EIR Daily Alert Service

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EDITORIAL

Effort To Save Euro Banks Fails—Herrhausen or Bust

Aug. 1 (EIRNS)—The European Banking Authority released the latest stress tests on the Euro banks at 10:00 p.m. (22:00 UCT) Friday night, hoping to be able to calm nerves over the weekend, but the effort failed as bank stocks tumbled Monday. The enormous scale of the bankruptcy of the entire banking system is increasingly obvious to all but the blind.  The stress tests were in fact a total fraud—the EBA dropped its previous policy of giving passing or failing marks, and did not even consider the massive derivative exposure of the major banks—but nevertheless it was clear that there is hardly a sound bank standing.

The fact that one (and only one) bank was bailed out—Italy’s Banca Monte dei Paschi di Siena (the world’s oldest bank)—simply demonstrated that the “bail-in” rules in the U.S. and Europe which were supposed to save taxpayers from further bail-outs (by stealing depositors’ money), as in the Dodd-Frank legislation, was a fraud from the beginning.

The most hysterical response was from Deutsche Bank’s Chief Risk Officer, Stuart Lewis, who was asked by the Frankfurter Allgemeine Zeitung about the IMF’s report that Deutsche Bank was “the most dangerous bank in the world.” Lewis responded: “No, not at all. Only one IMF report has recently muddled up the situation. We are not dangerous. We are very relevant. Deutsche Bank is interwoven with the entire financial sector.”

So much for truth in today’s Casino Mondial.

The only way out is that proposed by Lyndon and Helga LaRouche: (see: “Deutsche Bank Must Be Saved, For the Sake of World Peace”) to recapitalize Deutsche Bank while restoring the policies of Alfred Herrhausen, the chairman of Deutsche Bank who was assassinated just weeks after the fall of the Berlin Wall in 1989: to restore his policies of cooperation with the then-Soviet bloc and the developing nations for global development.

Madmen in the Obama camp are promoting war with China and Russia. A report released on July 28 by the RAND Corporation, funded by the U.S. government and the Army, is titled “War with China—Thinking Through the Unthinkable,” argues that if there were a war between the U.S. and China: “Chinese military losses would significantly exceed U.S. losses during a war. However, the unrelenting improvement of Chinese anti-access capabilities could increase U.S. losses and, as U.S. strike capabilities are depleted, reduce Chinese losses.” Better now than later, is the unstated message. Showing what LaRouche described as an incredible level of “make believe,” the report says that Russia would have “no significant bearing on the fighting,” and advises us to rest easy since they “regard nuclear war as highly unlikely.” Several scenarios are presented which could unleash such an existential threat to mankind, all blamed on China’s “aggression” or their “misjudging” the U.S. willingness to go to war over disputed islands in the East China Sea or the South China Sea.

The American “boiling point” has been reached, as demonstrated by the chaotic breakdown of both political parties. At such a moment in history, people can be driven to madness; to fascist forms of racism and war hysteria. But it is also in such moments of history as this that human beings become able to reach inside themselves to find that quality of mind which defines their true nature as creative beings, to shape the future for the benefit of all mankind.

Percy Shelley said of such times as these: “At such periods there is an accumulation of the power of communicating and receiving intense and impassioned conceptions respecting man and nature,” when people who choose to do so may reach into “that power which is seated on the throne of their own soul.” That is the choice for each of us.

COLLAPSING WESTERN FINANCIAL SYSTEM

Biggest Banks Jettison Customers, Become Investment Banks

Aug. 1 (EIRNS)—An in-depth study by Bloomberg News, published July 29, shows the effects of 20 years without Glass-Steagall and eight years of insane central bank policies, on two of the world’s biggest banks—Citigroup and HSBC. “Citibank, HSBC Jettison Customers,” is the title of Bloomberg’s article describing their findings, which are that the two mega-giant banking groups have essentially spent the Obama years trying to become immense investment banks, cutting their commercial banking activity by about 40% in each case.

Citigroup, for example, brags that it has trading floors in more than 80 countries, for trading of securities, derivatives, structured products, etc. But it has retail banking operations in just 21 countries, having pulled out of 29 countries—mostly in Europe and South America—since 2006. In the United States, two-thirds of Citi’s retail bank offices across the country have disappeared since 2006, and now exist in just seven metropolitan areas on the East and West Coasts. Where investment banking accounted for 33% of its profits in 2006, it now accounts for 56%. And its retail banking operations are now primarily in Asia.

With HSBC, which once had the largest global retail banking operations in the world, all the same changes have occurred, but to an even more exaggerated degree. Investment banking now accounts for 75% of its profits.

In other words, both these giants have come to function like Deutsche Bank.

Interestingly, Citigroup “has used capital freed up from divestitures to boost its derivatives business,” the nominal exposure to which has zoomed from $26.4 trillion in 2006 to $55.6 trillion now.

Both megabanks have severe problems with deferred prosecution agreements stemming from Wall Street-London crimes, which have motivated them to abandon commercial banking in some countries; most obviously, Citibank has divested its Mexico subsidiary.

Wells Fargo, by contrast, has more commercial banking customers than it did ten years ago, by virtue of buying the bankrupt Wachovia Bank. But with Wells Fargo, too, the share of its profits coming from investment banking casinos has grown, from 25% in 2006 to 34% now.

STRATEGIC WAR DANGER

RAND Corporation Issues Report on ‘War with China: Thinking Through the Unthinkable’

Aug. 1 (EIRNS)—The Obama war party is dropping all pretenses and preparing for war on China, as the above title of the July 28 RAND Corporation report makes clear. The contents are chilling, proposing that the U.S. is losing its edge if it waits even a few more years, and insanely arguing that war is winnable because the use of nuclear weapons is “highly unlikely,” and that Russia “would have no significant bearing on the fighting.”

The RAND press release announcing the release of “War with China: Thinking Through the Unthinkable” reads in part:

“As Chinese military capabilities improve, the United States no longer can be certain that a Sino-U.S. war would lead it to achieve a quick and decisive victory….

“At present, Chinese military losses would significantly exceed U.S. losses during a war. However, the unrelenting improvement of Chinese anti-access capabilities could increase U.S. losses and, as U.S. strike capabilities are depleted, reduce Chinese losses….

“[A] premeditated attack from either side is unlikely … [but] China could try to intimidate its neighbors below the threshold of U.S. intervention and misjudge where that threshold is, or underestimate U.S. willingness to back Japan militarily in a crisis over disputed territory in the East China Sea….

“Technological advances in the ability to target opposing forces are creating a condition of … conventional counterforce, where each side has the means to strike and degrade the other’s strike forces. Because this increases the incentive of each side to attack an enemy before one’s forces are attacked, it will make crises and military confrontations—such as the ongoing disputes in the South China Sea—increasingly and dangerously unstable, according to the study….

“Internally, China’s authoritarian regime and nationalistic public mood would, in the short term, enable it to wage war despite heavy losses, whereas U.S. politics are less predictable. Over time, however, China could be subject to heightened dissidence and separatist activities, especially as the economy—the ultimate source of regime legitimacy—is battered.

“Internationally, Russia and NATO might line up behind China and the United States, respectively, but have no significant bearing on the fighting…. Japan’s entry into a Sino-U.S. war could tilt the military situation, though this could increase Chinese resolve and result in attacks on Japan.”

Co-authors of the 116-page study are lead author and Adjunct Senior Fellow David C. Gompert, Astrid Stuth Cevallos and Cristina L. Garafola. “Research for the study was sponsored by the Office of the Undersecretary of the Army and conducted within the RAND Arroyo Center’s Strategy, Doctrine and Resources Program, a federally funded research and development center sponsored by the U.S. Army.”

ISIS Video Threatens President Putin’s Life and Calls for Jihad in All of Russia

Aug. 1 (EIRNS)—A nine-minute YouTube video reportedly issued by ISIS yesterday threatened the life of Russian President Vladimir Putin, and called on followers to wage jihad in Russia. The video went viral shortly after the shooting down of a Russian Mi-8 helicopter returning from a humanitarian mission delivering food and medicine to residents of Aleppo, Syria. Gen. Sergei Rudskoy, Chief of the Main Operational Directorate of the Russian General Staff, told reporters that the helicopter was downed over ground under the control of the Jabhat al-Nusra group and allied members of the “moderate opposition,” Russia’s Defense Ministry reported today.

According to Sputnik, Reuters and multiple other media sources, the video showed a masked man driving a car in the desert, yelling “Listen, Putin, we will come to Russia and will kill you at your homes…. O Brothers, carry out jihad and kill and fight them.” The video shows footage of armed men attacking armored vehicles and tents, and a subtitle reading “Breaking into a barracks of the rejectionist military on the international road south [of] Akashat.” It was posted to the Telegram account which ISIS has previously used to transmit threats.

RT reminds readers of the speech by President Putin last October, in which he reported that an estimated 5,000-7,000 fighters from Russia and other CIS member states were fighting for the Islamic State, and warned of the danger of these radicalized jihadis returning to Russia. “We certainly cannot allow them to use the experience they are getting in Syria on home soil,” he stated, and called for the creation of a broad international coalition to combat the spread of terrorism.

Putin Participates In Russia’s Navy Day Celebrations

Aug. 1 (EIRNS)—Yesterday marked “Navy Day” in Russia, and Russian President Vladimir Putin personally participated in the Navy Day celebration in St. Petersburg, where he reviewed the fleet, addressed the ceremony, and toured the historical cruiser Aurora. In his remarks, Putin said the Russian Navy is receiving modern ships equipped with the latest weaponry, and that the fleet is being maintained at a level of readiness appropriate for the threats that the country faces, while at the same time making the point, “We will be paying particular attention to ensuring social guarantees for service personnel and their families.” The Aurora cruiser, the whose restoration was recently completed, has special significance in Russian history. This is the only ship of the national fleet which participated in the Russo-Japanese War, World War I, and the Great Patriotic War, reports Sputnik, and is said to have fired the first shots of the 1917 Revolution.

Putin followed yesterday’s celebrations with a meeting today in St. Petersburg on Navy shipbuilding, with Defense Minister Sergei Shoigu, Commander of the Navy Adm. Vladimir Korolev, and industry officials. The Navy’s Deputy Commander for Weapons, Vice Adm. Viktor Bursuk, told Izvestia that Russia has no intention of scaling back its shipbuilding plans, which include three new classes of large warships: the Storm aircraft carrier, the nuclear-powered Leader destroyers, and a new helicopter carrier apparently derived from the French Mistral-class ships: “There are several options for implementing the promising program, but no decision has been made yet by the Supreme Commander on the new program of fleet construction.”

TASS Reports on French Monthly: NATO Should Have Disappeared After Cold War

Aug. 1 (EIRNS)—An article by Serge Halimi in the August issue of the monthly Le Monde Diplomatique argues that NATO needs to be abolished, reported TASS.

“The North Atlantic Alliance represents a relic of the Cold War and should have disappeared after the collapse of the Soviet Union,” Le Monde Diplomatique says, reports TASS. “You can imagine Russia’s reaction to the Alliance’s decision to hold the summit in a place where the Warsaw Pact was signed in May 1955. Ukrainian President Petro Poroshenko, who wages an undeclared war against Russia, was invited to the session in Warsaw, though his country is not a member of NATO,” the journal said. “So why is the Alliance aggravating tensions between European countries and Russia? This allows Washington to hamper any rapprochement between them,” the article concluded.

Russia Invites NATO Officials to Moscow for ‘Constructive Dialogue’ on Avoiding Conflicts

Aug. 1 (EIRNS)—Russia’s Deputy Defense Minister Anatoly Antonov announced today that military officials from NATO have been invited to a September meeting in Moscow to discuss the military-political situation in Europe, Sputnik reported. The issue of preventing any incidents in the air or on the sea is high on the agenda, he said, as is the fight against the Islamic State and other terrorist organizations. He emphasized Russia’s willingness to ensure that all military flights over the Baltic region take place with transponders on, a subject that was also discussed July 29, at a briefing for all foreign military attachés stationed in Moscow.

At that same July 29 meeting, Antonov explained, attachés were briefed on the results of the July 13 meeting of the NATO-Russia Council (NRC). Russia Beyond the Headlines reported today that at the NRC meeting, Russia proposed a “positive program” for improving relations with NATO, based on deescalating tensions and preventing “military incidents on the contact line between the sides’ armed forces.” Within the NRC format, he said, the Russia-NATO Cooperative Airspace Initiative (CAI) can be an important means of “promoting the safety of aviation flights.”

Antonov underscored that Moscow is prepared to carry out joint incident-prevention work, based on existing bilateral agreements and consultations with the Defense Ministers of Latvia, Lithuania, Estonia, Poland, Sweden and Finland “to address mutual concerns related to military activities in the near-border areas.” The Deputy Defense Minister also reported that Russia’s Defense Ministry is carrying out a “meticulous” evaluation of decisions made at the July 8-9 NATO summit in Warsaw.

U.S. Joint Chiefs Chairman General Dunford in Turkey To Cool Tensions

Aug. 1 (EIRNS)—Chairman of the U.S. Joint Chiefs of Staff Gen. Joseph Dunford arrived in Turkey July 31, on a mission to patch up U.S.-Turkey military relations. Today, he met with Turkish Prime Minister Binali Yildirim and Turkish Chief of General Staff Gen. Hulusi Akar in Ankara. According to his press office, Dunford “will deliver messages condemning in the strongest terms the recent coup attempt and reaffirming the importance of the U.S.’s enduring partnership for regional security, as symbolized by coalition operations out of Incirlik in the counter-ISIL fight, and the importance of Turkey’s contributions to both the counter-ISIL coalition and NATO alliances.”

Dunford traveled to Turkey after Turkish President Recep Tayyip Erdogan accused Gen. Joseph Votel, Commander of U.S. Central Command, of siding with the coup plotters. In remarks at the Aspen Security Forum last week, General Votel expressed concern that a large number of Turkish officers who were interlocutors with the U.S. were now in jail, for allegedly participating in the July 15 failed coup.

General Dunford could find his job more difficult, after a public prosecutor issued an indictment July 29 charging that the CIA and the FBI helped train the coup plotters. The Turkish daily Hurriyet reported the indictment alleges that “the CIA and FBI provided training in several subjects to the cadre raised in the culture centers belonging to the Gülen movement,” a reference to U.S.-based Islamic cleric Fethullah Gülen. “The operations carried out by prosecutors and security officials during the Dec. 17 process can be taken as a good example of this.” The “Dec. 17 process” refers to a high-profile corruption probe that targeted senior government officials in 2013. The “shocking allegations” against the U.S., reports Sputnik, have emboldened anti-American fervor in the country, with over 5,000 protesters marching towards the Incirlik Air Base July 28 chanting “Death to the U.S.,” and demanding that the United States leave.

NEW WORLD ECONOMIC ORDER

Argentina Boasts of $25 Billion in Chinese Investment—For Projects Signed by Previous Kirchner Government!

Aug. 1 (EIRNS)—With much fanfare, Argentine Ambassador to China Diego Guelar trumpeted to the state news agency Telam that China has invested $25 billion in several of the country’s infrastructure projects in the first half of 2016, and has become not only Argentina’s primary energy partner, but also, “without a doubt, our most important financial partner.” Guelar estimated that 70% of bids for solar and wind energy projects will be Chinese, and that over the next 20 years “we can say that our energy model will be tied to our association with China.”

So beside himself was Guelar, that he failed to mention one small detail: that a good number of the projects he bragged about—the huge hydroelectric project in Santa Cruz province, two new nuclear plants (Atucha IV and V), and the modernization of the Belgrano Cargas railroad line—were projects signed by then President Cristina Fernández de Kirchner and Chinese President Xi Jinping in 2014 and 2015.

The $11 billion swap agreement between the Chinese and Argentine central banks, about which Guelar gushed, was also established by the Fernández de Kirchner government in 2015.

Perhaps Guelar’s enthusiasm stems from the fact that the “flood of dollars” that was supposed to rain down on Argentina from foreign investors once neocon Mauricio Macri took office last December, hasn’t really materialized and government desperation is growing as the economy crumbles. Guelar never once mentioned Fernández de Kirchner’s name, saying only that contrary to the “previous model” of state-to-state agreements and concessions, China will now have to show it can be more “competitive”—offering lower interest rates and better financing terms. The Macri government, whose policies are dismantling Argentina’s productive economy and impoverishing the population, will soon find, however, that it’s in no position to dictate terms to China.

China Bids To Become Greek Power Grid Operator as Part of Regional

Aug. 1 (EIRNS)— China has shown interest in the Greek energy sector as part of its participation in Eastern European energy development. Two major state firms from China have made bids to purchase 24% of Greek power grid operator ADMIE, which would squeeze out bids by Italy’s Terna and France’s RTE. The two Chinese firms are the State Grid Corporation of China (SGCC), which also participated in an earlier tender for 65% of ADMIE and China Southern Power Grid.

According to Greek government sources cited by Kathimerini, the Chinese interest reflects its strategy of participation in energy infrastructure projects in Europe. During Prime Minister Alexis Tsipras’s recent trip to China, China expressed interest in the acquisition of a 17% stake in Greece’s Public Power Corporation (PPC)—whose tender will follow ADMIE’s—as well as in the joint construction of new electricity units with PPC in Greece and the Balkans.

Although not stated in this article, there is a nuclear angle to this. Unlike Russia’s Gazprom, China has no hydrocarbons to export, but it does have nuclear technology and financing capabilities. China has already partnered with the Canadian Candu Energy Inc., manufacturer of Candu reactors, to build reactors in Romania. As Bulgaria has also approached China.

There have been long-term proposals to build new reactors in both Bulgaria and Romania; both already have nuclear reactors and can export electricity to neighbors, including Greece.

Russia To Build Thermal Power and Desalination Plant in Iran

Aug. 1 (EIRNS)—Iran Daily reports today that Russia has been awarded a contract to build a 1.4GW thermal power plant using fuel oil and a desalination plant in the Bandar Abbas Port area of Iran. The Russian state company Rostec has reached a €1 billion deal with Tehran, and had the distinction of being the first Russian company to get a firm contract with the Iranian government since Western sanctions against Iran were lifted, RT reported.

The thermal power plant, called the Hormozgan Plant, will have four 350 MW generators, while the Bandar Langeh seawater desalination plant, will have a desalination capacity of 200,000 cubic meters of seawater per day. News reports pointed out that this is not the biggest power plant Russia has built in Iran. In the 1980s, the Soviet Union built the 1.89 GW Ramin plant and the 1.6 GW Isfahan plant in Iran. Russia will cover 85% of the awarded project’s cost while Iran is to provide the remaining 15%, Iran Daily reported.

Russian Railways and Tehran have also agreed on a €1.2 billion project to electrify 495 km of Iranian railroad, but the contract has not yet been signed. Inter RAO is ready to modernize and expand Iranian hydroelectric and power generation but financing is still unclear, Russia’s Kommersant reported.

First International Mariinsky Far East Festival Opens for Twelve Days in Vladivostok

Aug. 1 (EIRNS)—The First International Far East Festival was launched in Vladivostok on Saturday, July 30, running through Aug 10. Organized and conducted by President Vladimir Putin’s friend Mariinsky Theater Artistic Director Valery Gergiev, and planned in conjunction with the International Conference on the Development of the Russian Far East planned by Putin for Sept. 2-3 in Vladivostok, the Festival brings together on the Primorsky Stage of the Mariinsky Theater in Vladivostok musicians from Japan, China, Taiwan, South Korea, Germany, the U.K., the U.S and elsewhere, in addition to soloists from the Mariinsky Theater itself, and several winners of the Tchaikovsky International Piano (and other instrument) Competitions.

Gergiev explained that the festival is timed to commemorate the 125th anniversary of the birth of Russian composer Sergei Prokofiev, and opens with Prokofiev’s opera “Betrothal in a Monastery.”

The second day, July 31, which is Russia’s Navy Day, was performed onboard the flagship of the Russian Pacific Fleet, the guided missile cruiser Varyag.

Gergiev reported, “Practically all performances are sold out, and those are unseen-before sales for Vladivostok, both in money and in the audience; its variety; the variety of platforms. The [ticket] sales here jumped up; they look outstandingly successful.”  He announced an extra performance will be added in the city of Ussuriysk, 100 km from Vladivostok.

The 12-day festival will include more than 25 performances, including the Mariinsky Theater’s best known ballets and operas.

U.S. POLITICAL AND ECONOMIC

Assange: Clinton Knew About Libya/Syria Gun Running—And Lied

Aug. 1 (EIRNS)—Hillary Clinton knew in 2011 about the Libya to Syria gun-running nexus—run out of the CIA stronghold of Benghazi—long before it became public. So charged WikiLeaks Editor-in-Chief Julian Assange, last week, based on 30,000 hacked emails (50,000 pages with attachments)—7,500 of which were sent by Clinton herself.

Speaking on “Democracy Now!” news program on July 25, Assange said, “So, those Hillary Clinton emails, they connect together with the cables that we have published of Hillary Clinton, creating a rich picture of how Hillary Clinton performs in office, but, more broadly, how the U.S. Department of State operates.” Assange, who is definitely not “with her,” explained to host Juan Gonzalez that, “For example, the disastrous, absolutely disastrous intervention in Libya, the destruction of the Qaddafi government, which led to the occupation of ISIS of large segments of that country; weapons flows going over to Syria, being pushed by Hillary Clinton, into jihadists within Syria, including ISIS; that’s there in those emails. There’s more than 1,700 emails in Hillary Clinton’s collection, that we have released, just about Libya alone.”

Following this, Jim Hoft, in his blog, called the “Gateway Pundit,” noted that Clinton had, in fact, been questioned about this very operation back in 2013, during the original Senate Benghazi hearings. “Hillary Clinton denied she knew about the weapons shipments during public testimony (under oath) in early 2013 after the Benghazi terrorist attack,” under Sen. Rand Paul’s questioning, Hoft says. The Benghazi attack on Sept. 11, 2012, hitting the U.S. Consulate and CIA annex, killed U.S. Ambassador Chris Stevens and three other American officials. A 2015 video posting by Fox News shows an overconfident Clinton, first dodging the question, then clearly stating, “I do not know. I do not have any information on that.”

Senator Paul had stated that “incompetent” personnel at the leadership level—meaning Clinton, herself—should be replaced.

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