EDITORIAL

LaRouche’s Influence: The Increasing Force of Glass-Steagall

July 25 (EIRNS)—Interesting comments on both sides of the Atlantic over the weekend reflected the increasing likelihood of the restoration of the Glass-Steagall principle in the near future—critical for the future of the trans-Atlantic economies.

The leading financial newspaper on the European continent, Handelsblatt, published an article by its Washington correspondent July 22 expressing the increasing force of Glass-Steagall: “Separate What Does Not Belong Together,” meaning to separate deposit and lending banking from securities speculation.

Handelsblatt picked up from the American parties’ platforms but endorsed Glass-Steagall itself. Correspondent Frank Wiebe wrote that the debate on reintroducing Glass-Steagall is not new in the United States, but, “since Trump and the Republicans picked up the issue again, suddenly Wall Street is taking it seriously. Until now Wall Street was confident that despite the large support for the concept, in the end there would be no political majority possible. Now they are no longer so sure.”

And in the United States, a Clinton Democratic superdelegate and long-time top campaign consultant, Elaine Kamarck, wrote in her Brookings Institution blog that something like Glass-Steagall will have to be enacted by the new Congress and President. Hillary Clinton opposed Glass-Steagall, Kamarck said, “But by agreeing to place reinstatement of Glass-Steagall in the Democratic platform, Hillary Clinton signaled that she too would support it…. To date there hasn’t been much interest in this in Congress. But if the establishment heard one thing loud and clear in the 2016 primaries, it was that millions of Americans think that they were the victims of Wall Street and that the next President had better pay attention.”

The loss of Wall Street’s control signifies the rising impact of EIR Founding Editor Lyndon LaRouche’s seven-year concentrated campaign demanding Glass-Steagall as the door-opening for national credit policies to revive economic productivity in the United States and Europe.

Handelsblatt’s endorsement expanded the issue also to Germany and Europe. “Would a return to Glass-Steagall be justified?” Wiebe asks. The current system gives a universal bank more opportunities, but “more importantly, the bank separation concept would probably make the financial system safer. The decisive point is that large banks are too large and a separation would make them smaller again. The argument is valid for Europe, where very large banks sit in relatively small states, even more than for the United States. The Deutsche Bank business model, where a large investment bank sits on the foundations of a not too strong traditional bank is being discussed over and over again.”

When Lyndon LaRouche began his push for Glass-Steagall’s restoration seven years ago, the only Americans or Europeans who knew its name were its Wall Street destroyers. His understanding of the future was critical in choosing the fight. He knew the trans-Atlantic economies’ only future, their only chance to revive “Hamiltonian” credit, production, and productivity after the crash, passed through Glass-Steagall, cutting the Wall Street and London giant banks of the globalization era down to size.

Avoiding another general financial collapse, and the threat of world war, requires grasping that future now.

U.S. POLITICAL AND ECONOMIC

Signs of Crash in U.S. Debt Bubbles

July 25 (EIRNS)—Ominous signs have appeared of a renewed collapse of high-yield (“junk”) bank debt in the U.S. economy, potentially in the trillions. At the same time, industrial production and manufacturing output have stagnated or fallen for more than a year, while 215,000 jobs have been eliminated in the “energy” (oil and gas) sector, until a year ago the only real source of real capital investment.

Oil price, after its recovery of about one-third of its collapse since March, is again falling steadily (from $50 to $43/barrel so far for West Texas Intermediate crude), and this could turn into another steep drop. Despite continuous decline in U.S. crude oil production, gasoline demand keeps dropping. There is a renewed glut, now at a lower level, and refineries are now planning shutdowns earlier than the normal Labor Day. Another 15,000 layoffs were announced this week by the big oilfield service firms; internationally, the loss is 385,000 jobs in this sector, reported the Wall Street Journal July 24.

Morgan Stanley, the oil expert “bank,” reported July 22 the gasoline market is “severely oversupplied internationally.” “Refineries are the true consumer of crude oil…. Given the oversupply in the refined product markets, fading refinery margins, and economic run cuts, we expect crude oil demand to deteriorate further over the coming months.”

But the oil sector extremely rapidly built up the biggest global debt bubble from 2004-2014, going from $4 trillion to $7 trillion indebtedness, with no increase in global revenue at $450 billion/year or so. In the U.S. the highest-risk parts of this debt are leveraged loans and junk bonds in the sector, together totaling about $1.4 trillion.

So far only about $100 billion of this debt has defaulted, but the defaults are still increasing month to month despite the brutal cost-cutting represented by all that vanished employment. A renewed oil price plunge, will blow out a much larger chunk of that debt than has defaulted so far.

Meanwhile the $1.4 trillion auto loan bubble, of which about $400 billion is now subprime and $150 billion “deep subprime,” has been sailing along like Roadrunner off the cliff—until an accident today, involving a division of one of the world’s biggest banks. Santander Consumer USA Holdings, the biggest subprime auto lender, suddenly pulled back its second-quarter report for “revisions and new consultations with its accountants.” Reminiscent of JPMorgan Chase upon realizing its huge “London Whale” losses. The Santander stock plunged 16%. Some 18% of all subprime auto loans defaulted in the past year, including 30% of all “deep subprime” loans, so other lenders to follow Santander Consumer are already being named.

Losing Control of U.S. Presidential Politics? Blame It on Putin!

July 25 (EIRNS)—Since last week’s near implosion of the Republican National Convention, and the dawning reality that the Democrats may experience their own meltdown, U.S. media have “discovered” that the string-puller behind both parties’ maladies is none other than … Russian President Vladimir Putin! One can almost hear the new version of the old complaint:

Local Yokel 1: “I don’t know who to vote for, anymore. Who you voting for?”

Local Yokel 2: “It doesn’t matter who the little guy votes for, they’re all controlled by Putin!”

In the week since the Republican convention—especially in the wake of Donald Trump’s implicit questioning of the United States’ commitment to NATO—the line has emerged that Trump is beholding to Putin, through business, if not ideological, ties. On Saturday, an article emerged on Talking Points Memo blog which put it all together, in detail. In “Trump and Putin: Yeah It’s Really a Thing,” Joshua Micah Marshall lists a half-dozen “facts” which convinced him that Putin was behind Trump’s successes. Trump is massively indebted, he says, with live-saving capital coming from Russian sources—up to and including the oil and gas giant Gazprom, etc.

In addition, Marshall notes, Paul Manafort, Trump’s campaign manager, used to work for “disgraced” Ukrainian dictator Viktor Yanukovych, and his foreign policy advisor on Russia and Europe is Carter Page, “a man whose entire professional career has revolved around investments in Russia and who has deep and continuing financial and employment ties to Gazprom.”

As the spotlight shifted to the Democrats over the weekend, their facade of “unity” quickly imploded—with the exposure of internal emails, resulting in the resignation of DNC chair and Clinton cheerleader, Debbie Wasserman-Schultz. The accusation came immediately from the highest levels of media, think-tanks (think Brookings), and from Clinton’s campaign manager, that “the Russians” are also behind the email hacking. And, from unnamed sources, the Daily Beast writes this afternoon, that “the theory that Moscow orchestrated the leaks to help Trump, who has repeatedly praised Russian President Vladimir Putin and practically called for the end of NATO, is fast gaining currency within the Obama administration.” A clear sign of that, was the FBI’s instantly launching an investigation on Monday.

The fear the establishment is really trying to express, by claiming that Putin is taking control of the U.S. political process, is that Wall Street is losing control. Glass-Steagall! No TPP trade deal! Release the 28 pages on Saudi terrorism! Those hits are not coming from Moscow.

STRATEGIC WAR DANGER

ASEAN Foreign Ministers and ASEAN+China Both Stress Dialogue; Reject Obama Push for Strife in South China Sea

July 25 (EIRNS)—The statements issued this week by both the foreign ministers of the 10 ASEAN nations (Association of Southeast Asian Nations), and by the ASEAN-plus-China separate ministerial meeting, stress peace-seeking and dialogue in the region. They do not contain the references demanded by Obama envoys, to cite The Hague court ruling against China, contesting its claims in the South China Sea, nor make other belligerent points. This is rightly hailed as a diplomatic loss for the Obama Asia Pivot, and led a furious BBC to question whether ASEAN should continue to exist at all, if it won’t attack China.

The ASEAN foreign ministers met July 24 in Vientiane, Laos, for their 49th annual session. This has been followed by certain ASEAN-plus-One meetings with other countries, including today, the China-ASEAN meeting, and United States-ASEAN session, and the Russia-ASEAN meeting. Tuesday, July 26, the 18-nation EAS—Foreign Ministers of East Asia Summit, consisting of the ASEAN 10, plus China, Russia, India, South Korea, Japan, Australia, New Zealand, and the United States.

The new ASEAN ministerial communiqué speaks of the need to find peaceful resolutions to disputes, working through bilateral discussions, regarding the South China Sea. It acknowledges conflicting views, in general language: “We remain seriously concerned about recent and ongoing developments and took note of the concerns expressed by some ministers on the land reclamations and escalation of activities in the area, which have eroded trust and confidence, increased tensions and may undermine peace, security and stability in the region.”

Today’s separate China-ASEAN statement specifically calls for work on a “Code of Conduct” for the South China Sea, based on the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC), in turn based on the 1982 UN Convention on the Law of the Sea (UNCLOS, to which the U.S. does not belong). Point 2 of the China-ASEAN statement reads: “The Parties concerned undertake to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations by sovereign states directly concerned, in accordance with universally recognized principles of international law, including the 1982 UNCLOS.” The document also states approval for national or “cooperative activities, in fields such as navigation safety, search and rescue, marine scientific research, environmental protection, and combating transnational crimes at sea….”

At today’s Russia-ASEAN meeting, it is reported there was discussion on advancing economic relations between ASEAN and the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO). It began with Foreign Minister Sergey Lavrov saying that Russia defends “the role of the ASEAN ten in regional affairs.” TASS quoted him: “I would like to note that we closely coordinate our work with ASEAN in building a modern security architecture in the Asia-Pacific region, based on the principles of equality, openness and concern for the interests of all players.”

Meantime, at the United States-ASEAN meeting today, the U.S. representatives were stressing “the importance of adhering to the Philippines-China arbitration ruling on the South China Sea by The Hague,” according to Voice of America.

The Wall Street Journal, like other outlets of the war party in Washington, rants today that China is sabotaging ASEAN unity and openly calls for breaking up ASEAN’s policy of consensus, creating, “smaller coalitions that would allow an ASEAN majority to move forward on contentious issues”—meaning to join Obama’s confrontation with China. This is shown to be nonsense by the fact that all ten ASEAN nations signed the communiqué calling for dialogue of the “sovereign nations directly concerned,” rejecting Obama’s provocations and the Western-controlled “arbitration” court in The Hague.

China’s Foreign Minister Wang Yi Speaks to Press on China-ASEAN Ministerial Meeting

July 25 (EIRNS)—In his comments following the China-ASEAN meeting today, Chinese Foreign Minister Wang Yi stressed the degree of unity at the meeting. While the issue of the South China Sea had been broached during the discussion, he said that 80% of the discussion concerned issues of economic cooperation and only 20% on the South China Sea. Wang Yi also indicated that during the 90 minute meeting, only one country broached the issue of the South China Sea, although reports indicated that the Philippines and Vietnam wanted something in the China-ASEAN joint statement regarding arbitration. It was, however, not included, the general consensus being, Wang Yi said, that this was not an issue for ASEAN.

Wang Yi said that he had presented a six-point program for China-ASEAN Relations. These included: preparations for the 25th anniversary summit of the China-ASEAN partnership to be celebrated later this year; enhancing cooperation and creating a new pillar for cooperation focusing on education exchanges and greater tourism; increasing security cooperation and working toward a Treaty of Friendship and Cooperation; building on the Lancang-Mekong project in creating a new platform for development; and working for regional peace and development.

During his press conference Wang Yi said that China and ASEAN should be solely responsible for upholding security in the South China Sea.

Wang Yi said that we should get the arbitration behind us. “Certain countries outside the region have gotten worked up to fever-pitch on the issue,” which “had caused damage to the region.” He urged all parties to “lower the temperature in order to reduce speculation, or manipulation.” The Foreign Minister also encouraged the reporters to look around the world and see what happens when outside parties get involved in regional disputes. “We need to work together instead of allowing the region to be destabilized by outside forces,” Wang said.

Lavrov Charges, Those for Regime Change in Syria Are ‘Narrow-Minded or Villains’

July 25 (EIRNS)—In an interview for the website of the Imperial Orthodox Palestine Society that appeared today, Russia’s Foreign Minister Sergey Lavrov indicted the terrorism-spawning regime-change wars of the Obama and Bush administrations in the bluntest possible language. TASS quoted Lavrov: “The still hypocritical calls for regime change, including in Syria—after what happened to Iraq when Hussein was deposed, or in Libya, where Muammar Qaddafi was barbarously butchered—it seems to me, are made by the people who are at least narrow-minded, if not villains who simply enjoy or seek the destruction of countries and regions in the hope of getting their own benefit.”

Laying the blame for the rise of the Islamic State (IS), Lavrov said “The U.S. army dispersed the Iraqi army and security forces, thus leaving the people who know very well how to make war without any means of subsistence. Everybody understands this very well now.” He described that the backbone of the IS combat power is comprised of former generals of Saddam Hussein’s army who had been dismissed by the Americans during the occupation of Iraq in 2003, wrote TASS.

SCIENCE AND INFRASTRUCTURE

Andhra Pradesh To Become Nuclear Power Generation Center of India

July 25 (EIRNS)—Following his recent visit to Russia, Chief Minister of India’s state of Andhra Pradesh, Chandrababu Naidu, has announced that Russia’s state nuclear power company Rosatom will build its next set of six 1200MW VVER nuclear power plants in Andhra Pradesh, Sputnik reported today. Also in the works is the construction in the state of six 1594 MW Economic Simplified Boiling Water Reactors to be provided by GE-Hitachi. In addition, Toshiba Corp.’s Westinghouse Electric has reportedly decided to relocate a planned project to build six AP-1000 reactors in Andhra Pradesh, after the original site proposed for the multibillion-dollar project in Prime Minister Narendra Modi’s home state of Gujarat, faced local opposition.

When these reactors were installed and commissioned, The Hindu reported on July 21, Andhra Pradesh, a southeast coastal state, could account for more than 30,000 MW of the Modi government’s goal of 63,000 MW of nuclear power installed capacity in 15 years.

China and India, with their large populations and need for clean and steady power to push their economic development, now dominate planned nuclear power generation. China intends to build 110 nuclear power plants by 2030, with a plan to build six to eight nuclear power plants annually for the next five years, Beijing-based China Times reported last October quoting plan analysts. As for India, the World Nuclear Association reported that “India’s 12th Five-Year Plan (2012-17) proposals, now finalized, envisage start of work on eight indigenous 700 MW Pressurized Heavy Water Reactors (PHWRs), two 500 MW Fast Breeder Reactors (FBRs), one 300 MW Advanced Heavy Water Reactor (AHWR) and eight Light Water Reactors of 1000 MW or higher capacity with foreign technical cooperation.”

The Russian decision to build its next set of nuclear power plants in Andhra Pradesh was also reported by Rosatom sources to Sputnik: “1,200 MW VVER Nuclear Reactors will be constructed there with the safest, most up-to-date technology. Currently the location of one more sites for the construction of six new Russian-designed nuclear reactors is being considered by India. We hope to get more information about the new site soon.”

China’s Chief Lunar Engineer Outlines Next Two Moon Missions

July 25 (EIRNS)—China’s chief Chang’e mission lunar engineer, Wu Weiren, in an interview published in the July 21 Science magazine, discussed China’s highly-anticipated next two lunar missions. Chang’e-5, the lunar sample return mission which will be launched next year, will land in the Ocean of Storms, he reported. This is the general area which has already seen U.S. and Russian landers. Wu said they are choosing this region, “but with some considerations for an unprecedented landing site.” He said that the mission, from the launch of the craft to the return of the samples to Earth, will “be about a couple dozen days.” In fact, each one of China’s space science missions has included a capability, such as the Chang’e-3 rover’s ground-penetrating radar, which has not been attempted before.

Chang’e-4, which they are “pretty sure will be conducted by the year 2018,” will land on the far side of the Moon. Wu said that although this spacecraft was designed as the back-up for Chang’e-3, it has been repurposed for this mission, and “will have new instruments and upgraded instruments.” The three areas of focus will be to study the topography of the Moon, the geology, and do astronomy on the Moon, “observing the universe, and also solar activity, from the far side of the Moon. “That will be unprecedented,” he said.

He was asked if the science or the engineering challenges took priority in these missions. “Engineering objectives have always been given priority in our lunar missions,” he responded. “We have to guarantee that we can access space, access a lunar orbit, and the lunar surface, to realize the scientific objectives. We look carefully at our engineering objectives and the competences that we have, and then, based on that, we design our scientific objectives.”

This is not unlike the progressively more difficult lunar missions that China’s American and Russian predecessors undertook. The first goal must be to verify the engineering ability to get there, and once that is established, the focus on science will follow.

Iran Will Get Ready To Join the ITER Fusion Project

July 25 (EIRNS)—Iran’s cooperation on the International Thermonuclear Experimental Reactor (ITER) fusion project is moving forward, according to Iran’s representative to ITER. Mahmood Ghoranneviss, the founder of Iran’s fusion program, who was interviewed in the Sept. 18, 2015 of EIR, was on the Iranian delegation that visited the ITER project in France earlier this month.

The EIR interview with Dr. Ghoranneviss is quoted in the weekly newsletter circulated by ITER, which reported on the delegation’s visit.

Dr. Ghoranneviss reports that it has been decided that Iran will “associate” with ITER for two years, during which time they will train experts in Iran and design and fabricate some diagnostic systems for ITER. After that, it will be decided to bring Iran in as a “main member” of ITER.

Iran’s Islamic Republic News Agency (IRNA) reports today that Ali Akbar Salehi, head of Iran’s Atomic Energy Organization, who headed the delegation to France, said that “obstacles preventing Iran to join ITER have been removed and the country will officially join the group.” He also said that recently, six fusion experts from France had visited Iran, where views were exchanged on the necessary preparatory work for Iran to participate in ITER.

OTHER

Debate Resurfaces in Germany on Banning Computer/Internet Violence

July 25 (EIRNS)—With a third major violent attack occurring in a matter of a few days occurring today in Germany, a public debate has broken out on the urgency of banning computer killing games, as well as of underground websites like Darknet (through which the Munich killer got his handgun and plenty of ammunition, as is reported).

In the wake of the incident in Munich of Friday night, German Internal Security Minister Thomas de Maizière said on Saturday: “It is clear that the unbearable dimension of violence-worshipping games on the Internet also have a destructive effect on the development of adolescents. No reasonable man can contest that.”

With discussion on the need for such a ban picking up in Italy, also, in the context of the LaRouche movement’s international mobilization for such a ban, advocates and designers of these games are pushing back, insisting in the German media that “for every survey proving a connection between computer games and violence there exists a survey that precisely contradicts it”; or “games may lead to a wild weekend, but then the kids calm down for the rest of the year,” and similar attempts at a narrative.

Reach us at 1-800-278-3135 or www.larouchepub.com