Dear Pen-L and PKT
this was a report in the Sydney Morning Herald today detailing how our new
conservative treasurer conducts himself....it also says something about the US
economy.
kind regards
bill
October 3, 1996
Costello's global gaffe
By PAUL CLEARY, TOM ALLARD and JENNIFER HEWETT
The Treasurer, Mr Costello, was the centre of an international storm
yesterday after sparking a surge on world financial markets when he revealed a
confidential briefing with the United States' top economic adviser.
At a press conference in Washington on Tuesday, Mr Costello disclosed
highly sensitive details on US interest rate policy that he attributed to a
discussion with the chairman of the US Federal Reserve, Dr Alan Greenspan.
Dr Greenspan had apparently told Mr Costello that inflation was well under
control in the US and that there was no need to raise interest rates.
Mr Costello deepened the crisis by claiming later that reports of his
remarks had been "fanciful".
However, ABC Radio has a tape that contradicts this claim.
In a day of extraordinary reaction to Mr Costello's gaffe:
US bond rates dropped.
A US bond trader said calls were coming in from around the world
asking "who the hell is this Costello bloke?"
The Australian head of trading for the US bank Chase Manhattan said
it was "very unusual, to say the least", to quote Dr Greenspan after a
meeting.
The shadow Treasurer, Mr Evans, said Mr Costello was not fit to be
Treasurer.
The Prime Minister's office went to ground.
It has also been disclosed that Mr Costello made his remarks despite
confirmation by the US Federal Reserve - known as the Fed - that the meeting
with Dr
Greenspan was private.
Mr Costello, who is in Washington for the International Monetary Fund's
annual meeting, refused to make any further comment last night.
A spokesman for the Prime Minister referred journalists to the Treasurer's
office and said Mr Howard had no comment.
Asked earlier about reports of his comments, Mr Costello told AP-Dow
Jones: "I don't comment on US interest rates."
He was then asked whether Dr Greenspan had indicated the Fed's intentions
on interest rate, and replied: "Wouldn't know. You better ask him. I never
quote on other countries' interest rates. That's fanciful if it suggests to the
contrary."
The shadow Treasurer, Mr Evans, said Mr Costello had shown that he was
unfit to be Treasurer.
"No finance minister or treasurer in living memory anywhere in the world
has committed an indiscretion on this scale," he said.
A bond trader from a large US investment bank told the Herald: "Last night
we were getting calls from all around the world asking who the hell this Costello
bloke was.
All the US banks were asking, "what the hell is going on?'"
The Australian head of trading for giant US bank Chase Manhattan, Mr Peter
Burgess, said yesterday: "I think it took awhile for people to work out
who the hell
[Mr Costello] was and what was he doing talking about Greenspan so
bluntly.
"It is very unusual, to say the least, for someone to quote Greenspan
directly after a
meeting, particularly on such a sensitive topic."
US financial market pundits have bet billions that concerns about rising
inflation
would prompt the Fed to raise interest rates this year.
Mr Costello said at his press conference: "Well, I don't think there's any
expectation
at the moment that rates are going to rise ..."
On inflation, Mr Costello added: "He [Dr Greenspan] indicated to me that
he saw
no threats to inflation down the track."
--
#### ## William F. Mitchell
####### #### Head of Economics Department
################# University of Newcastle
#################### New South Wales, Australia
###################* E-mail: [EMAIL PROTECTED]
################### Phone: +61 49 215065
##### ## ### +61 49 215027
Fax: +61 49 216919
## http://econ-www.newcastle.edu.au/~bill/billyhp.html
"only when the last tree has died and the last river has been poisoned
and the last fish been caught will we realise we cannot eat money."
(Cree Indian saying...circa 1909)
