuum that begged to be filled.
If the two parties could not contest for seats, competitive instincts would be shifted into factional rivalries within the parties themselves -- a syndrome heightened by legislative term limits, which produce crops of term-limited, but ambitiously office-seeking politicians.
A perfect example of the syndrome has emerged in Los Angeles County, where the death of Democratic Rep. Juanita Millender-McDonald has touched off an elbow-throwing, three-way scramble.
To state legislators facing term limits, a congressional seat is golden -- essentially a lifetime job -- so it was not surprising when two Long Beach Democrats, Sen. Jenny Oropeza and Assemblywoman Laura Richardson, declared they'd run in the June 26 special election. It shaped up as a chapter in the jockeying of Latino and African American politicians in urban Los Angeles.
This week, however, the very influential Los Angeles County Federation of Labor, a major factor in the rise of Latino political power, backed Richardson. Oropeza's camp blamed the endorsement on her vote for gambling compacts with Indian tribes that unions opposed, but it also reflected efforts by the labor federation's chief, Maria Elena Durazo, to maintain its internal racial coalition and not be seen as abetting a Latino takeover of a black seat.
THE COMMITTEE SAYS:
Race politics and Union Bribes Compete for Domination of Dem Party
Also See:
Corruption Updates 21 , 1 st article on page, "SEIU POLITICAL CORRUPTION IN LA DEFENDED AS NORMAL PRACTICE"
“Ex-Union Chief gets jail...,” Corruption Updates 27, last article on page.
Search the Corruption Database under
Democrats
Unions
8) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
Recall Is Issued for Frozen Fish
By THE ASSOCIATED PRESS
http://www.nytimes.com/2007/05/25/us/25brfs-RECALLISISSU_BRF.html?pagewanted=print
Frozen fish distributed in three states were recalled after two people in the Chicago area became ill after eating the fish, said the importer, the Hong Chang Corporation of Santa Fe Springs, Calif. The company said the product might contain tetrodotoxin, a potent toxin, and analysis by the Food and Drug Administration confirmed its presence. The product, imported from China, was labeled monkfish, but the company said it might be pufferfish, with which the toxin is usually associated. Tetrodotoxin can result in serious illness or death, and it cannot be destroyed by cooking or freezing. The fish were sold in California, Hawaii and Illinois. The fish are individually packaged in clear plastic sleeves and placed in a plastic liner inside a box. There are no lot numbers on the box. Consumers can return the fish to the place of purchase or call the company with questions at (562) 309-0068.
THE COMMITTEE SAYS:
China Trade Sickens Consumers, Yet Again:
Kills Pets, Impoverishes Labor, Enriches China and Corporations at our expense
Also See:
Corruption Updates 36, 6th article on the Page, "China about to pass U.S. as world's top generator of greenhouse gases
Corruption Updates 55, 7th article on the Page, "China Tells Little About Illness That Kills Pigs, Officials Say"
Search the Corruption Database under
China
9) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
Central Islip: New Accusations in Slavery Case
By THE ASSOCIATED PRESS
May 25, 2007
http://www.nytimes.com/2007/05/25/nyregion/25mbrfs-servant.html?pagewanted=print
A Long Island couple accused of keeping two Indonesian women as slaves were ordered held in jail yesterday amid new allegations that the women’s relatives were threatened and offered bribes.
The couple, Varsha Mahender Sabhnani, 35, and her husband, Mahender Murlidhar Sabhnani, 51, who run a perfume business from their Muttontown home, pleaded not guilty in Federal District Court to slavery charges.
Prosecutors said Ms. Sabhnani’s mother, who lives in Indonesia, tried to bribe one victim’s son-in-law with $2,500. They said Ms. Sabhnani threatened to have the other victim’s husband, also in Indonesia, arrested if the woman did not obey her. Defense lawyers said the new allegations would be “withdrawn or proven to be false.”
THE COMMITTEE SAYS:
Slave Owners Threaten Family of Slaves: Reddys of Berkeley also accused of threatening foreign families of Saves
This story has chilling parallels with the Reddy Slavery Case. The Criminals are both exceedingly rich. Reddy came from a dominant Indian Family.
Both enslaved and abused poor women from their home countries. Both Imported the arrogance and immorality of their post-colonial wealth smoothly and successfully to America. Until they were Busted.
After arrest, Both were accused of using the power of their families to threaten the foreign families of the victims. It is surprising that these facts even came out, considering the death grip wealthy families have on Indian and Indonesian peasants.
It was reported that the Reddy Family in India collected rents from impoverished sharecroppers by seizing their daughters. These women ended up as day time labor slaves, and night time sex slaves, for elements of the Reddy family in Berkeley.
I can't wait until these people get as much wealth and power here, as their families have in their respective countries. They have a job for your sisters and daughters.
So much for "MultiCulturalism;" welcome to the global corporate community.
Also See:
Reddy of Berkeley is a Slave exploiting Scum, Busted , 1-20-2000
Reddy imported Indian Slavery to Berkeley: Berkeley Landlord Depicted As Overlord of India Village
Daily Planet Breakdown of Reddy Empire of Filth
Search the Corruption Database under
Reddy
India
10) THE ABSTRACT PRINTED BELOW WAS ORIGINALLY PUBLISHED IN THE :
China’s Leaders Confront Their Manic Market
May 25, 2007, NYT
http://www.nytimes.com/2007/05/25/business/worldbusiness
Zhou Xiaochuan, the current governor of the People’s Bank of China, faces the knotty question of what to do about a speculative mania that has drawn millions of people with limited investing experience into betting their savings on the stock market.
Mr. Greenspan, now 81, struggled to contain the tech stock boom, issuing his famous “irrational exuberance” warning in December 1996 only to watch the American market keep rising and finally collapse in early 2000. He tried his hand at forecasting Chinese stocks on Wednesday, telling an audience in Madrid by satellite that the Chinese market was “clearly unsustainable” and could undergo a “dramatic contraction.”
After setting records on Monday, Tuesday and Wednesday, the A shares, those traded in yuan, fell 0.47 percent in Shanghai and 0.6 percent in Shenzhen on Thursday as investors responded to the warning.
But the warning was not news to Mr. Zhou and other Chinese officials. The central bank, securities regulators and prominent business executives have all been cautioning investors that buying stocks is not a guaranteed path to riches — all with less apparent effect than Mr. Greenspan.
For Mr. Zhou, there is a further complication in that he faces considerable uncertainty about his personal future. Five years into his current job, he turns 60 next year, and so by Chinese standards is due for a transfer or promotion.
“It could come at any time; I tend to think it will happen before the 17th Party Congress,” expected in October or November, said Victor Shih, a Chinese banking specialist at Northwestern.
Whoever succeeds Mr. Zhou confronts one of the toughest challenges of any financial policy maker. Chinese families eager to make money are opening brokerage accounts around the country, with the number of new accounts rocketing from several thousand a day two years ago to nearly 300,000 a day this month.
Like Mr. Greenspan in the heat of the Internet frenzy, Mr. Zhou and his colleagues in the Chinese government have been cautious about trying to pop the bubble themselves.
The Chinese government chose administrative measures, instead of market forces like higher interest rates, to prevent the economy from overheating in 2004 and to curb real estate speculation over the last two years. The government has taken a few such measures this year, like investigating fund managers to make sure that they do not engage in self-dealing at the expense of their clients, and requiring this week that new brokerage customers sign forms acknowledging that they understand the risks of stocks.
Cash is pouring into the stock market partly because money is pouring into China in general. With the Chinese government intervening heavily in currency markets to hold down the value of the yuan against the dollar, China is on course for a surplus this year of up to $400 billion in the current account, the broadest measure of trade.
The most commonly cited potential governors are Shang Fulin, the chairman of the China Securities Regulatory Commission; Guo Shuqing, Communist Party secretary of the China Construction Bank; and Wu Xiaoling, who is the central bank’s senior deputy governor but at 60 may already be deemed too old to succeed Mr. Zhou.
Mr. Zhou was president of China Construction Bank and then chairman of the China Securities Regulatory Commission before taking over leadership of the central bank, so Mr. Shang and Mr. Guo could each be viewed as possibly following in his footsteps. As for Mr. Zhou himself, he is cited by some experts as a contender to rise as high as deputy prime minister of China — if he can stay popular a few more months.
The bigger worry, but much harder to calculate, lies in whether the country’s banks have unintentionally or secretly lent heavily to stock market speculators who would not be able to repay their loans if the market collapsed.
For lack of data, credit analysts have been unable to assess the scale of bank exposure to the stock market. “We can’t see it,” said Charlene Chu, an analyst in the Beijing office of Fitch Ratings, “on the balance sheets.”
THE COMMITTEE SAYS:
Chinese Bubble Expanding Towards Poppin Point:
Will inevitable meltdown threaten Commie Rule?
Have the Commie Leaders created a great big Enron, a feeding frenzy of greed driven speculation? Yes, but nobody knows the extent of the exposure.
China Bubble Contained for Now:
Chinese Meltdown will Stagger America when China Calls Due Loans Underwriting our Consumption
Also See:
Corruption Updates 59, 6th article on the page, "Greenspan Remarks Deflate Market Mood"
Corruption Updates 67, 3 rd article on the page, "China Stocks Extend Loss, Falling 8.3%"
Search the Corruption Database under
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