TUESDAY, AUGUST 16, 2016

Volume 2, Number 255

EIR Daily Alert Service

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

EDITORIAL

The Real Issue of Productivity: Catching Up To China and the ‘Eurasian Power’

Aug. 15 (EIRNS)—Will the United States revive the scientific creativity and economic productivity to collaborate peacefully, over the long term, with China’s progress?

Will Europe decide to leave what Helga Zepp-LaRouche calls the “suicide pact” with Obama and a NATO command planning for wars with both Russia and China? When will Europe join instead with Eurasia’s New Silk Road of great infrastructure projects—not to mention deep space exploration and fusion power development?

Those are the real questions citizens should be involving themselves in—not the disasters who are currently running for election.

The announcement today that German fusion researchers are joining a Russian national laboratory in developing a new “polarized deuterium” fuel for fusion power shows the creative direction for Europe’s best capabilities, for example. The result can leapfrog over the recent breakthrough in Germany’s fusion program—but those results have already been far exceeded by China’s.

China is making technological innovation and growth the theme of the G20 meeting it will chair on Sept. 4-5 in Hangzhou. The same is true of Putin’s Eastern Economic Forum in Vladivostok Sept. 2-3.

The Eurasian nations are pulling together in a process capable of winning peace as well as development; and it is leadership actions initiated by Russia’s President Vladimir Putin which have largely made that process possible.

It has put the United States in front of a choice—and it is not the choice between two Dick Cheney impersonators for President.

The IMF on Aug. 12 forecast China’s annual economic growth could fall to 6% by 2020. Were this true, then the United States—if guided by a revolutionary new Presidency deploying national credit for new infrastructure, space exploration, and fusion technologies—could hope to catch up with China’s growth by that time!

U.S. and Federal Reserve officials have at last admitted recently that they are worried by the very low productivity of the U.S. economy, as well as its very low growth. The Obama economy has exhibited unprecedentedly low productivity growth, no matter how measured.

A common measure of “productivity” merely divides GDP by hours worked. By that measure, labor productivity growth has never reached even a 1% annual rate since Obama signed his “stimulus act” in his first year in office. U.S. economic growth has been a pitiable 1.2% for the past 12 months.

But real labor productivity increases come from scientific and technological advances, and education. The National Bureau of Economic Research (NBER) report on the very high productivity growth during Franklin Roosevelt’s Presidency says, “This was due to the very strong growth in electric power generation and distribution, transportation, communications, civil and structural engineering for bridges, tunnels, dams, highways, railroads, and transmission systems; and private research and development.” The challenges of all this modern infrastructure-building produced technological advance in large numbers of industries, and R&D was sharply increased.

Economists grade the 1930s, ’40s, and the Apollo Project ’60s as the peaks of real productivity growth in U.S. history—nearly 3%/year improvement in productivity.

According to the San Francisco Federal Reserve and the NBER, George W. Bush’s eight years saw such growth at 1.0% annually; Obama’s near-eight years, 0.75%.

Time to create a new Presidency, and try to catch up with China.

SCIENCE AND INFRASTRUCTURE

New German-Russian Cooperation In Fusion Power Research

Aug. 15 (EIRNS)—The German nuclear research center in Jülich and Russian research at the Budker Center in Novosibirsk have signed a cooperation agreement for the joint construction of a special facility to produce polarized deuterium fuel from unpolarized deuterium. This will generate pre-ordered “nuclear spins”—alignments of the deuterium atoms—for fusion power experiments involving both deuterium and helium fuel. The joint project is funded by the German Research Association (DFG) and the Russian Science Foundation (RSF).

Departing from traditional generation of pre-ordered spins from already-polarized deuterium, the Russian scientists and engineers will contribute a specific magnetic field configuration, which will pre-order the isotope spins already during the polarization process. This enables the desired spins be more easily filtered out and, in the same process, separated from the spin alignments not wanted for the experiment.

Why? The efficiency of the fusion power reaction is considerably higher with completely polarized fuel than with the traditional method. It gives a larger “cross-section” to the reaction which combines the atoms of deuterium and/or helium, at extremely high temperatures and pressures produced by magnets or lasers.

The reaction is thus longer-lasting—one major goal of fusion power development—and the energy and particles produced can be directed magnetically for technological purposes.

The configuration design for polarizing the deuterium fuel comes from the Russian center. The German contribution will be the construction of four Lamb Shift Polarimeters from the Jülich center. There are only five of these worldwide at this point, so Jülich will take a global lead in this kind of research. Related research teams at the Universities of Düsseldorf and Darmstadt are part of the effort.

The key for German fusion power testing is the availability of this polarized fuel for the national fusion research center in Greifswald—an advanced magnetic fusion confinement design known as a stellarator. In early February, Greifswald, with unpolarized fuel, achieved 80 million degrees Fahrenheit temperature for one-quarter of a second of complete confinement of the fusion plasma by the magnetic fields.

But then in late February, China’s tokamak magnetic confinement design—the Experiment Advanced Superconducting Tokamak (EAST)—achieved 90 million degrees for 100 seconds of confinement.

The combination of polarized fuel and stellarator design was widely discussed and described in Lyndon LaRouche’s Fusion magazine 35 years ago, as key to achieving fusion power.

STRATEGIC WAR DANGER

Former Vice Chair of the Joint Chiefs of Staff Calls for End to U.S. First-Strike Doctrine

Aug. 15 (EIRNS)—General James Cartwright (USMC, ret.), who was Vice Chairman of the Joint Chiefs of Staff and earlier served as head of the Strategic Command, has co-authored an op-ed appearing in today’s New York Times, calling on President Obama to end the U.S. nuclear first strike doctrine. Cartwright and co-author Bruce G. Blair also called for a drastic reduction in the U.S. arsenal of thermonuclear weapons, down to 1,000, largely to be deployed on submarines and strategic bombers not vulnerable to a first strike attack.

In April 2015, General Cartwright co-authored another New York Times op-ed with Gen. Vladimir Dvorkin (ret.), former intelligence director of Russia’s Strategic Rocket Forces, warning about the growing danger of thermonuclear war and calling for the U.S. and Russia to agree to end the hair-trigger policy of launch on warning.

After running down a list of benefits of declaring an end to U.S. nuclear first strike, Cartwright and Blair noted, “Although a no-first-use policy would limit the President’s discretion by imposing procedural and physical constraints on his or her ability to initiate the use of nuclear weapons, we believe such checks on the commander-in-chief would serve the national interest.” After noting that China has taken the lead in a no-first-use policy, the authors concluded that “President Obama would be wise to follow China’s example. As commander-in-chief, he can adopt no-first-use overnight and lead the way in establishing it as a global norm among all of the nine countries with nuclear weapons.”

Washington sources indicated that the Cartwright-Blair op-ed is an important contribution to the much-needed debate over U.S. strategic doctrine, for a post-Cold War world.

Saudi Genocide in Yemen Enabled by Indifferent Obama White House and Fueled by U.S. Weapons Sales

Aug. 15 (EIRNS)—Andrew Cockburn, in the current issue of Harper’s magazine, provides a devastating picture of the Saudi genocidal war in Yemen, which is enabled, without much afterthought, by the Obama administration. The article, “Acceptable Losses: Aiding and Abetting the Saudi Slaughter in Yemen,” demonstrates that the people of Yemen, especially in the western half of the country, have fallen victim to pragmatic considerations of the U.S.-Saudi relationship, including the $111 billion in U.S. arms sales to the Saudis that President Obama has done so much to facilitate, as well as the ambitions of Prince Mohammed bin Salman, a man who apparently sees Iranians under every bed and is determined to eradicate them, to every last Yemeni, if necessary. Cockburn doesn’t even mention the recent Houthi advances into Saudi territory near the Red Sea, but nonetheless paints a picture of an inept, incompetent, Saudi military campaign where everything is a target, even donkey carts. The Saudi bombing that Cockburn describes is clearly every bit as indiscriminate as what the Russian and the Assad government are accused of in Syria. Yet, there’s no official outcry about it.

“The civilian targeting is absolutely astounding. I’ve seen hospitals, mosques, marketplaces, restaurants, power plants, universities, residential houses, just bombed, office buildings, bombed,” Tariq Riebl, an aid worker who spent several months in Yemen, last year, told Cockburn. While Cockburn makes the point that the reported civilian death toll is probably a gross underestimate, if there’s any fault in his report, it’s that he doesn’t put enough stress on the second- and third-order effects of the campaign, such as the destruction of the port facilities in Hodeidah, early in the war, where 90% of the food consumed by the population north Yemen used to be brought into the country.  The starvation that UN aid agencies have reported in Yemen, resulting in part from the closure of that port, as well as the blockade imposed on the country with U.S. backing, likely has had an even more devastating effect on the population than even the indiscriminate bombing of the civilian residential areas which Cockburn describes. On the other hand, the port of Mukalla, on the Arabian Sea—an al-Qaeda zone—was hardly touched, allowing al-Qaeda to occupy it unmolested for some 16 months, until they were finally evicted by Saudi-backed government troops in April.

Cockburn also provides some of the back story to the Saudi mess in Yemen, going back to the deployment of cleric Muqbil al-Wadie to establish a Wahhabite Sunni madrassa in “the heart of Zaidi territory” in north Yemen, nearly 40 years ago. The Zaidis are now better known as the Houthis. Al-Wadie, it turns out, was a leader of the 1979 assault on Mecca’s Grand Mosque, who had until that moment been rotting in a Saudi prison. “As has been their habit, the Saudis solved their own terrorism problem by exporting it,” Cockburn writes.

U.S. POLITICAL AND ECONOMIC

Senators for Blocking Arms Sales to Saudi Arabia, Blame Obama for Saudi Crimes

Aug. 15 (EIRNS)—Members of the House and the Senate are putting the blame, correctly, on British puppet Obama for Saudi war crimes in Yemen, and are threatening to block the $1.15 billion arms sales to the terrorist-supporting Kingdom that Obama approved last week. Reports from Médecins Sans Frontières (MSF, Doctors Without Borders) in Yemen over the weekend are that Saudi airstrikes killed 21 civilians, including 10 children when bombs hit a school in the northern village of Sa’dah, reported antiwar.com today. Another 19 children were injured in the attack.

Congress has 30 days after they reconvene following the summer recess to block the sale, which includes up to 153 Abrams tanks, 20 Hercules armored vehicles, and some 500 machine guns.

Sen. Rand Paul (R-KY) said that he will work with bipartisan coalition on a plan to block the deal in the Senate. “I will work with a bipartisan coalition to explore forcing a vote on blocking this sale,” he said in a statement emailed to Foreign Policy. “Saudi Arabia is an unreliable ally with a poor human rights record. We should not rush to sell them advanced arms and promote an arms race in the Middle East.”

Sen. Chris Murphy (D-CT), a member with Paul on the Senate Foreign Relations Committee, was quoted today in Britain’s Guardian from a June statement on Capitol Hill.

“If you talk to Yemeni Americans, they will tell you in Yemen this isn’t a Saudi bombing campaign, it’s a U.S. bombing campaign,” Murphy said. “Every single civilian death inside Yemen in attributable to the United States. We accept that as a consequence of our participation.”

In the House, opposition to the Saudi arms deal is also strong, reported U.S. News & World Report on Aug. 12.

“I believe the Saudi military’s operational conduct in Yemen and the killing of civilians with U.S.-made weapons have harmed our national security interests, and I will continue to oppose any arms sale that contributes to its operations in that arena,” says Rep. Ted Lieu (D-CA).

Rep. Jim McGovern (D-MA) similarly told the media, “This approved sale deserves to be scrutinized by Congress rather than rubber-stamped.” He added, “Saudi Arabia’s dangerous and reckless use of cluster munitions and other weapons has already harmed and killed countless innocent civilians. The last thing the United States should do is sell them more than a billion dollars’ worth of additional arms and military equipment…. America has a solemn responsibility to stand up for human rights and help protect the lives of innocent civilians.”

In June, Congressional opposition to the Saudis’ genocidal war surged after a UN report said that in 2015 the Saudi-led coalition killed 510 children and wounded 667 others in Yemen.

Fearing the growing Congressional opposition, especially since the July 15 release of the “28 pages” of the Joint Congressional Inquiry into 9/11 that had been classified for 14 years, last week the hyper-defensive Saudis “hijacked” Senator Paul’s Twitter account when he launched a poll asking readers to vote yes or no on the question, should the U.S. sell arms to Saudi Arabia? According to Washington Examiner, dozens of Saudi Tweets swarmed the poll, tilting the unofficial results to 73,000 “for,” and 27,000 “against,” and leaving all kinds of threatening comments.

Death of a Nation: Millennials Are Rejecting Both Candidates

Aug. 15 (EIRNS)—A new poll out today is being given much attention, since it ostensibly shows that “millennial” voters are rejecting Republican Presidential candidate Donald Trump’s racist outpourings, all to the benefit of Democrat Hillary Clinton. But, as an article in Sunday’s Washington Post goes to great length to show, millennials are actually rejecting both candidates, a reality that will have repercussions long after the November election is over.

Interviewing a selection of 70 young voters from nine states, the Post article puts a fine edge on a political system which is collapsing, and the desperate need to rise above the brain numbing “left, right” straitjacket of the two-party system.

“These voters were embarrassed and ashamed that Clinton and Trump are the best the country has to offer,” the Post says, “only a small fraction [of young voters] sounded genuinely enthusiastic about a candidate. … [I]t is clear their mood is decidedly different from previous elections … most of those interviewed shared a disgust with both Hillary Clinton and Donald Trump so intense that it is pushing many beyond disillusionment and toward apathy.”

Both candidates are “deeply polarizing” with younger Americans, they say, a view reflected in the broader population. While 72% said they had an unfavorable view of Trump, a full 49% said the same of Clinton! “An overwhelming majority—68%—said they are dissatisfied with the choice of Clinton or Trump.” They described both candidates using words each has flung at the other, including: Evil, racist, criminal, liar, sad, horrifying, disgusting, dangerous and disaster.

Without being able to name it, perhaps, what the youth are reacting to is the fascist/corporatist nature of the current candidates/parties/election. That aspect was addressed directly, in a posting, Aug. 10, on Black Agenda Report, entitled “Hillary Stuffs Entire U.S. Ruling Class Into Her Big, Nasty Tent,” by executive editor Glen Ford. Under “the Clintons,” argues Ford, the Republican Party has become the Democratic Party, explaining that, “While Democrats scream ‘fascist’ at Donald Trump, actual fascists with real histories of mass murder at home and abroad gather in Hillary Clinton’s ‘Big Tent’ Democratic Party. The melding of GOP and Democratic fat cats is ‘the most dramatic effect of the breakdown of the duopoly system set off by Donald Trump’s white nationalist, anti-free trade revolt.’ Blacks and progressives will be shocked to find themselves at the margins of Hillary’s tent.”

Rep. Rosa DeLauro Rallies To Stop Obama from Ramming Through TPP Vote

Aug. 15 (EIRNS)—Rep. Rosa DeLauro (D-CT) is leading a drive to do “everything we possibly can,” to stop Obama from ramming through a vote on the Trans-Pacific Partnership before he leaves office. Last Friday, Aug. 12, the White House gave Congress the mandatory 30-day notice that it would be submitting legislation to pass the TPP—despite the opposition against the deal by the majority of Democrats in the House, and the declared opposition by both Clinton and Trump.

DeLauro and liberal TPP opponents have launched “new wave of petition campaigns and fundraising drives,” report The Hill today to block a vote this year.

“Make no mistake about it,” DeLauro said, “Speaker [Paul] Ryan and the administration are working hand-in-hand to plot a path for the TPP in the lame duck session of Congress. They will do everything possible to try to pass the TPP after the election.”

COLLAPSING WESTERN FINANCIAL SYSTEM

Wall Street’s Top Line of Attack on Glass-Steagall Is a Fraud

Aug. 15 (EIRNS)—Since recent advances in the mobilization for Glass-Steagall legislation in the U.S. Congress—including endorsement by both political parties’ Presidential platforms—numerous repetitive and foolish attacks have been published against Glass-Steagall in the financial media. Their authors have usually been bankers, bailers-out of banks, or financial analysts with motives both fearful and self-serving.

Wall Street’s leading anti-Glass-Steagall champion for the past five years, however, has been Peter Wallison, “Arthur Burns Fellow for Financial Policy Studies” at the Heritage Foundation. Trying to deal with the new situation, Wallison has invented a slick new argument which appears to be addressing an important subject—credit in the U.S. economy, or the lack of it for anything productive, along with the lack of growth and productivity. Wallison’s new line was published by American Banker on Aug. 9, in the form of a “How can he support this?” attack on the Trump campaign.

American companies, says Wallison, raise money primarily by issuing long-term bonds, not by borrowing from banks. Bond underwriting is handled by the investment banking divisions of banks. Therefore if Glass-Steagall breaks up the banks, the separated investment banks will get all the business, and the commercial deposit banks will atrophy: “Banking organizations will again be frozen out of the securities markets. They will become less profitable and less able to support their subsidiary banks, making bank failures and taxpayer bailouts more likely.”

Don’t attack investment bank speculations, goes the underlying message, because they are what American companies need.

Expect to hear this Wall Street line in the intensifying Glass-Steagall debate.

That Wallison’s argument is a Wall Street fraud, is shown by currently available data from the Federal Reserve about “bank credit” in the U.S. economy. Many U.S. banks, by now, own some form of investment-banking vehicle, so “bank credit” includes most of the bond market.

Loans and leases in outstanding bank credit as of Aug. 3 totalled $8.967 trillion. Securities (bonds) in bank credit totalled $3.252 trillion; and most of that ($2.343 trillion) was bond of the U.S. Treasury and U.S. “agencies” like Fannie Mae and Freddie Mac, which Glass-Steagall specifically allowed commercial banks to buy. Just $909 billion are bonds which investment banks alone can underwrite.

Some 90% of U.S. corporations have never issued a bond. Only the largest corporations do it regularly. The critical issue of credit to small and medium-sized enterprises, where most technological advance takes place, is one of bank lending—as it was, when Franklin Roosevelt wisely put Glass-Steagall into effect. This produced, as the FDIC’s Thomas Hoenig has observed, the “deepest and most stable capital market in the world.”

Die Welt: The Powerful of Berlin Are in Fear over Deutsche Bank Fate

Aug. 15 (EIRNS)—According to the Aug. 13 issue of Die Welt, no one less than German Finance Minister Wolfgang Schäuble, and the government, are in panic about the fate of Deutsche Bank. Under a headline, “The Fears of the Powerful Faced with Deutsche Bank,” they report “that at every political summer party in Berlin, where also people from business are there, it’s an issue.” And they note, citing an anonymous member of the government, it is probably related to the totally opaque status of Deutsche Bank’s massive derivatives portfolio, which Italian Prime Minister Matteo Renzi likes to mention when Schäuble complains about Italian banks. Die Welt comments: “From outside of the bank, one can’t seriously judge the risks of this portfolio,” adding some wishful thinking that hopefully somebody in the bank does.

“Schäuble’s people” are terrified that the Deutsche Bank could plunge, leading to a plea for Berlin to bail them out, just in the period before next year’s general election, including for the next chancellor. As BüSo Chairwoman Helga Zepp-LaRouche has emphasized, Deutsche Bank must be saved, but saved as the Deutsche Bank of CEO Alfred Herrhausen, who was assassinated in Nov. 30, 1989 just after the fall of the Berlin Wall, and not the Deutsche Bank taken over by London and Wall Street after he was murdered. A reorganized Deutsche Bank, cleansed of the changes made after Herrhausen’s assassination, will be necessary to join a competent German government, minus Chancellor Merkel and Finance Minister Schäuble, in government-backed credits to join with Russia, China, and India in the great Eurasian New Silk Road projects.

NEW STRATEGIC PARADIGM

Chinese Launching Bullet Trains on 12,000 Miles of High-Speed Rail

Aug. 15 (EIRNS)—Xinhua reported today that “China Standard” passenger bullet trains, a new Chinese design capable of 350 kph travel, have started operation in its northeast Liaoning Province.

China Rail Corporation has 2,470 of the trains, called electric multiple units (EMUs), built or being manufactured, and is launching on China’s entire high-speed rail network, which now totals 19,000 kilometers (about 12,000 miles) built within the past decade.

CRC executive Zhou Li told Xinhua that “China independently owns the design of the EMU, and it will be a leading model for China to export to the world.” He said China will offer rail products according to the needs of various countries, where it is also developing the many transport infrastructure projects of the One Belt, One Road initiative, comprised of the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

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