Premier's tall tale raises eyebrows

Premier Chang Chun-hsiung (張俊雄) told lawmakers yesterday that the Cabinet has never in the past year instructed the four government-run labor and pension funds to buy stocks -- a tall tale market watchers find hard to swallow.

When the TAIEX sags and the government moves to prop up the index, the Cabinet has the NT$500 billion National Stabilization Fund at its disposal.

Also in the Cabinet's quiver are the four government-run labor and pension funds -- and market watchers say the funds routinely buy shares to support the TAIEX.

"The Executive Yuan has never directed the four government funds to intervene," the premier insisted yesterday.

Chang's comments left many legislators and market watchers dumbfounded.

"It's simply not true," said Yophy Huang (黃耀輝), an associate research fellow at the Chunghwa Institute for Economic Research. "The DPP administration has been intervening in the stock market since around 8,200 points last year."

The government made a concerted intervention effort last November, when the DPP and opposition legislators were locked in a fierce battle over the Fourth Nuclear Power Plant. The four government-run pension and labor insurance funds were believed to be a part of the efforts.

But Minister of Finance Yen Ching-chang (顏慶章) said there was never an order for the funds to buy shares. "The finance ministry has never held meetings with the four government funds to prop up the stock market," he told lawmakers yesterday.

One legislator said that not only did the government intervene, it made a mess of the situation after deciding that the market's future shouldn't be guided by Adam Smith's invisible hand.

"During the past year ... the Executive Yuan has continued [the KMT's policy] of instructing the four government funds to intervene in the stock market, and that has generated huge losses for the four funds," KMT lawmaker Hsu Shu-po (許舒博) said yesterday.

Chang denied that he had ever given an order for the funds to intervene. "The four government funds operate according to their own guidelines," the premier said.

Not so, said Norman Yin (殷乃平), a banking and finance professor of National Chengchi University.

"It is all lies," Yin said. "The finance ministry may not have held meetings with the four government funds, but the ministry did use the telephone to instruct the four government funds to intervene in the market. Everyone in the market knows about it."

Huang said the Cabinet may be looking to shift blame for the hefty losses incurred by the funds. "The national treasury will be hard pressed to pay for the losses, and someone should be held responsible for these mistakes," Huang said.

Meanwhile, during yesterday's interpellation, the premier said that although he has spent a lot of time and energy on the nation's economy, his performance "has not been ideal" during his first year in office.

Chang noted that the nation has undergone political reform, a series of natural disasters and a changed world situation, including a continued sluggish economy over the past year.

He said he was grateful that during his year in office, the political situation remained stable and that the series of tests did not lead to the toppling of the Cabinet, as was the case in Japan, the Philippines and Indonesia.

He also said that the Cabinet has devoted a lot of time and energy to the economy and has also begun overhauling ailing financial institutions, although he conceded that performance in this area has also been less than ideal.