Volume 2, Number 118

EIR Daily Alert Service

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


A Unique and Unprecedented Turning-Point in Human History

Feb. 4 (EIRNS)—We are standing at a unique and unprecedented turning-point in history; not in the current decades or the past few years, but in fact history has moved into a new phase in the past several days. No one yet knows what it will bring, whether for much better or for much worse; we must see to it that it is much better.

Just days after U.S. Defense Secretary Ash Carter presented a defense budget proposal which is properly described as preparation for World War III, Turkey today refused to allow Russia to exercise its right under the Open Sky Treaty to fly over the Turkish border area with Syria, where, Russian officials announced, they had credible evidence that Turkey’s President Erdogan, Obama’s closest friend in the region, is preparing an invasion of Syria. Such an invasion would not only be a clear violation of international law, but could easily lead to a military confrontation with Russia and spark global war.

Only last week Obama sent a warship into Chinese territorial waters, and announced possible joint patrols of the South China Sea with the Philippines, where Obama is in the process of setting up eight or more advanced military bases as part of his preparation for war on China.

Even the people who are making the plays, don’t know what the plays are going to be, Lyndon LaRouche said today, speaking of the decision that has been made to go to war against Russia and China.

And yet the major Western banks, led by Deutsche Bank, which hold the largest derivative portfolio (gambling debts) of the world’s banks, are in “free fall,” facing collapse literally any day, while the once great scientific establishment in the U.S. has been dismantled, especially since Obama shut down the space program.

“The development of the space program was the development of man’s ability to shape the destiny of the planetary system,” LaRouche said. “With mankind’s intelligence, its intelligent role in dealing with the opportunities and challenges otherwise which far space represents …, are actually representations of principles which create and improve the universe. And therefore, it’s the development of the mental powers of creativity of that nature, which defines the real significance of mankind as such. Without that, there is nothing; there is not something that is given to us, automatically; like something thrown down in the street. These things which are creative, were created by the minds of persons, individuals; and those individuals were individuals who created the access to understand how the universe works. So, the genius lies in the universe; not in the individual person. It lies in the role of the individual person to do the work of building up the universe.”

John F. Kennedy once said, “Man, in his quest for knowledge and progress, is determined and cannot be deterred. The exploration of space will go ahead, whether we join it or not, and it is one of the greatest adventures of all times, and no nation which expects to be the leader of other nations can expect to stay behind in the race for space.”

Indeed, the fact that the trans-Atlantic region, dominated by the British Empire, is now nothing other than an impotent rust-bucket, is summed up in the fact that it is none other than Barack Obama who cancelled the U.S. space program shortly after coming into office. Meanwhile, China has forged ahead in space, and is right now inspiring its 1.4 billion people with the prospect of the future first (robotic) landing on the far side of the Moon,—of which man has only had furtive glimpses so far—in all of human history. Now Americans will not succeed in anything unless they take inspiration from Russia and China,—regardless of what anyone might say about this.


Russia: Turkey Preparing To Invade Syria

Feb. 4 (EIRNS)—Turkey, yesterday, blocked a Russian crew from flying an observation flight over Turkey under the Open Skies Treaty, a treaty that allows participating countries to observe military activities in other countries of concern to them. This morning, Russian Defense Ministry spokesman Maj. Gen. Igor Konashenkov, tied this Turkish refusal to evidence that Russia says shows that Turkish troops are in the midst of preparations to invade Syria. Konashenkov reported that the Russian mission was to be flown over areas near the Syrian border and over bases where NATO forces are congregating, but Turkey offered no explanation for the cancellation.

“Last year Western countries conducted 32 observation flights over Russian territory on the routes designated by them within the Treaty on Open Skies,” Konashenkov said, according to the statement posted in the Russian Defense Ministry website. “Turkey conducted four of them, including two together with U.S. military officials.”

“The Russian Defense Ministry regards these actions of the Turkish party as a dangerous precedent and an attempt to hide the illegal military activity near the Syrian border. Moreover, the Russian party has reasonable grounds to suspect intensive preparation of Turkey for a military invasion of the territory of a sovereign state—the Syrian Arab Republic,” Konashenkov went on. “The Russian Defense Ministry has presented to the international community the incontrovertible video evidence which shows Turkish self-propelled artillery shelling Syrian inhabited areas in the north of Latakia.” Konashenkov stressed that Russia has “intensified” its intelligence collection efforts all over the region. “That’s why, if someone in Ankara thinks that the prohibition of Russian observer flight allows them to hide something, it is unprofessional.”

Konashenkov went on to show satellite images of the Turkish-Syrian border checkpoint near Sarmada in Reyhanli.

“Terrorists, who captured Aleppo and Idlib in the northwest of Syria, are supplied with weapons and militants through this checkpoint from the territory of Turkey, mainly at night,” he said. Konashenkov showed the border crossing on Oct. 26, 2015, which was generally empty during the day, he said. The second image, taken on Jan. 30, showed that the crossing facility had been expanded and was now more heavily used. During peacetime, this might show expanded trade between two countries, but “during wartime, transport infrastructure is prepared in such a way on the eve of military intervention. And such platforms are used for supporting the rapid movement of military convoys carrying ammunition and weapons in the war zone, as well as for operational personnel deployment and evacuation.”

The Turkish Foreign Ministry responded today, by acknowledging that they simply won’t allow the flight, without any excuse: “Observation flights are performed when the observing Party and the observed Party reach agreement on the mission plan. In the case of the observation flight requested by the Russian Federation for Feb. 2-5, 2016, an agreement could not be reached on the mission plan and the flight has thus not been conducted,” the ministry said in a statement reported by Hurriyet Daily News.

Lyndon LaRouche said that if Turkey invades Syria, Obama will blame Russia, and Germany will be placed under pressure to come out against Russia.

Syrian Army Tightening the Noose Around Aleppo

Feb. 4 (EIRNS)—Syrian troops have taken control of the road leading north out of Aleppo, after breaking the siege of two Shi’ite towns, Nubul and Zahraa, yesterday, according to a report in Sputnik this morning. “Less than 3 km separate the regime from cutting all routes to opposition-held Aleppo,” said Rami Abdulrahman, head of the anti-government Syrian Observatory for Human Rights, said.

“The Syrian army and its allies have totally broken the siege on Nubul and Zahraa,” a senior army official told Reuters. Breaking the siege opens a direct route for the Syrian army to Kurdish-controlled Afrin and brings them closer to areas run by Turkish-backed insurgents near the Turkish border. Defense strategists told Reuters that the two heavily garrisoned towns could become a launching pad for the Syrian army and its allies for wider territorial gains in northern Aleppo province, and to tighten the encirclement of the rebel-held part of Aleppo city. “Ending the siege means the supply route to terrorists from Turkey to Aleppo has been severed,” a Syrian military source said.

In Geneva, the Saudi-sponsored High Negotiations Committee used the Syrian army advances around Aleppo as an excuse to stop the talks, which were “suspended” by UN envoy Staffan de Mistura until Feb. 25. The U.S. and France blamed Assad and the Russians for the failure of the talks. U.S. Secretary of State John Kerry complained that the continued Syrian army assault on Aleppo, and the coordinated Russian air strikes, “have clearly signalled the intention to seek a military solution rather than enable a political one.”

Bashar Al Jaafari, the head of the Syrian delegation, placed the blame squarely on the Saudis, saying that “the masters of the al-Riyadh delegation, Saudi Arabia, Turkey and Qatar, issued their orders, from the first moment, to make the Geneva meeting a failure, as they did in the Geneva 2 meeting,” adding that “there was a problem in the absence of a list about who were the opposition and who were the terrorists.”


Italian Finance Minister Stresses, Our Banks Are Less Exposed to Derivatives than Others

Feb. 4 (EIRNS)—Italian Finance Minister Pier Carlo Padoan said that financial markets are wrongly attacking Italian banks, which “from many standpoints, are more solid than those of other countries…. Italian banks are much less exposed to emerging economies, to derivatives instruments, and to the real estate sector,” Padoan said today in the Senate.

Bad loans are a reality, but many of them are backed by collateral. Furthermore, banks have put up loan-loss reserves which cover 45% of bad loans.

Others in Italy think that European focus on Italian banks is a “weapon of mass distraction” and compare Italian banks to Deutsche Bank, concluding that Deutsche Bank is a much bigger problem.

According to the website, Brussels and Berlin want to hide “the real European problem: a giant financial black hole being created in Germany.” Deutsche Bank shares have fallen 35% since the beginning of 2016. The bank has a €64 trillion notional value in derivative investments, the largest of any bank in the world, and five times the GDP of the 19-country Eurozone, with a leverage ratio of 3.5% (against 4.9% for Unicredit and 6.9% for Banca Intesa, the two largest Italian banks).

Credit default swaps on Deutsche Bank are now at 167, an increase of 60% since the beginning of the year. For comparison, CDS on Intesa and Unicredit are at 100 and 136. Only Monte dei Paschi is higher, at 279, but MPS is notoriously troubled.

Despite this, people like columnist Wolfgang Münchau spread the line that Italy has “a bankrupt banking system,” as he wrote in Der Spiegel Jan. 29. Münchau is concerned, however, that “a global financial crisis cannot be solved with a return to the nation-state.”

Credit Suisse Posts First Full-Year Loss Since 2008: CEO Suffers from Hysteria

Feb. 4 (EIRNS)—Credit Suisse, Switzerland’s second-largest bank and one of Europe’s top “systemic” banks, posted its first full-year loss (for 2015) since 2008. According to CNBC the bank posted a full-year pre-tax loss of SFr2.4 billion Swiss francs ($2.38 billion) in the fourth quarter.

In announcing the loss, CEO Tidjane Thiam seemed to be suffering from hysteria. In presenting the news, he first talked about the next period being “challenging,” but then said that now is the time to buy banks! Why? Because the “world would have to come to an end” before banks would prove to be risky. Because of the Financial Stability Board (FSB), which monitors the global financial system, “global banks, systemically important banks will have raised $4 trillion of additional capital…. There is no scenario where the banking sector blows up today. All those doomsday scenarios are not justified.”

The “markets” did not seem to agree with him; Credit Suisse shares dove by 9% in early trading.

Like Switzerland’s largest bank, UBS, Thiam proclaimed that the bank’s strategy is to scale back the investment banking business in favor of wealth management—which, in the universal banking casino, really means nothing.

Of course, he also uses the buzz words, such as “legacy issues”: “It’s a clean-up and a turnaround. There is the need to deal with some legacy issues,” Thiam told CNBC.

On top of this, Credit Suisse will shed some 4,000 jobs.

Greek General Strike Shuts Down the Country, Aims To Halt Further Pension Cuts

Feb. 4 (EIRNS)—More than 50,000 Greeks took to the streets in a general strike that has shut down Greece today, protesting against the pension reforms that will further slash the already-minuscule pensions. Summoned by the private and public sector trade union federations, GSEE and ADEDY, they rallied at Klafthmonos Square, not far from the parliament. The Communist trade union federation, PAME, scheduled its rally at Omonia Square.

Athens’ metro, trolleys, train, and suburban rail services are shut down. Taxis are parked, since their drivers have also joined the strike. Ferries and ships will remain docked, as the seamen’s federation continues its ongoing strike. Olympic Air had to cancel a number of flights; public hospitals, care units, health centers, and emergency services operated with security staff, after doctors and healthcare employees also decided to strike. Farmers are continuing their actions, using tractors to block national highways.

The final details of the reforms have not been made public, as they are still under negotiation with the creditors, who are demanding the fresh cuts. The meeting of Economy Minister Giorgos Stathakis and Finance Minister Euclid Tsakalotos with the “institutions,” i.e., the European Commission, ECB, European Stability Mechanism, and IMF, went badly: Reportedly the government’s plan was rejected, and across-the-board pension cuts were being demanded.

The Greek daily, To Vima, reports that ruling party Syriza’s political secretariat held a meeting on Feb. 2 to discuss the issue. Rumors were flying that some party officers called for Syriza to leave the government, as it will be unable to pass the harsh measures demanded by the creditors. It is not out of the question that the government could fall over this issue.

German Government and Business Leaders Demand Restoration of Ties to Russia

Feb. 4 (EIRNS)—In an interview with Russia’s Sputnik Deutschland,Horst Teltschik, former head of the Chancellor’s Office in Germany, said that “Europeans and Americans have for too long rejected talking to President Putin about Syria.” There are differing views, Teltschik said, but there should have been discussion with Putin about how a peace regulation might be possible. “The immediate consequences which we have in Europe, are these countless numbers of refugees. That is, we have maximal interest in ending this conflict, so that the people do not flee. For that, Russia does play a key role.” Teltschik said that the vast majority of Germans want a dialogue with Russia, including on economic cooperation, and that the EU/NATO sanctions have done damage to both sides.

Bavarian Minister President Horst Seehofer said at a press conference, after meeting in Moscow with Russian President Vladimir Putin last night, that “some ideas are needed to get out of the sanctions, either in one step or in several steps.”

Putin told the press conference that the 1,600 companies with Bavarian participation in Russia are active “in practically every sector—in electronics, engineering, the construction industry, and more. Fifty percent of Germany’s investment projects in Russia are of Bavarian origin. You are therefore a special guest here, and we are very pleased to see you.”

Seehofer responded: “What is most important for us is to deepen our relations, above all, of course, our economic relations, but this is not our only goal. I think we need to do the same in culture, too, and in science. These are things we will discuss too. In today’s globalized world, we in Bavaria, with our population of 13 million, are very much aware, of course, of what is happening every day in our world, whether in Syria or in Ukraine, whether refugees or crime. And we believe that only by acting together, and not in conflict with each other, can we solve these problems. In this desire, we are not seeking to act against our Federal government, but together with it, and we are not acting against Russia, but hope to work together with Russia.”

This afternoon, Seehofer also met with the Russian cabinet ministers for industry and for economic policy, partly in preparation for another trip in the autumn together with a high-powered delegation of German industrialists and bankers.


Obama Anti-Space Policy Attacked, Again, by Scientists and Policymakers

Feb. 4 (EIRNS)—Referring to Obama’s senseless asteroid-redirect mission, at a hearing yesterday by the space subcommittee of the House Committee on Science, Space, and Technology, Dr. Paul Spudis expressed the consensus in the scientific community by describing the proposed mission as “finding something for astronauts to do,” which is “barren of real accomplishment and irrelevant to future deep space missions.” It was the informed view of the witnesses and the House Members, that U.S. space exploration policy, in contrast to China’s and Russia’s, remains directionless, and that what the White House has proposed could wreck NASA.

In the umpteenth bipartisan hearing on U.S. space policy in the Congress since President Obama killed the Constellation program in 2010, the reality was again repeated—this administration has no credible plan for human space exploration, and is wasting precious resources on its asteroid program, “despite opposition from space policy experts, scientists, and engineers,” as stated by subcommittee chair Brian Babin (R-TX).

Dr. John Sommerer, who chaired the technical committee of the National Research Council, which produced a report on NASA’s exploration programs, commenting on the administration’s supposed mad dash for an “affordable” manned Mars mission, advised that “candidly, the fastest and least expensive pathway that we examined comes with enormous risks to both the success of the missions and the lives of the astronauts.”

The sense of the witnesses can be summed up by the testimony of Thomas Young, former NASA executive, industry leader, and member of NASA’s Advisory Council, who said: “It is important to do what is required for a successful exploration program and not what is possible.”

2016 Opens with ‘Surge’ in Mass Layoffs

Feb. 4 (EIRNS)—Chicago’s Challenger, Gray & Christmasconsultancy, which has tracked company mass layoffs in the U.S. for decades, reported today that new mass layoffs in January 2016, at 75,114, were 42% higher than in January 2015, and a giant 218% more than in December 2015.

Retail, led by Walmart and Macy’s, cut the most, with 22,246 announced mass layoffs, a seven-year high.

The energy sector was a close second, with the 20,246 mass layoffs representing the highest monthly total since January 2015. These include layoffs by the heavyweights of the producers of oil industry equipment, Halliburton, Baker Hughes, and Schlumberger.

Texas was the state worst-hit in the nation, by far and away, with over 27,000 mass layoff announcements. The next four top losers were Arkansas (Walmart’s headquarters), with more than 16,000; Ohio more than 6,000; Virginia, nearly 4,000 and New Jersey, 3,000.

Note that the Challenger, Gray report does not track layoffs per se, but only legally-defined “mass layoffs.”


AIIB Is What the World Bank Was Meant To Be

Feb. 4 (EIRNS)—Danny Quah, a Malaysian-born professor of economics and development at the London School of Economics, was interviewed by China’s Global Times Wednesday on the role of the Asian Infrastructure Investment Bank (AIIB). Asked if it were really “China’s World Bank,” as it is often called in the West, Quah said: “We should be clear, this is not a Chinese bank. When we look at the numbers, China’s stake is just a little over 30%. But 57 countries are members. The combined vote of Western democracies alone would already overwhelm China’s. However, it’s obviously a China-driven initiative….

“In a way, its purpose is very similar to how the World Bank began,” Quah added.

Without saying so explicitly, Quah makes the point that the World Bank is no longer serving that purpose: “There is always going to be tension as long as U.S. policymakers describe the AIIB as being susceptible to endangering the environment, lowering procurement standards, and not safeguarding lending requirement.”

He also references President Xi Jinping’s call for the U.S. to join the AIIB: “Many Americans still think that the U.S. should join the AIIB, and it’s still possible to do that. Membership is still open. The U.S. appears to be on one side, the AIIB, China and its group on the other—it is not China or the AIIB’s doing which has brought this about. It has created tension between the U.S. and nearly all the Western democracies, such as South Korea and Australia, which are all willing members. There is no coercion in involvement. If the U.S. says it doesn’t want to join, it’s its choice to stay outside. This means there will be continuing tension.”

South Korea Starts Commercial Operation of Its Maglev System

Feb. 4 (EIRNS)—South Korea began commercial operation of its maglev line yesterday, which travels 6.1 km, linking Incheon International Airport to a station that is a tourist location on the same island as the airport. The plan is to expand the route. South Korea has been developing its own, indigenous maglev technology for a number of years, and Hyundai Rotem, which operates it, plans to market the system overseas, including in the United States, Russia, Malaysia, and Indonesia, reports the Korea Herald.

The maglev train can carry up to 230 passengers, at a maximum speed of 80 kph, with the potential to travel up to 110 kph on a longer route. Technology development started in 2006, and reportedly $342 million was spent on the project.

The technology was developed with government support, and the article states that the Transport Ministry says it plans to “offer diverse forms of administrative support” to promote the technology “amid encroaching competition from China.” Curiously, they leave out that Japan also has a commercially-operating maglev system, which it has been trying to sell in the U.S., to no avail.


Germany Is Going With Fusion Power!

Feb. 4 (EIRNS)—German Chancellor Angela Merkel yesterday made the official kick-off for the second phase of the Stellarator operation in Greifswald (Wendelstein 7-X), by pressing the button which started the build-up of a hydrogen plasma there. The first phase of the experiment, the build-up of a helium plasma, was initiated at the end of last year. Merkel gave a speech there, explaining why the government is investing in this project.

This is in blinding contrast to the U.S., where Obama famously said, “We wouldn’t need new technologies. We wouldn’t need to invent some fancy new fusion energy or anything. If we just took our existing building stock in homes and insulated them, had new windows…we could squeeze huge efficiencies out of that.”

The German fusion power project is to carry out a whole range of experiments that are expected to lead to the development of a power-generating reactor type, but it is also contributing to the research project at the International Thermonuclear Experimental Reactor (ITER), a tokamak-type reactor. A second area of research done at Greifswald is the development of plasma processes for industrial and medical purposes.

In the evening, German national TV news prominently displayed Merkel’s visit to the Greifswald fusion reactor, noting that from this project, we might have an unlimited energy resource—a big cultural shock for many Germans whom the media have brainwashed into believing resources are limited.

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