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EDITORIAL

LaRouche to O’Malley: Stick To Your Core Message and Be Bold! –

Jan. 27 (EIRNS)—Lyndon LaRouche, in discussion with his LaRouchePAC Policy Committee today, delivered some powerful advice to Democratic presidential candidate Martin O’Malley, who has earned the hatred of Wall Street by pushing for the immediate reinstatement of Glass-Steagall, the convening of a new Pecora Commission to probe the serious crimes of Wall Street executives, and other measures in the spirit and tradition of Franklin Roosevelt’s emergency 100 Days program.

LaRouche urged O’Malley to stick to his straightforward focus on the Wall Street menace and his action plan for taking down Wall Street. LaRouche described O’Malley, the former Baltimore Mayor and Maryland Governor, as the only candidate of significance who has said anything that fits the purpose of the United States. “He’s the best we’ve got at this point in time,” LaRouche declared. LaRouche candidly noted that O’Malley’s only real weakness is that he does not yet see himself as a leading candidate, and he believes he is short of the needed support to emerge as the Democratic nominee. “He is not certain he has the authority to shoot out as a leading candidate,” LaRouche observed.

LaRouche emphasized that the two other Democratic presidential candidates—Hillary Clinton and Bernie Sanders—are unacceptable. Hillary Clinton, LaRouche noted, has been going downhill ever since her capitulation to President Barack Obama. Her record, from that point on, has been a fraud. LaRouche described Sanders as an “opportunist,” who will patch some policies together to fool people, but who, in the end, is not credible.

“If those two other candidates are dumped, as is both appropriate and likely, who is left? O’Malley,” LaRouche said. “The key objective is to get O’Malley to see that he has to step in now, and take the position as a leading candidate for the presidential nomination of the Democratic Party right now—because the other two candidates are worthless.”

LaRouche made clear that if O’Malley takes that initiative, he can create the conditions for his success, and under those circumstances, he will have LaRouche’s full backing. “The other choices are a farce,” LaRouche reiterated.

LaRouche noted that his own name and history are well known among leading political circles and leaders within the American population. This is a wild card factor in this election.

O’Malley will certainly go further by taking this bold approach, and by sticking to the core issue that is also on the minds of the vast majority of Americans: Sink Wall Street.

LaRouche added that, throughout the trans-Atlantic region, there is such a mountain of toxic debt that it can never be paid, it should never be paid, and it must be immediately cancelled altogether. O’Malley’s call for immediate restoration of Glass-Steagall is precisely the needed measure. “Then you can do what FDR did: Issue Federal credits to create millions of productive jobs—with not a penny of obligation to Wall Street attached.

COLLAPSING WESTERN FINANCIAL SYSTEM

China Warns Soros on Currency War: ‘You Can’t Succeed—Ha, Ha!’

Jan. 27 (EIRNS)—At the World Economic Forum meeting in Davos, Switzerland last week, and in an interview with Bloomberg News, currency speculator George Soros announced, “We are repeating [2008],” and pointed to China as the root cause. “It’s serious. And the Chinese left it too long to address the changeover in the growth model that they have to adopt from—investment and export-led, to domestic-led. So a hard landing is practically unavoidable.” China has over $3 trillion of foreign exchange reserves, and this is “one of the sources of deflation; the other is oil and raw material prices, and the third is competitive devaluation, as three causes of deflation. The world hasn’t faced a deflationary environment since the 1930s … and we just don’t know how to handle it.” Bloomberg reported that Soros was betting against all Asian currencies.

Soros no doubt doesn’t face it, but Franklin Roosevelt did, despite financier enemies of Soros’s ilk.

The Chinese, who are financing infrastructure all over the world through the One Belt, One Road program, found the threats of Soros, the idiot with the reputation of “breaking the Bank of England,” laughable, and responded, with a “characteristically hilarious” op-ed yesterday, as Zero Hedge news site dubbed it, in China’s major newspaper People’s Daily, ridiculing Soros for “Declaring War on China’s Currency? Ha Ha.”

“Soros’s war on the renminbi and the Hong Kong dollar cannot possibly succeed—about this there can be no doubt,” the People’s Daily says, and proceeds to call Soros “the financial crocodile,” and blame him for “increasing volatility in already unstable financial markets.”

Beijing takes Soros’s reference to “a hard landing” and betting against Asian currencies to mean that he is shorting the yuan and the Hong Kong dollar, Xinhua warns, “Reckless speculations and vicious shorting will face higher trading costs and possibly severe legal consequences. And just as proved in the yuan exchange rate case, the Chinese government has sufficient resources and policy tools to keep the overall economic situation under control and cope with any external challenges.” Zero Hedge notes the irony that Soros himself actually echoed Xinhua’s statement in the interview that China appears to be referencing; Soros said, “China can manage it. It has resources and greater latitude in policies, with $3 trillion in reserves.” China’s sensitivity to suggestions of a steeper RMB devaluation is understandable, Zero Hedge says, because capital flight can be driven by perceptions and panic such as Soros aims to incite.

Senate Democrats Urge Debt Restructuring for Puerto Rico

Jan. 27 (EIRNS)—Speaking from the Senate floor yesterday, Minority Leader Harry Reid (D-NV) announced that the entire bloc of Senate Democrats had signed a letter to Majority Leader Mitch McConnell (R-KY), urging bipartisan cooperation to pass legislation that will address Puerto Rico’s desperate economic and humanitarian crisis.

Two days before Puerto Rico’s government advisors will sit down with bondholder representatives and present the Commonwealth’s restructuring proposal for its $72 billion in debt, 44 Democrats and 2 Independents called on Republicans to finally address the deepening crisis affecting 3.5 million American citizens on the island, noting the devastating effect of Congress having failed to do so in the 2016 Omnibus Appropriations Bill.

A responsible solution, the letter reads, “must allow Puerto Rico to restructure a meaningful portion of its debt,” although it stipulates the end of March timeframe set by House Speaker Paul Ryan as the deadline for producing a plan for the island. This is far too late to respond to a crisis which the letter admits is of a “catastrophic” nature. Gov. Alejandro García Padilla has already indicated that a number of payments due between now and July cannot be made, and two bond insurers have filed legal suits against the Governor and several top officials. Litigation could become a costly nightmare for everyone involved.

Until 1984, when Congress “inexplicably excluded it,” Puerto Rico was included in Chapter 9 of the U.S. Bankruptcy Code, the letter notes. “We urge you to commit to working with us to swiftly enact legislation to give Puerto Rico access to appropriate restructuring tools.” Reid himself had argued from the floor that any solution that doesn’t grant the Commonwealth the ability to restructure its debt “would be an abject failure.”

Spain’s Bankia Bank Is in Trouble, Again

Jan. 27 (EIRNS)—Spain’s Bankia bank is again in trouble, in the wake of a new court decision that it must pay back thousands of small investors. Bankia was taken over by the government’s Orderly Bank Restructuring Fund (FROB) at the cost of €22 billion in May 2012—less than a year after it began to sell shares on the stock exchange. It is a very likely candidate for a bail-in. It was created by the merger of seven savings banks, including Caja Madrid, all of which suffered huge losses when the Spanish real estate bubble burst.

The Supreme Court ordered Bankia to pay back preferred share investors, most of whom are small investors. The court found that the brochure advertising the bank’s stock market launch contained “serious inaccuracies” regarding the true state of the lender’s finances. Holders of these complex financial instruments took huge losses on their investments. Money-back claims now total €819.2 million. There are apparently other cases like this, which the bank could lose, and Bankia has already put aside more than €1.8 billion for this contingency.

The Bankia story has immediate political implications. Rodrigo Rato, a former Partido Popular government official, who headed both Caja Madrid and Bankia with which it was merged, is currently the target of several criminal investigations in connection with his tenure at both lenders.

Now Rato has become embroiled in a new probe. In a separate corruption case also affecting the Partido Popular, 24 people were arrested in the Valencia region in connection with a bribes-for-contracts investigation; in another case former Partido Popular Agriculture Minister Miguel Arias Cañete, now on the European Commission, is under investigation over a corruption scandal at Acuamed, an Agriculture Ministry agency responsible for development of the Mediterranean river basin.

These cases are add-ons to previous corruption cases that have hit the right-wing People’s Party. The new revelations are making it even more difficult for the PP find a partner to try to form a government following the December elections in which party lost its absolute majority.

STRATEGIC WAR DANGER

U.S. European Command Wants More Troops To Target Russia

Jan. 27 (EIRNS)—U.S. European Command released a new theater strategy document yesterday that identifies Russia as the number-one threat to Europe and warns that the U.S. troop drawdowns of the past 25 years put the region’s stability at risk. “Russia is presenting enduring challenges to our allies and partners in multiple regions; therefore, it is a global challenge that requires a global response,” the report says. Tackling that challenge will require EUCOM to work carefully with other military components to ensure that “collective DOD [Defense Department] deterrence efforts are synchronized and achieve the desired effect without causing unwarranted escalation or provocation.”

Defense News reports that despite this Russian “aggression,” the United States has been reluctant to divert more troops to Europe because of new crises that keep cropping up in the Middle East and Asia. Yet EUCOM’s new strategy, the Defense News report continues, warns that “fully addressing” Europe’s security challenges “and their long-term implications requires a reformulation of the U.S. strategic calculus and corresponding resourcing levied towards Europe,” the report said.

The EUCOM report, which bears the signature of Gen. Philip Breedlove, the commander of both EUCOM and NATO, unabashedly advocates the permanent stationing of troops in Eastern Europe in place of the current rotational presence. “Reduced U.S. forward presence and degraded readiness across the services are inhibiting the United States’ ability to favorably shape the environment,” it says. “USEUCOM cannot fully mitigate the impact felt from a reduction in assigned military forces through the augmentation of rotational forces from the United States,” it goes on. “The temporary presence of rotational forces complements, but does not substitute for an enduring forward deployed presence that is tangible and real.”

Since the bulk of U.S. forces present in Europe on a rotational basis are located in the Baltics, Poland, Hungary, and Romania, this would seem to be an outright call for the permanent stationing of U.S. troops in Eastern Europe. Not only would such a U.S. troop presence violate the NATO-Russia Founding Act of 1997—which some NATO member governments still regard as in effect—Russia would also find it a provocation.

U.S. POLITICAL AND ECONOMIC

Kerry Strikes Out in Laos, Cambodia, and China

Jan. 27 (EIRNS)—The headlines on John Kerry’s three-stop tour of Asia this past week—Laos, Cambodia, and China—indicate a general failure to move Obama’s agenda in Asia in preparation for Obama’s “Command Summit” in Sunnylands, California, with all the heads of state from the 10 ASEAN countries on Feb. 15-16. Of course, Kerry often negotiates more seriously with other nations, behind his official task of representing Obama—which is to be hoped for in Asia as well.

“U.S. Faces Challenges as It Seeks To Make Inroads in Laos,” writes Voice of America (VOA); “Kerry Fails To Sway Cambodian Leaders on South China Sea,” writes Reuters; and “China Firm against Sanctions-Only Approach toward N. Korea,” reports Yonhap.

Kerry was officially aiming at getting a unified ASEAN policy against China in the South China Sea dispute ahead of the California summit. But VOA quotes Nicholas Thomas, a professor in Hong Kong, that “One of the things that I guess Kerry might get out of the visit is actually a sense of how strongly Laos will probably oppose any decisions on the South China Sea issue.” Thomas then reports on China’s commitment to building up agriculture, rail connectivity, and other infrastructure in Laos.

Likewise in Cambodia: “U.S. Secretary of State John Kerry met Cambodian leaders on Tuesday but failed to secure their commitment to a more robust stance with Southeast Asian nations against China’s pursuit of territorial claims in the South China Sea,” according to Reuters. Foreign Minister Hor Namhong said after meeting Kerry, “We want it open to negotiations in the future between countries who made claims in the South China Sea,” which is also China’s view, rather than allowing outside intervention from the U.S., from ASEAN, or from the international courts.

In China, Foreign Minister Wang Yi responded to Kerry repeating Obama’s call for more sanctions against North Korea: “Sanctions shouldn’t be an objective itself,” he said, and reiterated Beijing’s three principles—denuclearization of the Korean Peninsula, maintaining peace and stability on the peninsula, and resolving it peacefully through dialogue.

Obama wants China to reduce its oil shipments to North Korea and stop importing North Korean raw materials. China wants peace and development.

Meanwhile, Soros’s Human Rights Watch is in full gear, denouncing Obama’s invitation to such leaders as Thailand’s Prime Minister Prayuth Chan-Ocha and Cambodia’s Prime Minister Hun Sen as leaders who “deny basic freedoms, and use intimidation, torture, and unlawful violence to maintain their hold on power.” HRW’s open letter to Obama of Jan. 19 even said that Prayuth and Hun Sen should be excluded from the United States under Obama’s 2011 Presidential Proclamation barring entry to serious human rights violators. It is certain that the Proclamation applies to Obama himself.

THE NEW GLOBAL ECONOMIC ORDER

China Signs Contracts To Build Floating Nuclear Power Stations

Jan. 27 (EIRNS)—China has taken another step in its plan to build floating nuclear power stations. On Wednesday, Xu Dazhe, Chairman of China’s Atomic Energy Authority, told a press conference that “We have plans for floating nuclear power plants, which will be subject to strict and scientific assessments. China is devoted to building itself into a maritime power and so we will definitely make full use of ocean resources.” Xu added that while China currently has 30 nuclear reactors, with a capacity of 28.3 gigawatts, another 24 reactors capable of generating 26.7 GW are under construction.

The announcement follows the signing of a strategic cooperation agreement between the China General Nuclear (CGN) and the China Shipbuilding Industry Corporation (CSIC), China’s largest shipbuilder. The agreement was signed in the presence of CGN chairman He Yu and CSIC chairman Hu Wenming by CGN deputy general manager Tan Jiansheng and CSIC deputy general manager Qian Jianping, according to World Nuclear News.

CGN issued a statement that the agreement was to “jointly promote cooperation on nuclear power offshore platform projects.”

The project would use CGN’s ACPR50S reactor design, which was approved by China’s National Development and Reform Commission (NDRC) on Dec. 30. CCGN is working on a demonstration ACPR50S reactor, and is expected to begin construction of the floating reactor next year, it said, with electricity generation to begin in 2020. The reactor will have a capacity of 200 MWt (60 MWe) and can be used for supplying electricity as well as heat, and for desalination of seawater. It can be used on islands or in coastal areas, or for offshore oil and gas exploration. CGN also said they have designed two concepts for marine nuclear power platforms. One would be a floating platform; the other would be a submersible nuclear power plant.

Earlier this month, CGN signed a strategic cooperation framework agreement with China National Offshore Oil Corp. to cooperate in the development of nuclear technology for use in offshore oil fields.

In a related development, China National Nuclear Corp. (CNNC) recently announced plans to build a demonstration floating nuclear power plant based on its ACP100S small reactor by 2019. CNNC’s Nuclear Power Institute of China subsidiary has completed a preliminary design for this project as well as “all the scientific research work.” The project is part of China’s 13th five-year plan for 2016-2020.

Wall Street Journal: Kra Canal Is Part of China’s Silk Road—If U.S. Does Not Subvert It

Jan. 27 (EIRNS)—The Wall Street Journal’s Tim Maverick today ran a column today called “A Thai Canal To Be Part of China’s Silk Road.” This analysis does not reporting anything new, but presents an optimistic view that the Asian Infrastructure Investment Bank (AIIB) is designed to construct such projects and that “sooner or later the Thai government will give a China-led project a thumbs-up. The economic opportunity to become a regional maritime center … is going to be too good to pass up. And China is patient enough to wait for Thailand’s approval.”

The article presents the tremendous benefits of the Kra Canal, in time, money, and development priorities for the entire region. These include the fact that Vietnam is building a major port at its southern-most tip (Hon Khoai Port), built by Bechtel with U.S. Exim Bank financing. This port is directly parallel to the Kra Canal.

Maverick also makes clear that it is the Obama Administration which is trying to subvert the project, including “intense diplomatic pressure from the United States” on Thailand against striking any deal with China to proceed.

SCIENCE AND INFRASTRUCTURE

‘How Nuclear Fusion Could Unlock Thailand’s Energy Dilemma’

Jan. 27 (EIRNS)—In an op-ed with the above title, a wonderfully optimistic article appears in today’s The Nation of Thailand, by John Draper and Peerasit Kamnuansilpa (who are not further identified). They report, first, that the Thai Ministry of Energy’s Integrated Blueprint calls for up to 5% of the country’s energy to be generated through nuclear power by 2036. But fusion has many advantages beyond fission, they say, and although experimental ITER tokamak is slated to be completed only in 2019, and there will be steps needed after that to produce commercial-scale power, there are other, promising smaller projects underway around the world, which they call “low-end.”

The authors review a few of the promising experiments, with some of them expecting to achieve at least a proof of principle in the 2020 timeframe. They correctly point out that some of these concepts were explored in the past, and the new work is building on that. Thailand must get ready for the fusion era, they say, and point out that Malaysia’s national investment fund, Khazanah Nasional Berhad, has invested in General Fusion’s magnetized target fusion project (under development in Canada).

“Thailand can do better,” they say. “It can provide research grants for Thai universities and commercial partners to build their own fusion reactors.” For the skeptics, they point out that Thailand has been safely operating fission research reactors (the first going back to 1962 and Atoms for Peace), and that “Thailand, by developing fusion reactor technology, will be in a position to capitalize on a tokamak reactor when the design becomes commercially available.” They point out that Thailand’s neighbors are “already ahead of us in terms of research, development, and innovation. Simply put, long-term returns on the research and development are worth the investment, whether or not low-end commercial fusion is feasible.”

The authors describe such an initiative as “embracing an entirely new human development paradigm.”

OTHER

Lavrov Tells Press Conference, ISIS Is in Georgia

Jan. 27 (EIRNS)—During his press conference, yesterday, Russian Foreign Minister Sergey Lavrov indicated that there is evidence that the Islamic State is operating in Georgia’s Pankisi Gorge. “We are getting reports that IS militants use this remote area to train, rest and replenish their reserves,” Lavrov said. He added that it hasn’t been possible to open the borders, since a visa regime was introduced between Russia and Georgia back in 2000, largely because the “terrorist threat coming from the Pankisi Gorge has not faded.”

Not surprisingly, the Georgian authorities deny this. “In regard to the Pankisi Gorge, Minister Lavrov made a tendentious statement, as Georgian authorities fully control this region,” the Georgian Prime Minister’s Special Envoy on Russian Affairs Zurab Abashidze told journalists, as quoted by Interfax. He did admit that as many as 30 locals have left to join ISIS and fight in Syria.

That ISIS might, indeed, have a presence in the Pankisi Gorge area, where the population is mostly ethnic Chechens, is not so far fetched, however. Numerous news reports over the past year have indicated the draw that young Chechens living in the Pankisi Valley feel towards the war in Syria. A lengthy profile, published by McClatchy News last September, reported that one of ISIS’s most famous commanders in Syria—Abu Omar Al Shishani—Omar the Chechen—is a native of the Pankisi Valley. Al Shishani, born Tarkhan Batirashvili in 1986, served in the Georgian army from 2006-2010, where he was the beneficiary of U.S. training programs. His exploits in Syria have since had an outsized effect on the Transcaucasus region in terms of recruitment of fighters to fight for ISIS in Syria. According to the McClatchy report, U.S. and Georgian intelligence estimates that 150-200 young Georgian men have left the Pankisi Valley to fight in Syria, out of a population of only about 10,000 people.

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