The initial Chinese reaction to the Clinton double cross was to threaten to launch the “nuclear option” of dumping the dollar.However it was only a few days before it became clear that doing so was equivalent to shooting themselves financially in the foot. Unfortunately for China, the bullet had already left the gun and was rapidly passing through the collective Chinese foot. The scare had precipitated dollar dumping elsewhere in the world markets.
Foreign dollar reserves total about 5.7 trillion US dollars, and 65% of foreign reserves are in dollars. China holds about 1.4 trillion, or 25% of the total. [34] Thus as China precipitated a crisis, and the dollar fell from mid August to early December [35], China lost 21.4% of the value of their dollars (in euro terms) or about 300 billion dollars! China’s other investments had been damaged around the globe.
Japan had 1 trillion in dollar reserves and they were also hit by the drop in the dollar. China’s customers in America had become less able to buy things from China, and the volatile Chinese stock market had been hit as well. In addition to that “About $3 billion of the [Chinese government ] fund was invested in the private equity manager Blackstone in May - that may have bought China useful political contacts, but it is now [as of Dec 5th] worth $2 billion. And the remainder is being invested very carefully, primarily in US Treasury securities - which are also losing money steadily in yuan terms.” The rest of this fund is being used to bail out bad loans in Chinese banks - which are also lousy investments and apt to become worse ones as weaker American dollars buy less from China. [36]
Seeing that their Chinese situation was starting to hit the fan, Bill and Hillary liquidated their “blind” trust of 5-25 million$ thus getting out of the stock and credit markets on June 15th. [37] Ben Stein, who is a very bright conservative as well as an economist is not prone to seeing conspiracies, but he has suspected one in this case:
“I always scoff at these letters [regarding grand conspiracies]. The world is far too complex a place to be run by any one group. But the closest I have recently seen to such a world-running body would have to be a certain large investment bank [Goldman Sachs], whose alums are routinely Treasury secretaries, high advisers to presidents, and occasionally a governor or United States senator.” [38] Ben Stein noted that while other Wall Street firms were damaged by the Chinese crisis, the wealthiest one, Goldman Sachs was not.
The damage was severe: Morgan Stanley had its first quarterly loss ever, and had sell 9.9% of its equity to China. [39] Bear Stearns also had its first loss in its 84 year history. [40] While Goldman Sachs had record profits this year, the other big brokerages were forgoing and reducing their bonuses. [41] But with record profits Goldman Sachs has been a revolving door for White house officials in Clinton and Bush administrations:
“One of the oil paintings hanging in the executive suite at Goldman's New York headquarters portrays Robert Rubin, a former vice chairman who became then-president Bill Clinton's treasury secretary. ... Goldman recently hired ... Faryar Shirzad, who worked as one of Bush's national security advisors.” [42]
“Henry Paulson, the firm's former chair, was sworn in as Treasury secretary. Back in March, President Bush selected Josh Bolton, a former Goldman Sachs managing director, as his chief of staff. And Mr. Paulson's arrival coincides with the departure of Deputy Secretary of State Robert Zoellick - for Goldman Sachs. Goldman executives have always been favorites to fill White House advisory posts, but the revolving door between Washington and Wall Street has been especially busy of late: Paulson joins Reuben Jeffery, chair of the Commodity Futures Trading Commission, and Stephen Friedman, who led Bush's National Economic Council before moving over to the Foreign Intelligence Advisory Board. Nor is Bush alone in his preference for Goldman bigwigs: Robert Rubin and Henry Fowler were Treasury secretaries to Bill Clinton and Lyndon Johnson, respectively; John Rogers served as deputy Treasury secretary under Ronald Reagan; and John Whitehead was deputy secretary of State under Mr. Reagan. [43]
Apparently the Clintons and their friends at Goldman Sachs managed to cash in on the financial consequences of their premeditated double cross. The revolving door with the White House during Bush and Clinton Administrations may also explain how they got so much timely cooperation from the Consumer Product Safety Commission in pushing the Chinese product scare.
The stock markets and credit markets were thrown in disarray, the economy was shoved in the direction of recession, and consumer confidence dropped down in the shopping season right before Christmas. Furthermore, a weak dollar increased the costs of gifts before Christmas, and spiked up the price of oil even higher. Chinese toys were even being turned away at Toys for Tots, and even Chinese parents were shunning Chinese toys in China. [44] Democrats like Barbara Boxer jumped on board with a really scary e-mail to constituents about the mortgage crisis just two weeks before Christmas. [45] The Democrat Grinch had made a good try at stealing Christmas.
Thus when Bill and Hillary recently launched their theme of “Back to the Future” [46] , the country was primed to listen. They waxed nostalgic for the good old days when the Clintons were running things - as if a vote for Hillary was a vote for a booming economy. The worse things could get economically, the more likely the voters would miss the Clintons.
So, how did the Chinese feel about being thrown under the bus by Hillary? They probably did not like it. China called Hillary’s criticism of Chinese toys “slander” and said "any slander or exaggeration of facts is irresponsible." Hillary in turn urged Washington to take "immediate, decisive steps" to protect US children. These “steps” would only mean severe regulation or a complete ban on Chinese toys and other goods. [47] Democrats also pushed legislation increasing penalties from $1.8 million to $100 million for failures to meet safety standards. It would be a protectionist (and protection racket) gold mine for unscrupulous regulators under a Hillary Clinton Administration. [48]
Complaining about Hillary was an ineffective way for the Chinese to get back at her. The Chinese are much more capable of getting things done using indirect methods. They instead probably did things that would damage her campaign. For example, they could invest in Hillary’s opponents, or leak damaging information about her.
They could “invest” in her opponent Rudy Guiliani. In fact, a big contributor to Rudy is the CEO of the Las Vegas Sands, which has built the world’s largest casino in the world in China controlled Macau. It has potential to be the world’s largest money laundering operation for the Chinese. A favor to the casino operators could easily be translated into a favor to Guiliani and be perfectly legal. [49] But there is more they could do.
One very easy and effective thing they could do is out Norman Hsu, thereby dredging up the Chinagate scandal. That would hurt Hillary where it would count. Perhaps you remember Mr. Hsu: He is the mousey Chinese guy who was recently exposed making large donations to Hillary and other Democrat coffers. Hsu was a fugitive on the lam for many years. Years ago he ran out on a court date after setting up bogus apparel companies and defrauding investors. As a bundler of Chinese donations, he was responsible for passing money to the Hillary campaign and other Democrats. [50]
All it would take is a phone call to the Wall Street Journal and the illicit payments to the Clintons would be exposed. On August 28th the Journal reported that Paw family that shared a home with Norman Hsu and they were revealed to be making huge and inexplicable donations to Hillary. [51] On October 19th a similar scam was revealed in New York’s Chinatown. [52] Somebody who knew all about mysterious payments to the Democrats from the Chinese community suddenly made it a lot harder for Hillary to look electable.
The Chinese who sourced the money would have known all about Clinton and Hsu. Perhaps the Chinese were angry that Hsu had failed to purchase the Clintons’ support as he had promised. Chinese spymasters would have been furious at both Hsu and the Clintons. Norman Hsu was also implicated in Chinagate back in 1996. [53] but had escaped prosecution thanks to the Clinton Administration roadblocks.
Hsu was close to Bernard L. Schwartz, the head of Loral during Chinagate. Schwartz was so close to Bill and Hill that he gave Bill his 71st birthday party in the White House. Schwartz was the key man in the Chinagate scandal, and a major beneficiary of the Loral missile deal. Schwartz also gave the Clinton library $250,000 and pledged $750,000 more in 2000. It was Schwartz that persuaded the Clintons to approve the missile technology transfer, greatly increasing the Chinese missiles’ accuracy. [54] Under the Bush administration, Loral agreed to pay a paltry civil fine of $14 million to settle the case. Schwartz has also claimed to donate to other presidential libraries - presumably including Republican ones.
This same Schwartz has also been recently helping Norman Hsu. Schwartz vouched for Hsu at New School, even though he was a fugitive convicted of grand theft in California. Last November, Schwartz and Hsu chaired a New School banquet at the Mandarin Oriental in New York which featured Sen. Clinton as keynote speaker. Clinton steered a $1 million federal grant to the college. More recently, Schwartz and Hsu appeared together at the New York Yacht Club for Democratic Rep. Patrick Kennedy's 40th birthday bash.
Hsu also had business dealings with the head of the largest criminal Chinese gang in San Francisco. The Chinese gang leader Raymond Chow said “I guess he into a lot of financial problem back then and I loaned him some money and I help him with my knowledge and with my strength. That’s all there is.” However, they were not always happy business partners. On one occasion Hsu was kidnapped by Chow and his gang. By dumb luck Hsu was rescued by police during a routine traffic stop. In the early hours of August 28, 1990, Foster City Police stopped a car for making an illegal turn. They found a terrified Norman Hsu in the back seat. In the front were the gangster Raymond Chow and two associates. Hsu told police he had been assaulted several times, threatened and kidnapped for 12 hours because of a dispute over business dealings with the Chinese gangster. [55]
Thus Norman Hsu had Chinese organized crime relationships going back to long before Bill Clinton was elected president. Norman Hsu was also supposed to turn himself in to authorities and surrender his passport on the 5th of September this year,[56] but instead somehow ended up on a train to Chicago and apparently drugged: Hsu “could not stand. He was acting like he didn’t understand them. They tried to get him up but he couldn’t walk.” At one point, Hsu asked the Amtrak attendants if he was in jail. [57] Was Norman Hsu nearly silenced permanently by either the Chinese gang or the Clintons? Given his information and the Clinton Arkencide history, one or both are plausible.
Poor Norman. As the go between for the Democrats and the PRC via Chinese gang intermediaries, he was expendable and caught in the crossfire. The Chinese probably felt that Norman had failed to deliver the political goods he promised. What better way for China to punish Hillary and Hsu than expose the corrupt Chinese donation connection? As the court case creeps ahead in 2008, who knows what Norman may expose? This Democrat and Clinton gambit may succeed in trashing the economy before the election by distressing voting homeowners and consumers. It is a shame our economy is held hostage to the Clintons’ political ambitions.
However, getting tough with China is not all bad. At least China is finally being widely recognized as a threat, and American manufacturers and exporters are booming thanks to the drop in the dollar. Only last month, China made concessions to drop subsidies - something that would have been unthinkable a short time ago. [58] Duncan Hunter has been calling for getting tough with China’s trade policies for years and Senator Fred Thompson chaired the Senate committee that revealed the Clintons’ corrupt Chinese ties in 1997. He understood the Clinton games and called the 1996 election “the most corrupt political campaign in modern history.” From the Thompson report:
“The president [Clinton] and his aides demeaned the offices of the president and vice president, took advantage of minority groups, pulled down all the barriers that would normally be in place to keep out illegal contributions, pressured policy makers, and left themselves open to strong suspicion that they were selling not only access to high-ranking officials, but policy as well. Millions of dollars were raised in illegal contributions, much of it from foreign sources.” [59] By double crossing the Chinese, Hillary and company may have made some powerful enemies who have a lot of American dollars, and no hesitation to use them in sneaky ways. Who knows how much of the recent flood of Hillary dirt has been expedited by the Chinese... how many donations to her opponents may come indirectly from China ... and who knows what surprises will be coming in the next few months, courtesy of China?
References:
34. http://www.dailyfx.com/charts/Chart.html
35. http://archive.newsmax.com/archives/articles/2007/8/12/134624.shtml?s=lh
36. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/16/bcnchina116.xml
37. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/10/16/bcnchina116.xml
38. Losing faith inthe greenback, Economist 1 dec 07 p. 85-86.
39. http://www.atimes.com/atimes/China_Business/IL05Cb02.html
40. http://www.wnd.com/news/article.asp?ARTICLE_ID=56344
41. http://www.nytimes.com/2007/12/02/business/02every.html?_r=2&pagewanted=1&oref=slogin
42. http://www.commondreams.org/headlines06/0820-06.htm
43. http://www.csmonitor.com/2006/0720/p09s02-coop.htm
44. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/05/bcnchina105.xml
http://www.wnd.com/news/article.asp?ARTICLE_ID=58563
45. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/05/bcnchina105.xm
http://www.justhillary.com/herwords/foreclosures0614.php
46. http://afp.google.com/article/ALeqM5iNg0ETwSPokMZBw6m0oGdeRRJ7uw
47. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml
48. http://www.rockymounttelegram.com/news/content/news/stories/2007/11/11/toys.html
http://www.bradenton.com/business/story/226708.html
http://www.naplesnews.com/news/2007/sep/29/washington_calling_do_not_mail_safeguarding_toys_t/
49. http://boxer.senate.go/features/mortgage/
50. http://www.newsmax.com/insidecover/bill_clinton/2007/11/27/52623.html
51. http://www.newsmax.com/insidecover/hillary_attacks_china/2007/11/23/51773.html
52. http://www.nytimes.com/2007/10/30/washington/30cnd-consumer.html?_r=2&oref=slogin&oref=slogin
53. http://www.democrats.org/a/2007/10/giuliani_slams.php
54. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/31/MN4VRSVO8.DTL&tsp=1
http://online.wsj.com/article/SB118920845515221199.html
http://online.wsj.com/article/SB118826947048110677.html
http://online.wsj.com/article/SB118835199704811801.html
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http://online.wsj.com/article/SB118826947048110677.html
http://online.wsj.com/article/SB118835199704811801.html
http://online.wsj.com/public/resources/documents/info-DONATE-retro_sort.html
56. http://www.latimes.com/news/politics/la-na-donors19oct19%2C0%2C4231217.story?coll=la-home-center
57. http://gatewaypundit.blogspot.com/2007/08/more-bum-news-for-hillary-hsu-named-in.html
58. http://worldnetdaily.com/news/article.asp?ARTICLE_ID=57450
59. http://hotair.com/archives/2007/09/08/hsu-and-the-shrimp-boy/
http://abclocal.go.com/kgo/story?section=local&id=5643329
60. http://www.newsmax.com/insidecover/Norman_Hsu/2007/09/10/31343.html
61. http://blogs.wsj.com/washwire/2007/09/10/traveling-man/
http://abcnews.go.com/US/Consumer/wireStory?id=3541291
62. http://www.breitbart.com/article.php?id=D8T7DTSG0&show_article=1&catnum=0
