	id AA20722; Tue, 31 Jan 95 19:29:04 CST
Subject: Conspiracy Nation -- Vol. 3 Num. 73


              Conspiracy Nation -- Vol. 3  Num. 73
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                    ("Quid coniuratio est?")
 
 
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"Although not one in 10,000 Americans knows it, the Fed has a 
huge secret cash stash of $20 billion, known among insiders as 
the 'currency stabilization fund'..."
 
 +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +  +
 
RAPE OF MEXICAN ECONOMY AIDED BY "INSIDE" INFO
By Warren Hough
[Excerpts from *The Spotlight*, Feb. 6, 1995]
 
[...]
 
Dismissing official explanations, seasoned currency traders 
privately blame the mess in Mexico on a series of secretive, 
high-level financial maneuvers that led to the collapse of the 
peso, while producing billion-dollar profits for a consortium of 
megabanks and financial speculators closely linked to [Federal 
Reserve Chairman Alan] Greenspan.
 
A detailed review of the current balance sheet of Citibank, 
ranked No. 1 among U.S.-based commercial banks and among Mexico's 
foreign lenders, confirms that far from suffering losses, the 
money center giant made prodigious profits on the peso's plunge, 
reports *Spotlight* correspondent George Nicholas from New York.
 
Calling its Mexican operations "stronger than ever," Citibank 
reported a whopping jump of 81 percent in its earnings for the 
last quarter of 1994 -- just when the peso collapsed.
 
                   -+- *Cui Bono*? -+-
 
Profits are soaring so nicely, "We are doubling our dividend 
payout for the period," Citibank Chairman John Reed informed 
stockholders on January 20, a month after Mexico's monetary 
meltdown.
 
The simultaneous headline, "Surprise Profits for Top N.Y. Banks" 
heading the financial page of *Newsday*, a major New York daily, 
highlighted the profit gains Chase Manhattan Bank (19 percent) 
and Chemical Bank (22 percent) realized for the same period.
 
"The big banks made out like bandits," says Paul Lanier, who 
heads the New York trading desk of a major European investment 
bank. "When I asked myself how that could have happened, I 
realized that although a complex scheme is behind it all, the 
essential facts are not hard to understand."
 
On the last day of 1994, major U.S.-based banks reported holding 
Mexican treasury bonds worth an astonishing $19.8 billion -- an 
extraordinary debt load. "The key is to realize that these 
Mexican debentures come in two principal species," explained 
Lanier. "There are the so-called '*cetes*' -- loans which are 
repayable in pesos. Then there are '*tesobonos*' -- bonds 
denominated in pesos which are, however, pegged to the dollar. If 
the peso falls against the dollar, the payments due on these 
*tesobono* bonds increase accordingly."
 
There is another important difference between these two main 
types of Mexican treasury IOUs. "The bonds known as *cetes* 
produce the highest yield," Lanier noted. "In 1994, *cetes* paid 
interest at rates averaging 24 percent -- a rich return for 
lenders willing to take a chance on them."
 
                 -+- Heavy In *Cetes* -+-
 
Most of the Mexican bonds held by Citibank and other American 
investors at the beginning of 1994 were *cetes*, since the 
speculation-driven U.S. money markets forced financial managers 
to lock in the highest possible returns. "Of the round $20 
billion in Mexican treasury IOUs held by U.S. creditors, only 
$1.7 billion was in *tesobonos* [CN -- lower yield, more secure]; 
almost all the rest was in high-yield *cetes*," explained Lanier.
 
But when the economic earthquake hit Mexico on December 20, 
raising urgent questions about this debt, it was discovered that 
the proportion had been mysteriously reversed. In the days before 
the peso began to crumble, the largest Wall Street lenders 
abruptly switched from *cetes* to *tesobonos*, thus buying 
insurance against the looming currency collapse.
 
"The big banks were secretly tipped off by Greenspan about the 
coming devaluation," explained Dr. Felipe Arismendi, a U.N. 
economist specializing in monetary studies. "They converted their 
holdings from *cetes* to *tesobonos* a jump ahead of the market, 
and came out winners while tens of thousands of small American 
global-fund investors ended up losers."
 
But even if *tesobonos* are theoretically worth their weight in 
dollars, how can Citibank be so sure the busted and beleaguered 
Mexican government will pay?
 
"That is Greenspan's second scheme," explained Arismendi. 
"Although not one in 10,000 Americans knows about it, the Fed has 
a huge secret cash stash of $20 billion, known among insiders as 
the 'currency stabilization fund' or 'the swap pool.'"
 
Greenspan secretly assured Citibank and other major lenders the 
Fed would use its $20 billion kitty to compensate them for any 
shortfalls in their due debt payments caused by a Mexican 
default.
 
In that case, Congress might inquire, where is the need for the 
additional $40 billion bailout guarantee fund proposed by the 
Clinton administration? [CN -- *That* plan has just been dropped.]
 
The answer is that it would provide insurance for Wall Street 
banks eager to make more mega-loans to Mexico, on even more 
profitable terms.
 
[...]
 
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Aperi os tuum muto, et causis omnium filiorum qui pertranseunt.
Aperi os tuum, decerne quod justum est, et judica inopem et 
  pauperem.                    -- Liber Proverbiorum  XXXI: 8-9 

 Brian Francis Redman    bigxc@prairienet.org    "The Big C"
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    Coming to you from Illinois -- "The Land of Skolnick"        
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