FRIDAY, JANUARY 29, 2016
Volume 2, Number 113
EIR Daily Alert Service
P.O. Box 17390, Washington, DC 20041-0390
U.S., European Corporations Are Far More Leveraged than in 2008—O’Malley Must Take the Lead in War on Wall Street
Jan. 28 (EIRNS)—Overleveraged companies in the U.S. and Europe, and the mountain of debt which is consuming their earnings, is far worse now than in 2008, before the last collapse of the Western financial system.
A Bloomberg News article Jan. 28 admits that “The $29 Trillion Corporate Debt Hangover” threatens the collapse of the entire trans-Atlantic system.
The report appears just as one of the world’s largest commodity and mining companies, Freeport-McMoRan, had its debt downgraded by four levels, well into the junk range, by Moody’s Investors Service. The company’s stock has dropped 80% in the past year. It will be difficult for Freeport to remain solvent without an investment-grade rating. In addition, Glencore, Trafigura and the other commodity giants require a great deal of borrowing and also have to guarantee borrowing by companies which are their customers. As for Freeport, it is also involved in increasingly difficult negotiations with Indonesia—from whose mines 15% of its global revenue derives—which now include Freeport trying to sell part of its operations to Indonesia at an inflated price.
Debt of “global companies rated by Standard & Poor’s reached three times earnings before interest, tax, depreciation and amortization in 2015, the highest in data going back to 2003 and up from 2.8 times last year,” according to S&P. Total debt at listed Chinese companies also reached a recent peak, but it was only a three-year high, not one exceeding the levels of the 2008 bank crash.
The bottom line: One-third of all companies listed by S&P internationally are failing to earn enough to cover their debt service, which is the formal definition of bankruptcy.
The latest sign of physical contraction was the December durable goods orders report from the U.S. Commerce Department, which showed a large 5.1% drop in orders, which fell for most of 2015.
Lyndon LaRouche on Wednesday announced that if presidential candidate Martin O’Malley focusses his campaign on his primary dedication to fighting Wall Street, imposing Glass-Steagall to bankrupt Wall Street speculators and restore the American banking system, then LaRouche will orient his support to that campaign, and that this will have a direct effect.
Hillary Clinton is a fraud, said LaRouche, her record is that of a fraud, since she capitulated to Obama. She’s a stooge for Obama. A vote for Hillary is a vote for Obama, for Obama’s killing, his wars, and his bail-out of Wall Street—and that can not be tolerated. Sanders is the same kind of thing, LaRouche said—he’s an opportunist who tries to patch something together to fool people.
Despite minor issues, O’Malley’s candidacy is the only thing that’s fit to be supported, said LaRouche. “He’s the only significant candidate, who so far has represented anything that fits the purpose of the United States. So, he’s the best we’ve got; we’ll go with the best we’ve got.”
Ischinger: NATO and Russia Need To Talk Face-To-Face, Not through a Megaphone
Jan. 28 (EIRNS)—Wolfgang Ischinger, chairman of the Munich Security Conference, said in a speech in Berlin, yesterday, that NATO and Russia need to talk to each other face-to-face. “It is important to talk to each other not only through a megaphone, and I think there is an urgent need for the Alliance to increase its already growing striving to revive the NATO-Russia Council,” he said, reported Sputnik. Ischinger added that the danger of escalation became only more evident after Turkey downed the Russian bomber over Syria.
He called on all the parties not to forget that both sides have in their possession thousands of nuclear warheads. “Only imagine if Russia, also by mistake, had reacted by downing an American jet. The problem should be treated seriously,” he concluded.
Turkish Killer of Russian Jet Pilot Appears in Istanbul
Jan. 28 (EIRNS)—In a confirmation that the Turkish government is protecting the murderer of the pilot of the Russian warplane that the Turkish Air Force shot down over Syria on Nov. 24, the murderer appeared at a funeral in Istanbul of another Turkish mercenary who was killed while fighting against the Syrian army in Syria. “I am here and there. I am going and returning. And now, I came for the funeral ceremony and I will go again,” said killer Alparslan Celik, speaking to reporters according to the Hurriyet Daily News. Celik is wanted by the Russian government.
Celik is the son of a former district mayor elected from the Nationalist Movement Party (MHP). Although the second largest opposition party, the MHP refused to form a coalition with the Republican People’s Party (CHP) and the People’s Democratic Party (HDP) because the latter is considered pro-Kurdish. Such a three-way coalition would have unseated the ruling Justice and Development Party (AKP). The key point is that although MHP is not an Islamic party it shares the same electoral base as the AKP. It has a pan-Turkic ideology and has the Turkish mafia-linked Grey Wolves as its youth movement; Celik is a member of the Grey Wolves.
In a not-unrelated development, prosecutors have issued their indictment against Turkish journalists Can Dundar Editor-in-Chief of daily Cumhuriyet, and Erdem Gul, Ankara bureau chief for Cumhuriyet, for reporting on intelligence agency MIT’s weapons transfers to anti-Syrian government terrorists; MIT takes its orders from the prime minister, who at the time of the report was Recep Tayyip Erdogan, now Turkey’s President. The journalists were indicted on terrorism charges on Nov. 26, 2015, over a story that trucks owned by the MIT, which were stopped and searched in southern Turkey in early 2014, were carrying weapons to opposition forces fighting against the Syrian government. The prosecution is asking for aggravated life sentences against the defendants.
The indictment accuses them of “gathering secret state documents for the purposes of political and military espionage,” “attempting to topple the government of the Republic of Turkey or attempting to stop either partially or totally the government from fulfilling its duties” and “deliberate support for a terrorist organization without being a member.”
President Recep Tayyip Erdogan and MIT are the plaintiffs in the case, which has drawn strong domestic and international condemnations.
This indictment could be seen as a slap in the face of Vice President Joe Biden, who met with Dundar’s family on his visit last week to Turkey, and made strong comments on lack of press freedom. The Erdogan government has arrested 67 journalists, mostly for “insulting” President Erdogan or reporting on corruption cases against AKP ministers which have been otherwise suppressed by the government. Since Erdogan takes his orders from U.S. President Barack Obama, who supports him, he feels he can do what he likes against the U.S. Vice President.
U.S. POLITICAL AND ECONOMIC
World Health Organization Finally Convenes Emergency Panel on Zika’s ‘Explosive Pandemic Potential’
Jan. 28 (EIRNS)—Margaret Chan, Director General of the World Health Organization (WHO), announced to that agency’s Executive Board this morning that she has convened an emergency committee of experts that will meet in Geneva on Feb. 1 to discuss the response to the worsening global Zika epidemic. The virus is “spreading explosively” in the Americas, Chan said, and the “level of alarm is extremely high.” Moreover, the suspected links between Zika and microcephaly in newborns (an abnormally small cranium which affects brain development) as well as other neurological diseases, “have changed Zika’s risk profile from a mild threat to one of alarming proportions.”
The emergency committee will advise Chan on how the WHO should respond to Zika, and recommend specific actions, including determining whether the virus constitutes a Public Health Emergency of International Concern (PHEIC). Notably, Chan’s action followed by a day the publication of an article in the Journal of the American Medical Association (JAMA), in which Dr. Daniel Lucey and Dr. Lawrence Gostin, both of Georgetown University’s O’Neill Institute for National and Global Health Law, criticized WHO for not having already convened the emergency committee, given Zika’s “explosive pandemic potential.” The two experts recalled the WHO’s delayed response to the Ebola outbreak, which “cost thousands of lives.” Dr. Lucey told NBC News that “it’s past time to act…now, just like it was with Ebola.” Many other experts also criticized WHO’s non-response.
The United States should play a key role in the response to Zika, internationally as well as dealing with a real domestic threat. Don’t expect much from Obama. The Washington Post reported today that Anthony Fauci, director of the NIH National Institute of Allergy and Infectious Diseases, who was one of several experts who briefed President Obama yesterday, said “it is unlikely that we will have a major outbreak of Zika in this country.”
Others disagree. “I think we’re in for real trouble in the United States,” argues Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine in Texas. The existence of stagnant water sources throughout the Gulf Coast, he said, makes that region an ideal breeding ground for disease-carrying mosquitoes all year long. Laura Harrington, chair of Cornell University’s entomology department, notes that Aedes albopictus, the Asia Tiger mosquito which can transmit Zika, is present from Florida to Connecticut and as far west as Illinois. Even though the Aedes aegypti mosquito has a more limited geographic range, it is the primary vector for Zika’s transmission. Thus, “there are many parts of the United States that are vulnerable because of where the mosquito populations are,” Harrington concluded.
COLLAPSING WESTERN FINANCIAL SYSTEM
Deutsche Bank’s Big Black Holes—the Investment Branch and Legal Cases
Jan. 28 (EIRNS)—Deutsche Bank had its annual shareholder meeting, featuring a lot of crisis discussions: The investment branch of the bank has made a net loss of €2 billion in 2015. This is very bad news for CEO John Cryan (a British investment specialist coming from Man Capital), whose restructuring plans for the bank envisage an even-higher emphasis on investment activities in the future, at the expense of the classic deposits branch. Cryan wants to sell Postbank, because it does not yield the profits which he needs in order to compensate for the losses in investment banking. Also, the bank’s Chinese operation at Hua Xia Bank is being sold for about €3 billion.
Cryan’s emergency restructuring strategy will involve the axing of 9,000 jobs (nearly 10% of the entire workforce) and 200 offices in Germany, at the cost of €1 billion. Cryan’s one big problem is that investors do not have much confidence in his strategy—since he took over as CEO last summer, the bank’s shares have lost 30% in value. The bank’s bonus program will be slashed now—it won’t do any material good, but aims at making a good impression.
The other big problem that Cryan has, is inherited from his CEO predecessors: The bank had to spend more than €12 billion in legal cases since 2012, and an end to that is not in sight. “Too-big-to-be-rescued”? The many problems of Deutsche Bank may add up to being too big to steer the bank back into safe waters.
THE NEW GLOBAL ECONOMIC ORDER
Obama Administration’s Lies about Trade through South China Sea Exposed
Jan. 28 (EIRNS)—Despite Obama’s lying claim that the South China Sea is of great strategic importance for U.S. trade, the fact is that nearly all the trade through the South China Sea is with China. Peter Lee, writing in the Asia Times on Jan. 27, noted that the website MarineTraffic shows clearly that the small proportion of shipping traversing the South China Sea which is not going to China goes to Japan and South Korea, and yet most of those two nations’ shipping passes through the Lombok Strait in Indonesia, passing east of the Philippines, bypassing the South China Sea. If Japan and South Korea were forced to bypass the South China Sea altogether, it would mean a relatively small additional expense to shift Malacca Strait shipping (which would pass through the South China Sea) to the Lombok Strait.
Plus, writes Lee, “Vietnam, Indonesia, Taiwan, and the Philippines are largely served by coast-hugging routes outside the P.R.C.’s dreaded Nine-Dash-Line,” a fact which is clearly shown in the MarineTraffic shipping density charts.
In other words, as Lee writes, “the only major power with a vital strategic interest in Freedom of Navigation in the South China Sea is the People’s Republic of China. And the powers actually interested in impeding Freedom of Navigation down there are pretty much everybody else, led by the United States.”
Russia Gets Green Light To Build Two More Nuclear Reactors at India’s Kudankulam Power Plant
Jan. 28 (EIRNS)—India’s Atomic Energy Regulatory Board (AERB) has issued a go-ahead to Russia’s Rosatom to start work on two more 1000 MW VVER nuclear reactors at Kudankulam. Russia already set up the first unit at Kudankulam last year and the second unit is getting ready to be commissioned. R.S. Sundar, the head of the Kudankulam Nuclear Power Plant (KNPP), told TASS: “For the third and fourth units, the AERB has given its nod for taking up site excavation work. Site excavations for the two units would commence in a few weeks. Once the excavation is completed, the first pour of concrete for the reactor would take place within a year from now.” If the current pace of construction work is maintained, the new blocks will be placed into operation in 2020-2021.”
According to Sundar, India’s total cost for the first two units was close to $2.74 billion. However construction of the Units 3 and 4 will cost India about $6.3 billion, Sundar said.
The KNPP is being built with Russian technical assistance under the inter-governmental agreement signed in 1988. In 2014, Russia and India signed a general framework agreement for construction of the second stage, including the third and fourth units. The “road map” for cooperation in nuclear energy between India and Russia envisages the construction of 15 nuclear power units in India, including the four units at the Kudankulam site.
SCIENCE AND INFRASTRUCTURE
France To Help India To Put a Lander on Mars
Jan. 28 (EIRNS)—During French President François Hollande’s Jan. 24-26 visit, India and France pledged cooperation in India’s planned 2020 mission to put a lander on Mars. France’s National Center for Space Research (CNES) has signed a letter with the Indian Space Research Organization (ISRO) to participate in the Mars orbiter mission. If France and India together succeed in putting a lander on Mars, they would be only the second entity after the U.S. to have achieved such a feat.
In addition to the Mars program, India and France signed agreements for a future Earth observation satellite and putting French Argos-4 data collection payload in the Oceansat-3, which may be launched in 2018 to provide continuity of data for already established services in the area of oceanographic applications. The Earth observation project is to have a joint thermal infrared mission, the Deccan Herald reported on Jan. 25.
“After India’s Mars orbiter, the next step has to be a lander. A lander on Mars is not easy, but it will be interesting to undertake,” NDTV quoted Jean-Yves Le Gall, president of CNES, as saying. India had successfully sent its spacecraft, Mangalyaan, in 2014 to orbit around Mars. The Mangalyaan has been orbiting Mars over 15 months and is presently at a distance of 200 million km from the planet Earth.
India’s space collaboration with France is 52 years old and together they have developed small satellites, Earth system science and weather satellites. India had been also a valued customer for France’s Arianespace and in 2013, Arianespace had launched India’s first exclusive defense satellite GSAT-7 from Kourou spaceport in French Guiana, giving a major push to the country’s maritime security.