EIR Daily Alert Service, WEDNESDAY, JANUARY 31, 2018

WEDNESDAY, JANUARY 31, 2018

Volume 5, Number 22

EIR Daily Alert Service

P.O. Box 17390, Washington, DC 20041-0390

EDITORIAL

The New Paradigm Already Exists; Time To Act on Optimism!

Jan. 30 (EIRNS)—We are at a point where the New Paradigm of world development already exists. People in Western Europe and the United States may not know it, but the Old Paradigm has gone away. The New Silk Road is now the pre-eminent policy internationally, giving solid grounds for optimism and action.

Everywhere other than the Trans-Atlantic nations, there are strategic alignments underway. In East Asia, Japanese Prime Minister Shinzo Abe is actively working with Russia and China, on economic and peace projects. In Africa, Belt and Road Initiative (BRI) progress is dramatic, as furthered this month, in the annual first-of-the-year African tour by the Chinese Foreign Minister. Even in Europe, there are nations now fully engaged in Silk Road trade and infrastructure construction. In the Americas, south of the United States, there was a formal declaration by the nations at the Community of Latin American and Caribbean States (CELAC) summit this month, of commitment to work with China on the Belt and Road Initiative. Last week, even President Michel Temer of Brazil acknowledged the BRI momentum during his time at the Davos Forum.

“The New Paradigm is moving ahead in a very dynamic way,” Helga Zepp-LaRouche stressed today. “Americans should be optimistic that the United States can be moved.” With its “Campaign To Win the Future” 2018 Platform for the U.S. midterm elections, the LaRouche Political Action Committee is presenting the only solutions to the manifest problems of the U.S.: LaRouche’s Four Laws for economic recovery, and linking the U.S. to the BRI. This is so, regardless of what President Donald Trump may or may not say in Tuesday night’s State of the Union address.

Zepp-LaRouche pointed to a parallel case of a policy shift announcement coming at its own moment: that of the SDI, the Strategic Defense Initiative. Authored by Lyndon LaRouche, whose collaborators worked for years, including in Republican circles, for adoption of a new laser defense and economic policy in association with the Soviet Union, the LaRouche concept was not recognized at all by President Ronald Reagan in his State of the Union speeches. Then, as if suddenly, on March 23, 1983, Reagan called a special televised address on national security, and announced the SDI, proposing, as LaRouche had specified, that the United States and the Soviet Union work together to develop technology based on new physical principles to defend against ballistic missiles, stressing the resulting economic and peace benefits for all mankind.

Today, it is dreadfully clear that the alternative to the LaRouche “Four Laws” program, is chaos, if not war. All kinds of warnings are coming out about the imminent financial blow-out. Even Goldman Sachs has issued cautions to its own customers. The Dow Jones Index drop of 400 points today is an omen and sign to those who would worship the “markets.”

We are in a period of tumult, in all respects, but if sufficient people act with determination and courage, the Trans-Atlantic can be won to the New Paradigm. Senior statesman Lyndon LaRouche urged today: “So let’s do it!”

COLLAPSING WESTERN FINANCIAL SYSTEM

In the Shock Phase of the LaRouche ‘Triple Curve’—Soaring Rate of Debt To ‘Yield’

Jan. 30 (EIRNS)—Readings and warnings continue to come out about the imminence of the financial bubble bursting. Charts on what was headlined about the “The Next Financial Crisis” were publicized yesterday on Seeking Alpha, warning about what can be called the extreme stage of “system leverage.” Writer Lance Roberts reported that there is a “yield chase” underway, which is associated with “a massive surge in debt in the U.S.” since the last financial crisis, because of the impact of policies of “ultra-low interest rates.”

Roberts writes, “As shown, prior to the deregulation of the financial industry under Ronald Reagan, which led to an explosive consumer credit issuance, it required just $1.25 of total system-wide debt to create $1.00 of economic growth. Today, it requires $3.83 to create the same $1 of economic growth.” (Emphasis in the original.) The author continues, “This shouldn’t be surprising, given that ‘debt’ detracts from economic growth as the required ‘debt service’ diverts income from savings and productive investment leading to a ‘diminishing rate of return’ for each new dollar of debt.” A graph showing “Total System Leverage,” from 1966 to 2017 is displayed.

Roberts’ article was headlined, “The Fed Will Ignite the Next ‘Financial Crisis.’ ” His point is that the Federal Reserve has three or more rate hikes planned for 2018, which will trigger a 40-50% collapse in the financial markets and “would also unleash a host of related collapses throughout the economy as a rush to liquidate holdings accelerates.” Further, “It will be worse because it will be spread across the entire financial ecosystem. Pensions, welfare, markets, debt, real estate and savings.”

This bears out, in the extreme, what Lyndon LaRouche warned about years ago, as the shock wave and explosion, depicted in his “Triple Curve Typical Collapse Function,” when the phase is reached, where to get an apparent financial yield, the debt involved soars. LaRouche has proposed the answer to Armageddon, with Glass-Steagall, and all of LaRouche’s “Four Laws.”

EIR’s Paul Gallagher wrote this week that, “It is estimated that the U.S. Treasury will issue $1.42 trillion new debt in 2018, nearly triple the $550 billion in 2017. That, and pressure from a falling dollar, could make interest rates rise rapidly, the most likely trigger for the crash.”

Today, the Dow Jones Index did drop 400 points in the course of speculation, ending 314 down.

Italian Candidate Bagnai Takes On Draghi’s Complaint of Trump Putative ‘Dollar Manipulation’

Jan. 30 (EIRNS)—Economist Alberto Bagnai, a candidate on the Lega slate in the March 4 Italian general elections, blasted European Central Bank President Mario Draghi’s complaints against a putative “manipulation” of the U.S. dollar by the Trump Administration in an interview with TGCOM24 online media. Bagnai said, Draghi is “panicking” because he fears that “his toy is destroyed.”

Bagnai explained that the most probable cause for the relative weakness of the dollar vs. the euro is very banal: an “enormous” trade deficit vs. an “enormous” trade surplus.

But if we want to speak about currency wars, then “Italy, by being pegged to Germany through the common currency, is de facto, unwittingly waging a currency war against the United States.”

Wall Street and the euro system manipulate currencies all the time, Bagnai said, but now things have changed. In the United States “there are two souls: Wall Street is the financial soul and Main Street is the industrial soul. Hillary was the Wall Street President, connected to financial circles. Financial interests do like a strong currency because through a strong currency you attract capital, you become a safe asset…. European financial interests liked a strong dollar because with a weak euro, they managed to keep weaker countries alive and inside the euro cage.

“Then, the Main Street President came. Why is Draghi nervous, panicking? Because he is afraid that his toy is destroyed.”

Bagnai, however, warned against the financial bubble bursting: “True, the U.S. economy is currently enjoying a relatively healthy” condition—especially if compared with the Italian situation, “but it must be said that historically, this financial exuberance opens the way to a crisis period…. If we all agree that there is a bubble, then we must consider that in a while we will undergo a situation of financial instability.”

Since he announced his run for Parliament, Bagnai has been interviewed by numerous TV stations, definitely helping to raise the level of the election debate.

New Report: 54,000 Bridges That Americans Use 174 Million Times Daily Are ‘Structurally Deficient’

Jan. 30 (EIRNS)—The American Road & Transportation Builders Association (ARTBA) issued a report yesterday on the eve of President Donald Trump’s State of the Union address, on the sorry state of bridges (“Over 54,000 American Bridges Structurally Deficient, Analysis of New Federal Data Shows”). The analysis by its economists is derived from Federal data contained in the U.S. Department of Transportation’s 2017 National Bridge Inventory database. Some 54,259 American highway bridges are “structurally deficient,” it shows, on structures that “cars, trucks, and school buses cross these … compromised structures 174 million times every day.” One in three bridges (226,837) in the country is in need of repair, in addition to 17,726 bridges along the 48,000 miles of the Interstate Highway System. The ARTBA’s website lists the bridges by state and by congressional district.

At the current pathetic rate of repair or replacement, the ARTBA’s analysis reveals, it would take 37 years to remedy all of the deficient bridges, says ARTBA’s chief economist Dr. Alison Premo Black. In anticipation that President Trump’s State of the Union address will include a building program, Dr. Black says that an infrastructure package would have both short- and long-term positive effects on the economy, which currently loses $60 billion per year in just the trucking industry, in lost productivity and fuel just from traffic bottlenecks.

The ARTBA was created in 1902, to be “the consensus voice” of the U.S. transportation design and construction industry.

U.S. POLITICAL AND ECONOMIC

Sen. Mike Gravel Says Republicans Should Release the FISA Memo

Jan. 30 (EIRNS)—Former U.S. Senator Mike Gravel, a Democrat representing Alaska from 1969-1981, has said that Republicans on the House Intelligence Committee are cowards if they let the Executive Branch block release of Committee Republicans’ memo on illegal Federal surveillance of the Trump administration carried out in connection with the Foreign Intelligence Surveillance Act (FISA) and its related Court, reported the Washington Examiner yesterday.

Senator Gravel told the Examiner’s Steven Nelson that the congressmen should be willing to unilaterally release the classified documents if they believe that it is in the public interest, as he did in 1971 when he released the classified Vietnam War study known as “the Pentagon Papers.”

“The criteria for releasing anything is this: Is this something the people should know? If the Republicans feel this should be made public for the benefit of their constituents, fine, release it. The Democrats should do the same,” Gravel told the Examiner after the vote. He continued, “But, there is no argument to be made that this stuff is secret and it’s too important for the people to know,” provided it is done by people elected and sworn to protect the Constitution.

Republicans on the House Intelligence Committee yesterday voted to release the four-page memo. That started a five-day waiting period during which President Trump can object to the memo’s release.

Senator Gravel further said, “For the Congress to be a bunch of wimps and cowards, and defer to the Executive Branch because they don’t want to take any responsibility is the height of cowardice.”

Senator Gravel released thousands of pages of Pentagon documents exposing the failure of the Vietnam War policy in June 1971, by reading the documents that became known as the “Pentagon Papers” to his subcommittee on Buildings and Grounds. The Nixon administration challenged the release, but the U.S. Supreme Court upheld Senator Gravel’s action in 1972, in the case, Gravel v. U.S.This, Gravel told the Examiner, shows “There is no legal risk on their part for releasing information they feel the public should know.”

Former FBI Deputy Director Andrew McCabe Fired, Not Retired

Jan. 30 (EIRNS)—Deputy FBI Director Andrew McCabe was effectively fired by FBI Director Christopher Wray, when he “retired” yesterday. McCabe’s firing came after Wray viewed Rep. Devin Nunes’s now-famous memo in which McCabe’s role in illegal activities against President Trump is apparently referenced, and after Wray was briefed on the preliminary findings of FBI Inspector General Michael Horowitz concerning his investigation of FBI handling of the Clinton email probe.

Wray had insisted, prior to viewing the Nunes memo and prior to a briefing on the Inspector General’s preliminary findings, that he would not fire McCabe, but, instead, allow him to retire in March. It was the Horowitz investigation which unearthed the now-infamous text messages between former Clinton and Trump FBI case-agent Peter Strzok and his lover, FBI lawyer Lisa Page, which referred to an FBI “insurance policy” against Trump assuming the Presidency, an insurance policy discussed in a meeting in McCabe’s office.

Likewise, McCabe did not recuse himself from the Clinton investigation despite the fact that his wife received a huge campaign contribution from Clinton money man and general sleazeball, former Virginia Gov. Terry McAuliffe. McCabe attended meetings at which McAuliffe recruited Jill McCabe as a candidate. These meetings occurred at a time when both McAuliffe and Clinton were under FBI investigation, and McCabe was the number-two man in the FBI.

These are among the multiple grounds for dismissing McCabe, and it should be recalled that Senators Chuck Grassley and Lindsey Graham, both in the Judiciary Committee, intend that criminal charges must proceed against government leaders guilty of misdeeds in office.

Former FBI Director James Comey, himself fired earlier for malfeasance, tweeted his support to McCabe yesterday, for having “stood tall over the last 8 months, when small people were trying to tear down” the FBI.

Wray has appointed as acting Deputy Director in McCabe’s place, David Bowdich, a senior FBI official.

STRATEGIC WAR DANGER

‘Kremlin Report’ Lists 210 Russian ‘Adversaries,’ But Trump Clips CAATSA Claws

Jan. 30 (EIRNS)—Under the “Countering America’s Adversaries Through Sanctions Act” (CAATSA), the Trump Administration had 180 days to prepare a list of Russian people and entities for possible sanctions. The bill was reluctantly signed by President Trump in August, despite his public opposition to a law drawn up with the stated intent of preventing him from reestablishing friendly relations with Russia. Rather than see his veto overridden by an out-of-control Congress, Trump included in his “signing statement” that the legislation was “seriously flawed.”

Late yesterday, and just making the deadline, Steven Mnuchin’s Treasury Department issued a list, the so-called “Kremlin Report,” as required by the law. But rather than imposing any sanctions, the Trump Administration simply issued a list that included practically every member of the Putin government and every businessman worth over $1 billion. A Treasury official told BuzzFeed that the names of “billionaires” were taken from a Forbes list of the richest Russian citizens.

The CAATSA wording is that the report is required to identify “senior political figures and oligarchs in the Russian Federation, as determined by their closeness to the Russian regime and their net worth.” The law has instructions on how to assess all these people and their relation to President Vladimir Putin, and others of the political class. Trump complied with the letter of the law by producing the list—thus far, but no farther.

President Putin, speaking in Moscow at a campaign event today, said that it was clearly a “hostile step” in relations, but joked that he felt “slighted” that he was not included on the list. As for response, the President said that Russia would be guided by the proverb: “The dog barks, but the caravan rolls on.”

It looks as though Treasury “simply copied the Kremlin phone book” to assemble the names, said Senator Konstanin Kosachev, Chairman of the Foreign Affairs Committee of the Federation Council. Other Russian leaders issued strong objections, making the obvious point that the law and the list it required were intended to undermine U.S.-Russia relations.

The McCarthyite fanatics in the Congress went berserk. Rep. Eliot Engel (D-NY), the ranking Democrat on the House Foreign Affairs Committee, said Trump had “let Russia off the hook yet again. I’m fed up waiting for this administration to protect our country and our elections.” Senate Minority Leader Chuck Schumer (D-NY) not only objected to Trump’s not imposing more sanctions, but also denounced him for allowing Sergey Naryshkin, the head of Russia’s foreign intelligence service, who is currently under sanctions, to visit the United States last week—albeit Naryshkin’s purpose was to meet with DNI Dan Coats to collaborate in the war against terror. “We sanctioned the head of their intelligence and then the Trump administration invites him to waltz through our front door,” Schumer ranted, calling it an “extreme dereliction of duty by President Trump, who seems more intent on undermining the rule of law in this country than standing up to Putin.”

Syrian National Dialogue Congress Agrees To Set Up Constitutional Commission

Jan. 30 (EIRNS)—Despite apparent attempts at sabotage, the 1,510 delegates participating in the Syrian Congress on National Dialogue in Sochi, Russia agreed to establish a constitutional commission, which will include representatives elected at the Congress as well as from groups not in attendance. “[In] the new final declaration today you embraced the 12 principles, developed in the Geneva political process, that describe a vision of Syria that all Syrians should be able to share,” UN Special Envoy for Syria Staffan de Mistura said at the Congress’s closing ceremony, Sputnik reported. De Mistura stated that the delegates agreed that the commission will include members of the government in Damascus as well as “wide representation of the opposition delegations for drafting a constitutional reform.”

Russian Foreign Minister Sergey Lavrov told reporters afterwards that the Congress “approved the statement on the foundations and principles of the future national-state structure in Syria,” principles which are not revolutionary but rather the norms of international law. According to Lavrov, “this result of the creation of a constitutional commission will now be transferred to the UN in accordance with Resolution 2254.”

The U.S., Britain, and France had all also been invited to Sochi as observers, but had all declined to attend, because they saw the Congress as a Russian effort to supplant the Geneva process. This view has clearly been rejected by de Mistura himself, the mediator of the Geneva process.

Russian President Vladimir Putin earlier sent a message of unity to the conference, which was read out by Lavrov. “Your forum is called upon to reunite the Syrian people after the armed conflict that lasted nearly seven years, which has claimed the lives of hundreds of thousands of people and forced millions of citizens to leave their home country,” he stressed, reported TASS. “There is a good opportunity to meet the Syrians’ aspirations to end the fratricidal war, fully eradicate terrorism and return to normal life.”

Putin said that Syrians should jointly develop their vision of prospects to overcome the crisis and outline reforms in the country. “Now all the constructive forces of the Syrian society have a key task of developing a common vision of prospects to overcome the crisis and together outline the reforms that would enable citizens, regardless of their religious, ethnic background and social status, to feel safe and comfortable in their motherland,” the President said.

At the beginning of the day, Western media reports were portraying a state of chaos in Sochi, particularly with the refusal of the Turkish-backed Free Syrian Army delegation to leave the airport after seeing posters associating the Congress with Syrian government flags. They decided to return home, leaving a Turkish diplomat to represent them at the Congress.

Qadri Jamil, the leader of the Moscow Platform of the Syrian opposition, told reporters on the sidelines of the Congress that a “campaign of intimidation” was carried out against many of the delegates who attended. “They exerted pressure on us. When you asked me ‘who,’ I would ask you, who is not interested in the Syrian crisis settlement in a broader sense? There was a campaign of intimidation and threats ahead of the Congress against those who wanted to come here,” Jamil told reporters, reported Sputnik.

SCIENCE AND INFRASTRUCTURE

China Is Creating a Fusion Industry, Through Its Work on ITER

Jan. 30 (EIRNS)—China has completed the manufacture of a high-technology component for the ITER tokamak thermonuclear fusion reactor, and this week, it has been shipped to the construction site in France. Each of the ITER partners—the U.S., Russia, Europe, China, South Korea, Japan, and India—is responsible for an array of components for what will be the world’s largest tokamak fusion experiment.

In each country, ITER has presented technical challenges, especially in precision and scale, that have stretched its manufacturing capability. To China, its manufacture of the four steam generators just shipped to France, built upon its advanced nuclear capabilities, represents the ability to meet international standards for building future fusion devices. In comments to Global Times yesterday, Gui Liming, a nuclear safety expert at Tsinghua University, explained that the fact that the Chinese components have met the standards and been accepted by Europe for ITER, “represents China’s developments in the industry.” He said that now “Chinese enterprises engaged in producing devices for nuclear fusion are competitive with those of developed countries, including the U.S.”

China is looking at fusion, as not only a scientific challenge, but as a necessary energy source for the future, requiring a world-class manufacturing industry, which they are now starting to develop.

Africa-South America Submarine Cable To Allow Faster, Better, More Dense Communications

Jan. 30 (EIRNS)—The first submarine cable to establish a link between Africa and South America is expected to reach the coast of Brazil—in Fortaleza, Ceará State—in the first days of February, Angola Cables Chairman António Nunes said. The submarine cable known as SACS, for South Atlantic Cable System, stretching over 6,500 km, will allow countries of South America to communicate with Africa and Europe without having to go through the United States; and allow African countries to communicate with the United States via South America without having to go through Europe. “The SACS project represents a unique platform to build a South-South network on a global scale,” said Nunes.

The SACS submarine cable will have four fiber optic pairs with a capacity of 40 terabits per second (tbps). It will start operating in the third quarter of 2018 and will have a waiting time of 63 milliseconds, which compares with 350 milliseconds using the current Angola-Europe-Brazil route. The company also reports that construction of the Fortaleza data and reception center is on target to meet schedule deadlines.

OTHER

In Wake of China-CELAC Summit, Tillerson To Embark on Tour of Ibero-America

Jan. 30 (EIRNS)—Coming on the heels of the stunningly successful China-CELAC summit in Santiago, in which that grouping fully endorsed the Belt and Road Initiative (BRI), U.S. Secretary of State Rex Tillerson will embark on a tour of four Ibero-American and one Caribbean country beginning Feb. 2. On Feb. 1, he will give a speech at the University of Texas at Austin, on U.S. policy toward the region.

Then on to Mexico Feb. 2, followed by Argentina, Peru and Colombia, and completing his tour in Jamaica. In each of those countries, he will meet with the head of state or government, foreign ministers, and other cabinet ministers. In addition, he will meet with the heads of U.S. missions of neighboring countries. So, in Mexico, the heads of U.S. missions in every Central American nation will meet with Tillerson in an “informal” setting to raise issues of concern. Security matters, drug trafficking, organized crime and illegal immigration to the U.S. will be a key focus of discussions.

As Helga Zepp-LaRouche has insisted, the only way the U.S. can possibly deal with such issues, is by joining China in the Belt and Road Initiative to develop these impoverished regions economically. So far, Tillerson’s trip appears to be focused on geopolitics. Argentina, Peru and Colombia—nations that are friendlier to Wall Street than to the BRI—belong to the so-called Lima Group, which is completely allied with Washington in squeezing Venezuela. Tillerson is expected to emphasize how “successful” U.S. sanctions against Venezuela have been thus far, and press for more to force it to “return to democracy.”

According to a briefing given yesterday by two unnamed State Department officials, the trip will show that Tillerson—and the U.S.—are “engaged in the region,” and will lay the groundwork for upcoming conferences this year in which “U.S. leadership will be on display.” The first, the Summit of the Americas in April, taking place in Peru, may be addressed by President Trump, with a focus on “democratic governance” and the fight against corruption, according to this official. He insisted that Tillerson is “engaging with regional partners on this trip to promote a safe, prosperous, energy-secure and democratic hemisphere. We stand with the region as a steady, enduring partner.”

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