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"The case of Howe vs. Bank for International Settlements et
al."
-- I like to call it Howe vs. All the Money in the World -- was roughed up
a little today but survived its first day of hearing in federal court in
Boston.
"During 2 1/2 hours of oral argument, U.S. District Judge Reginald C.
Lindsay dismissed two counts of the lawsuit involving securities fraud
charges against defendant J.P. Morgan/Chase, and ruled that the plaintiff's
method of serving lawsuit notice papers against the BIS -- by mail in English
instead of by personal service in German - was insufficient.
"But the two dismissed securities fraud counts were secondary to the
lawsuit's substance, and the problem with the lawsuit notice probably can be
fixed by a pricey translator if the lawsuit is allowed to proceed.
"The judge took the remainder of the case back to his chambers for
drafting a written decision on the plaintiffs' motions to dismiss the rest of
the lawsuit. That could take weeks or months.
"The case was called at 2:30 p.m. in a beautiful and huge courtroom
in the opulent new U.S. courthouse just across Fort Point Channel from
gleaming downtown Boston. About 30 people sat in the audience section at the
back of the courtroom, some of them GATA supporters, including a few who had
come quite a long way to watch.
"Plaintiff Howe sat alone at the counsel's table on the audience's
left. At the counsel's table on the right sat his opponents, nine lawyers
representing the BIS, Goldman Sachs, Deutsche Bank, J.P. Morgan/Chase,
Citigroup, the U.S. Treasury Department, the Federal Reserve Board, and the
New York Federal Reserve Bank. Behind them in the gallery were still a few
more defendants' lawyers. The defendants' lawyers seemed to be smirking over
their having had to come all this way just to confront a mere pro-se
litigant, but they seemed to be smirking less when it was over.
"About two-thirds of the hearing consisted of Judge Lindsay's
questioning Howe about the case and its likely weaknesses. The judge was
exceptionally well-informed about both the legal technicalities and the
broader issues behind them. While he sought to move the hearing along, he
also was pretty indulgent in letting Howe explain things.
"The hearing wasn't really about whether the gold market is
manipulated. It was about whether there is any basis in law for the suit.
Thus it turns on legal issues and technicalities that will interest few of
the partisans of gold and free markets -- issues like the very limited
circumstances under which the government and government officials may be sued
for official acts. But a few observations from this partisan may be of
interest:
-- "The judge had trouble seeing in the lawsuit's claims possible
evidence that the bullion banks had conspired with each other rather than
with the federal government, other than what was called "parallel
conduct" -- their doing the same things in the market at the same times.
I thought Howe answered this well by noting that the bullion bank defendants
had issued the overwhelming majority of gold and interest rate derivatives
and essentially were themselves the markets for those instruments.
-- "The judge seemed almost obtuse in not understanding Howe's claim
that there was fraud in the BIS' forcibly redeeming the shares of its private
shareholders at less than fair value when there had never been any indication
to the private that their shares could be taken this way.
-- "One of the lawyers for the government asserted the government's
right, under the laws establishing the Federal Reserve Board and the U.S.
Treasury Department's Exchange Stabilization Fund, to trade in gold in a way
affecting gold's price. That is, he almost seemed to be claiming, on behalf
of the government, the right to do exactly what the lawsuit complains of,
without actually admitting that this was happening. (Whether he is right is
exactly the legal issue the suit seeks to settle.) Howe was excellent in
rebutting this claim. He argued that prior to 1974 Congress had fixed the
gold price, but since then has left gold's price to the market. Thus, Howe
said, any government trading in gold cannot constitutionally aim to fix the
price, and certainly not surreptitiously. (I thought Howe got by far the
better of this exchange, at least establishing a point worth litigating.
Unfortunately I was sitting on the wrong side of the courtroom. We'll just
have to wait to find out what the judge thinks.)
-- "Howe was just as effective in describing the unfairness of the
BIS' liquidating its private shareholders without recourse and without
arbitration. While the judge at first had wanted to skip argument on the
arbitration issue, considering it examined adequately in the legal briefs,
Howe managed to get his approval to make one point and then another and
another, and the effect was very strong politically -- it gave the impression
of ordinary small investors getting screwed by arrogant and powerful people.
This happened to be the last issue discussed, so Howe finished strong, the
other side weak.
"When it was over, the courtroom cleared out quickly, and Howe was
left alone at the counsel table packing his books and papers into his
briefcases. Forgive the editorializing, but I couldn't help but think of the
scene at the end of the trial in that wonderful movie, "To Kill a
Mockingbird," when Gregory Peck, playing the quietly heroic defense
lawyer, Atticus Finch, does the same thing, seemingly alone -- and yet he is
not alone, but rather watched by the oppressed people in the gallery with
awe, admiration, and respect for standing up against the most hateful and
vicious power. What I saw today was really not so different.
"I won't guess what will happen with this case; anything can. Maybe
the essence of what has happened today is that we could have lost the whole
case but didn't. (I spent some time later with Howe and his business
associate, Bob Landis, and, analyzing the day clinically, almost as a sport,
they seemed ready to be hopeful.)
"We still may lose the case on the technicalities in a few weeks and
should be prepared for that.
"But two things:
-- "Enough of the cursed cynicism that the courts are as rigged as
the markets, that there is no fighting the power. We know some things about
market rigging but there is no evidence that anything in court today was
rigged. We got a day in court if not quite yet OUR day in court. And for all
its faults this remains a country where one brave man pleading his own case
can summon the representatives of all the money in the world and put the
bastards in danger of having to answer for themselves.
-- "The lawsuit is an important front in our struggle for free
markets and honest dealing but it is not the only front, and, win or lose
here, our strategy and plan will be, in Churchill's words, KBO: Keep
buggering on. Thanks to GATA Chairman Bill Murphy and Howe and those who have
come to their assistance, we have discovered that the scheme against gold is
only part of a bigger scheme involving interest rates and currencies to
deprive the financial markets of any standards of value and to expropriate
the world for the benefit of certain Wall Street interests and to make the
world the slave of the U.S. dollar.
"This deeply shames Americans who understand it. That is why they
will continue to oppose it as best they can regardless of what happens in
court. It is an anti-imperialist cause and thus a great cause. And, as
Churchill said, 'When great causes are on the move in the world, we find that
we are spirits, not animals, and that something is going on in space and
time, and beyond space and time, which, whether we like it or not, spells
duty.'"
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