MONDAY, JULY 11, 2016

Volume 2, Number 229

EIR Daily Alert Service

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

 

EDITORIAL

LaRouche: ‘We’ve Got To Help Germany—Without Sustaining a Stable German System, We Cannot Prevent War!’

July 10 (EIRNS)—The trans-Atlantic financial system is at an imminent blowout point, and what’s happened just in the last day, Italian Prime Minister Renzi had made a statement during a joint press conference with the Swedish Prime Minister, saying that, while Italy’s banks are in big trouble and need a bail-out, this is very minor compared to the major European banks that are facing a massive derivatives blowout. He was referring very specifically to Deutsche Bank which has $75 trillion in derivatives exposure and is being universally described as the biggest single source for a new systemic blowout.

Renzi was putting pressure on Merkel and especially German Finance Minister Schäuble to back down and allow Italy to abandon the bail-in requirements that have been enforced in Europe since January 1st, to do a bail-out of Monte dei Paschi and other Italian banks.

What actually has happened since then, is that Deutsche Bank has publicly come out calling for a massive European bank bail-out, obviously starting with themselves, and that basically they are calling precisely for a cancellation, temporarily at least, of the bail-in rule. This is a statement that was made by Deutsche Bank’s chief economist David Folkerts-Landau in Welt am Sonntag on Sunday. He says, the banks need a €150 billion bail-out to recapitalize, and it has to be done without bailing in the bondholders and depositors.

In response to these dramatic developments, American political economist Lyndon LaRouche issued a dramatic call for action:

“Exactly what we have to do is support, the fact of a temporary reorganization of the economy of those banks, and we have to secure that in order to stop the bleeding. In other words, the point is, stop the bleeding and integrate and bring in conditions which will enable us to sustain that kind of operation.

“In other words, you’ve got to create, because the whole German economy is a crucial thing. It’s a mess. We all know it’s a mess. It’s been a mess; it became a mess—Schäuble and so forth have made it a mess! We know that. But we’re not going to shut down the German economy on the basis of the fact we got a bunch of crooks or suspected crooks who might be in certain departments. What we’re going to do is, we’re going solve this thing; we’re going to fix it and we’re going to back it up, for a one-time backup.

“Clean the whole thing out, set up a program which will secure the banking system of Germany to function. Once that has happened, now you can work from there!”

Such a one-time move would necessarily involve cancelling out this $75 trillion in derivatives and going in a direction a bank separation and the sorts of things that would allow for credit to the real economy.

LaRouche elaborated: “You’ve got to qualify the thing further, saying we are doing it as a one-time operation, for the sake of saving the economy. That’s it.

“This is a rescue of the economy, despite all the mistakes made, we’re going to take it one time, because we’re going to try to save the economy of Germany. And that’s what’s at risk. And Schäuble is not a useful person, nor is Merkel.

“We’ve got to help Germany, because without sustaining a stable German system, we cannot prevent war!

“What we need is a program which gives credit to the German economy, a one-time German economy credit. And you have to present it that way, and put it to people that way for giving themconfidence in what they’re doing, and telling them ‘don’t do what you did before.’ That’s the point.

“You have to say to the Germany economy, ‘Look, you’ve made mistakes, serious mistakes. Now, we’re going to bail you out, but you’re going to have to obey yourself; you’re going to have to get on the job and do what you should do, and don’t try to cheat any more.’

“I’m saying, Germany is an emergency case. We have to organize the thing in such a way that Germany can escape from this problem. Assuming that the organizations of the German economy are going to operate, in such a way as to win the battle.

“And Schäuble is not really high on my level on that, you know…. But concentrate essentially on the provisions which must be made, which enable this thing to go. You’ve got to have some system, which will secure the system of the German economy, the financial economy, and you’ve got to do that; and you’ve got to make it work. If you don’t, you’re going to go into chaos.”

LaRouche referred to the period of 1989, when the Berlin Wall came down and Germany was moving towards reunification, and the Helmut Kohl government was looking to revive economic and political ties to Eastern Europe and what would soon be post-Soviet Russia:

“We had a case at that time of a great leader, of the economy of Germany, who was assassinated by the French—Deutsche Bank President Alfred Herrhausen. So we don’t want another Herrhausen abuse. Let the Germans be free, and let the others go into the pen. I mean, because that’s what happened. Because you had a point here, you had a leading figure for the leading office of German policy, and you shut that down, and you moved the thing out to a different way, you destroyed the beginnings of the German economy!

“So we have to tell some of the people in that area that they made a big mistake and they should be a little bit more generous in their matters of dealing with this thing.”

COLLAPSING WESTERN FINANCIAL SYSTEM

Deutsche Bank’s London Operations Can Blow Out the Entire System

July 10 (EIRNS)—Italian Prime Minister Matteo Renzi told reporters during a recent joint press conference with Swedish Prime Minister Stefan Löfven that, no matter how serious Italy’s banking problems are, they are dwarfed, by comparison, with Deutsche Bank. “If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred.” Renzi’s remarks were described by Alex Christoforou as a not-so-subtle pressure move by Renzi against German Chancellor Angela Merkel and German Finance Minister Wolfgang Schäuble, over their refusal to bend the rules to allow Italy to bail out Banca Monte dei Paschi di Siena without invoking the EU’s bail-in policy, in force since Jan. 1. The “derivatives at big banks” referenced by Renzi was directed at Deutsche Bank, which has been widely described in recent weeks as the most volatile bank in the entire trans-Atlantic system, with a derivatives exposure of $75 trillion, 20 times bigger than the GDP of Germany, and a 40:1 leverage rate, far beyond the Lehman Brothers case in 2008.

Zero Hedge on Saturday further detailed the Deutsche Bank disaster under the headline “Charting the Epic Collapse of the World’s Most Systemically Dangerous Bank.” Tyler Durden wrote “If the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful.” But according to a time-line of recent events, Deutsche Bank is now on the edge of blowout, with massive implications for the entire London-Wall Street centered system of trans-Atlantic finance. On June 2, two former Deutsche Bank employees were charged in the ongoing U.S. Justice Department probe of the Libor rigging scandal. A total of 29 Deutsche Bank officials are still under investigation in that probe. Following the Brexit vote, Deutsche Bank, the largest European bank operation in London, has been further reeling. On June 29, the IMF issued a warning that “DB appears to be the most important net contributor to systematic risks.” The next day, the Fed announced that DB had failed the stress test as the result of “poor risk management and financial planning.”

Deutsche Bank shares are now selling at 8% of the peak price in May 2007, with 9,000 employees having been recently laid off, and the bank shutting down operations in 10 countries. However, the real problem is Deutsche Bank’s enormous derivatives exposure, the largest of any bank in the world. Zero Hedge warned: “Now that Deutsche Bank’s dirty laundry has been exposed for all to see, Renzi’s gambit is clear: If Merkel does not relent on bailing out Italian banks, the collapse of Italian banks will assure the failure of Deutsche Bank in kind. And since in a fallout scenario of that magnitude DB’s derivatives would not net out, there will be no change to save the German banking giant, bail out, in or sideways.”

Deutsche Bank Officer Says ‘Europe Is Extremely Sick,’ Demands Bailout Poison

July 10 (EIRNS)—Now not only Société Générale, but the British-German monster Deutsche Bank is demanding that the European Union suspend its “bail-in” rules and conduct a “European TARP” bank bailout to avert looming bank failures.

Deutsche Bank chief economist David Folkerts-Landau, interviewed by Welt am Sonntag, demanded a €150 billion (roughly $165 billion) Europe-wide bailout to “recapitalize” banks, specifically without “bailing in” bank bondholders or depositors. Folkerts-Landau called his demand a TARP for Europe, but apparently thought it would be reassuring that he was recommending only $165 billion and not $700 billion. One might anticipate checking back with the distinguished bank economist on that figure in a week or two.

Immediately, the statement knocks the props out from under German Finance Minister Wolfgang Schäuble’s opposition to allowing Italy to conduct such a “no bail-in bank bailout.” Schäuble has said that he is ready to “stand by” Deutsche Bank in its difficulties, while claiming they were not serious. Folkerts-Landau evidently knows better; but he particularly called a bailout for Italian banks “urgent,” and said that “to stick so strictly to the [bail-in] rules would cause greater destruction than setting them aside.”

He obviously was asking for Deutsche Bank and other London-centered giants as well. “Europe is extremely sick, and must attack the existing problems extremely quickly, otherwise we are threatened with an accident,” he told the Sunday edition of Die Welt. These illnesses, with bank stock collapses as their symptoms only, included “a fatal combination of weak growth, high government debt and the approach of dangerous deflation.”

Folkerts-Landau is an investment banker who heads both the research division of Deutsche Bank’s investment bank, and the “think-tank” of the bank holding company. This was rightly called dangerous when he took over the jobs in 2012; but since Deutsche Bank is essentially not a bank but a giant broker-dealer/hedge fund, it was not surprising.

European Banks Are ‘On the Brink’; Some May Be over It

July 8 (EIRNS)—In another desperation “idea” for saving the failing European banking systems, Bloomberg News today floated mergers of the biggest European banks into even bigger monsters—Deutsche Bank merging with Barclays, Santander merging with Deutsche Bank, JPMorgan Chase or Société Générale buying Standard Chartered, etc.

Germany’s financial newspaper Handelsblatt today headlined an article “Banks on Brink as Contagion Fears Grow.” The authors meant the 50 largest European banks. “A study by the consultancy ZEB,” the paper wrote, “made exclusively available to Handelsblatt, shows the problems that Europe’s banks are facing. In their report, the consultants describe the profitability of the 50 biggest European banks as, ‘on average, catastrophic.’ The return on equity of large banks in the euro zone was actually … well below the cost of capital.”

The essential case presented is that these banks must have more capital to survive because of their years-long, increasingly drastic loss of market capitalization and their bad assets; but they are unable to raise capital for the same reasons. Thus, they must get that new capital from new government bailouts, or fail.

STRATEGIC WAR DANGER

U.S. and South Korea Reach Agreement: THAAD Will Be Deployed

June 8 (EIRNS)—After months of badgering by the Obama Administration, the government of South Korea finally agreed today to allow the deployment of the THAAD missile defense system on South Korean soil, ostensibly to defend against North Korea’s growing ballistic missile and nuclear weapons capabilities. The Terminal High Altitude Area Defense (THAAD) system is of dubious value against any North Korean missile attack, given the close proximity of the South Korean capital Seoul to the North Korean border.

The joint U.S.-South Korean announcement promised that a decision would be made “within a couple of weeks” on that exact placement of the THAAD system, which both countries say will be operational by late 2017.

Immediately after the announcement, the Chinese Foreign Ministry summoned American and South Korean diplomats to deliver a strongly-worded protest. The Ministry issued a terse statement: “China strongly urges the United States and South Korea to stop the deployment process of the THAAD anti-missile system, not take any steps to complicate the regional situation and do nothing to harm China’s strategic security interests.”

The day before today’s announcement by the U.S. and South Korea, the U.S. Treasury Department blacklisted North Korean leader Kim Jong-un on human rights violations, adding further to the climate of friction in the region.

China’s Global Times Warns of Consequences of U.S.-R.O.K. THAAD Deployment

July 10, (EIRNS)—In a strongly worded editorial today, China’sGlobal Times warns about the consequences of the U.S. and South Korean decision to place THAAD missile defense systems on R.O.K. territory.

The editorial explicitly spelled out a range of countermeasures that China could take, in response:

“Apart from monitoring missiles from North Korea, THAAD could expand South Korea’s surveillance range to China and Russia and pose serious threat to the two countries.

“Though South Korea claims it can reduce the surveillance range, the country cannot make the call as the system will be controlled by U.S. forces in South Korea, and such cheap promises mean nothing in international politics.

“We recommend China to take the following countermeasures. China should cut off economic ties with companies involved with the system and ban their products from entering the Chinese market.

“It could also implement sanctions on politicians who advocated the deployment, ban their entry into China as well as their family business.

“In addition, the Chinese military could come up with a solution that minimizes the threat posed by the system, such as technical disturbances and targeting missiles toward the THAAD system.

“Meanwhile, China should also re-evaluate the long-term impact in Northeast Asia of the sanctions on North Korea, concerning the link between the sanctions and the imbalance after the THAAD system is deployed.

“China can also consider the possibility of joint actions with Russia with countermeasures.”

The editorial statement, a semi-official voice of the Chinese government addressed to an international audience, took note of the larger context of the U.S.-R.O.K. action and the impact it will have on regional security as a whole:

“The biggest problem of the peninsula’s messy situation lies in U.S.’ Cold-War strategy in Northeast Asia, and its mind-set of balancing China in the region. Neither Pyongyang nor Seoul could make their own decisions independently, as the region’s stability and development are highly related to China and the U.S.”

COLLAPSING WESTERN GEOPOLITICAL SYSTEM

Panic Underlies the NATO Summit

July 10 (EIRNS)—While the agenda and proceedings of the NATO summit in Warsaw may have been tightly scripted, Brexit and other disagreements were on everybody’s minds. “[L]urking beneath a veneer of unity was growing evidence in Warsaw of fissures within Europe that go beyond its highly visible split with Britain,” the New York Times moaned yesterday. “From NATO’s economic sanctions to pressure Russia to the alliance’s military exercises meant to deter it, Germany, France and Italy are showing signs of wavering from the hard-line stance” that NATO adopted two years ago following the return of Crimea to Russia.

Philip Hammond, the British Foreign Secretary, reported that every conversation he had was about Brexit. “It is probably not an exaggeration to say there is almost no other subject on the table when I get together with my colleagues,” he said after the Friday night dinner. “We are at a NATO meeting but most of the discussions have not been about NATO issues, they have been about the outcome of the referendum and the consequences.” President Obama even met with European Council President Donald Tusk and European Commission President Jean-Claude Juncker about it. “Obama was quite keen to push for a quick settlement of Brexit,” a European official told Reuters. “Both Tusk and Juncker took him on a pedagogic route and stressed it is important to keep the remaining 27 (EU states) united. If we go superfast, we could lose that unity.”

At the NATO summit, the French and Greek heads of state joined German Foreign Minister Frank-Walter Steinmeier is rejecting the “Russia is the enemy” narrative.

Arriving in Warsaw for the summit, French President François Hollande declared on July 8 that “NATO has no role at all to be saying what Europe’s relations with Russia should be. For France, Russia is not an adversary, not a threat. Russia is a partner which, it is true, may sometimes, and we have seen that in Ukraine, use force which we have condemned when it annexed Crimea.” According to Sputnik, Greek Prime Minister Alexis Tsipras urged NATO leaders to engage in “constructive talks” with Russia, adding that he has long advocated for a dialogue with Moscow, calling Cold War-style rhetoric and sanctions not productive.

Germany’s Social Democrats are also expressing a desire to de-escalate with Russia. Vice Chancellor and SPD leader Sigmar Gabriel said in Nuremberg, yesterday, that the West should return to the negotiating table with Russia and he had “strong doubt” whether increasing NATO’s military presence in eastern Europe would help that, reports Reuters. “I’m not in favor of us constantly escalating the relationship with Russia,” he said.

British Deputy PM Apologizes for Iraq War, Blasts Blair

July 10 (EIRNS)—Tony Blair’s Deputy Prime Minister at the time of the launching of the Iraq war has published a condemnation of Blair and an apology, particularly to the families of the 179 British soldiers killed in that illegal war. John Prescott published a signed article in today’s Sunday Mirror.

Prescott began his personal account: “On Wednesday we finally saw the Chilcot Report. It was a damning indictment of how the Blair Government handled the war….

“As the Deputy Prime Minister in that Government I must express my fullest apology, especially to the families of the 179 men and women who gave their lives in the Iraq War.”

Prescott blasted Tony Blair for keeping his own cabinet in the dark over his secret dealings with his “special partner” in Washington, George W. Bush.

“Chilcot went into great detail as to what went wrong. But I want to identify certain lessons we must learn to prevent this tragedy being repeated. My first concern was the way Tony Blair ran Cabinet. We were given too little paper documentation to make decisions. I raised this matter with Lord Butler, the Cabinet Secretary. I asked him whether Blair had consulted him on the proper rules and practices of a Cabinet Government.

“He said that he had, and that Tony was not going to run it that way.

“In fact Tony ran it like a Shadow Cabinet, where the least amount of information was made available to avoid any possible leak of papers.”

Prescott ended with a personal apology for his role in allowing the Iraq disaster: “I will live with the decision of going to war and its catastrophic consequences for the rest of my life. In 2004, the UN Secretary-General Kofi Annan said that as regime change was the prime aim of the Iraq War, it was illegal. With great sadness and anger, I now believe him to be right.”

Call for an American Chilcot Commission

July 9 (EIRNS)—Might there be a Chilcot Commission for the U.S.? At least one American veteran is calling for such an inquiry.

“The fact that we haven’t done a report like that—and there haven’t been any moves to do that—makes it a whole hell of a lot more likely that we are going to go right down the same road and make the same mistakes we did less than 13 years ago,” Matthew Howard, a Marine veteran of two tours in Iraq and co-director of Iraq Veterans Against the War, told Britain’s Guardian.

“Unfortunately, there hasn’t been the same kind of public reckoning with our own government and country’s involvement in the war in Iraq,” said Howard. “I think that a majority of those folks that were behind the decision to agree to invade Iraq don’t have a lot of interest in revisiting that, both in terms of how it affected Iraq, the country itself, and in terms of how it affected U.S. service members, a veteran community of more than 2.8 million people, and the families that have to deal with the aftermath.”

British MPs Calling for Tony Blair’s Head To Roll

July 10 (EIRNS)—Conservative Member of Parliament David Davis, backed by MP Alex Salmond of the Scottish National Party (SNP) told the BBC’s popular Andrew Marr show that he will introduce a motion in Parliament to hold former Prime Minister Tony Blair in contempt of Parliament, the Sunday Telegraph reported today. This announcement comes on top of the drive by the families of British soldiers killed in Blair’s illegal war, to sue Blair for “every penny he’s worth,” which the Telegraph reported July 8th. Davis told BBC1’s show that if the Speaker the Parliament accepts the motion, it could be debated before the Parliament’s summer recess.

Davis explained that the motion is “a bit like contempt of court, essentially by deceit. If you look just at the debate [on the Iraq war of 2003] alone, on five different grounds the House was misled: three in terms of the weapons of mass destruction, one in terms of the UN votes were going, and one in terms of the threat, the risks. He might have done one of those accidentally, but five?”

Labour Party leader Jeremy Corbyn also told Andrew Marr that he would “probably back the motion” for contempt, in the words of theTelegraph. “Parliament must hold to account, including Tony Blair, those who took us into this particular war,” Corbyn said.

SNP’s Alex Salmond told another media program, ITV’s Peston show, that Corbyn’s support would mean the motion had enough cross-party support. “No Parliament worth its salt tolerates being misled,” stated Salmond, Scotland’s former first minister.

Philippines New President Calls Out U.K., U.S. for Terrorism

July 8 (EIRNS)—The British (specifically, Tony Blair) responsibility for Mideast/North Africa wars and the spread of terrorism stands exposed after issuance in London of the Chilcot Report on the Iraq War.

Today the new President of the Philippines, Rodrigo Duterte, attacked the U.K. and the United States for spreading terrorism, in remarks to a Muslim organization which were striking in their impact and originality.

Associated Press headlined, “Philippine President Blames U.S., U.K. for Middle East Violence.” The news service reported, “The new Philippine President has blamed U.S. intervention for the bloody conflicts in Iraq and other Middle Eastern countries…. President Rodrigo Duterte suggested in a speech on Friday that U.S. policy was to blame for terrorist attacks on its soil, saying, ‘It is not that the Middle East is exporting terrorism to America, America imported terrorism.’

GAM News Service in the Philippines reported that Duterte said, “They forced their way into Iraq and killed Saddam. Look at Iraq now. Look what happened to Libya. Look what happened to Syria.” Clearly referring to the Chilcot Report, he said that “After a thorough, almost 10 years investigation, it turns out there was no legal basis to declare war against Iraq … it’s such a useless war.”

U.S. POLITICAL AND ECONOMIC

Soros-Funded Group Leading Nationwide Police Brutality Protests

July 9 (EIRNS)—British agent George Soros has poured an estimated $33 million into the Black Lives Matter (BLM) movement, through a number of activist fronts, run by the hashtag group’s founders. EIRfirst reported on the Soros funding in an Aug. 21, 2015 article, “Soros Money Matters,” which appeared in the midst of the Ferguson, Missouri police killing protests. One of the Soros-funded groups, the Gamaliel Foundation, a nationwide network of grass-roots protest groups, hired a young Columbia University graduate named Barack Obama and shipped him from New York City to Chicago back in the early 1980s, launching his political career.

While BLM has insisted that it had no ties to the sniper who killed five Dallas police officers and wounded six other people, also mostly police, they have played a pivotal role in building the strategy of tension now playing out throughout the United States.

The dead shooter, Micah Johnson, was in the Army Reserve for five years, and spent nine months in Afghanistan, before he was dismissed from the Army, following charges of sexual harassment. The profile of Johnson still remains murky. His Facebook page suggested links to the New Black Panther Party and the African American Defense League, but the depth of these ties have not been corroborated publicly yet.

EIR is conducting a top-to-bottom probe into the Dallas incident and the organizations that show up in the environment of the protests, particularly given the central role that George Soros has played in the bankrolling of the movement, which draws heavily from his Drug Policy Alliance personnel. Lyndon LaRouche cautioned on July 8 that this is not an appropriate time to speculate, given the seriousness of the situation.

SCIENCE AND INFRASTRUCTURE

Russia and China Deepen Strategic Cooperation in Nuclear Power

July 8 (EIRNS)—After talking with Chinese President Xi Jinping in Beijing on June 25, Russian President Vladimir Putin said in his press statement, regarding nuclear cooperation, that the two countries are “now negotiating further joint operations in third country markets,” reported a special from the Kremlin website. This would be a game-changer in international nuclear energy development, especially for developing countries. Russia and China have been cooperating in nuclear power plants bilaterally for years, as Russia has built plants in China. But this would involve cooperation leading to joint projects for the export of new nuclear systems, BusinessNewsAsia.com reported yesterday.

Nuclear technology has depended upon an international supply chain for components for decades, especially since the U.S. shut down its nuclear industry. The nuclear industrial base has been primarily in the U.S., Europe, and Japan, and for Eastern Europe, Russia. Now Russia, with the largest number of export orders for nuclear plants (reportedly $100 billion worth), could very productively benefit from teaming up with China to jointly build the dozens of plants that are on Russia’s order book. For China, this is a gateway to these new markets. This cooperation shifts the nuclear industrial base away from the dying U.S. and European nuclear sectors—a shift already in progress—to a new level, with the focus on new builds in Asia, the former Comecon countries in Eastern Europe, and the Middle East.

In a parallel development, Russia’s Roscosmos head Igor Komarov made a striking statement July 7, during an interview with Rossiya 24 TV: That his space agency is ready to discuss with BRICS partners, forming joint crews to the International Space Station. “We are always leaving a door open on this issue,” he said, specifying, “We are at the early stages of discussing a joint crew with China.” He also reiterated that China was interested in bilateral space cooperation, engine building, remote sensing, and navigation, which has been reported previously.

Although it is not clear that Komarov meant the ISS, and not a future station, closer cooperation between Russia and China in manned space operations would be another game-changer, in international projects of exploration.

 

 

My Comment:  SOROS is the Rothschild Khazarian Mafia frontman funder for all these anti-republic groups:  ACLU, Black Lives Matter (to exploit civil unrest & cause race riots getting lots of blacks murdered)…Soros is a Nazi, Color Hating, Child Sacrifice Attendant at the Satanic Ninth Circle Rituals and is funder of protecting pedophiles via his funding ACLU (Curly vs NAMBLA), etc.

 

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