EDITORIAL
Like King Canute, the Oligarchs Cannot Stop the Tide
Nov. 29 (EIRNS)—The revolutionary changes sweeping through the Western nations are provoking hysteria among the has-been, discredited national leaders in Europe and the United States. The Brexit, the U.S. electoral defeat of the Obama/Hillary plan for war on Russia and China, the Philippine revolt against Obama, and nation after nation in Europe rejecting the anti-Russia sanctions and demonization of Putin—these and more represent a recognition across the West that their leadership has been under the control of financial oligarchs and war-crazed neo-conservatives who can no longer be tolerated. The Empire is crumbling—but the Lords will stop at nothing, even nuclear war, to save the Empire, if they are not replaced first.
It is no surprise that the British rise to defend the Empire in the most overt and repulsive fashion. Tony Blair, after being exposed by England’s own Chilcot Inquiry of waging a criminal war of aggression in Iraq based on lies, has announced that he is returning to politics to save his dying breed. A U.S. military officer writing on the Sic Semper Tyrannis blog of Col. Pat Lang perhaps best captures the irony: “I also note that in the U.K., Tony Blair has lifted the lid off his casket and again stalks the streets of London aiming to reverse Brexit. Do we see a pattern here? International elites none too happy with revolting peasants on both sides of the Atlantic?”
Also from the U.K., former Tory Cabinet Minister Ken Clark looks to the pathetic Angela Merkel as the last great white hope for the British Empire: Merkel, he writes, now that the U.S. has been “lost” to Trump, is “the only politician succeeding in keeping the tradition of Western liberal democracy alive.” Clearly, if what has happened to the West is “Western liberal democracy,” then the people are ready to dump it.
The hysteria extends to the dying breed’s response to the defeat of terrorism taking place in Aleppo. As Russia and Syria together are demonstrating that terrorism can, in fact, be defeated, and the population freed from barbarism, the Western media react with horror, insisting that Russia and Syria are the problem, not the terrorists. France, under the doomed Hollande regime, even called an emergency UN Security Council meeting to denounce Syria.
But the tide cannot be turned back. Behind the surge of sanity in the West is the growing recognition that Russia and China have put in place a new paradigm based on win-win cooperation in the physical development of nations and regions around the world. On every continent, conferences are being held on the New Silk Road initiated by Xi Jinping, examining the existing and potential infrastructure development which links nations through joint progress, and through sharing the best and most creative traditions within their respective cultures.
The LaRouche organization has initiated and campaigned for these ideas for half a century. The truth is revealed in the long waves of history, and the world is now experiencing the thundering crash of an historical tidal wave. What direction the subsequent awakening will take depends on the power of creativity and Classical culture adopted by the people of the world, and especially in the United States.
As Friedrich Schiller, the Poet of Freedom, wrote: “The dignity of man into your hands is given. Its keeper be. With you it sinks, with you it will be risen.”
THE NEW GLOBAL ECONOMIC ORDER
Japan’s Economy Minister Urges Companies: Cooperate with Russia
Nov. 29 (EIRNS)—Speaking at a meeting of the Japan Foreign Trade Council (JFTC), Japanese Minister of Economy, Trade and Industry Hiroshige Seko urged national corporations to cooperate with Russia.
“I would like to urge you to boost cooperation with Russian businesses,” he said, and he expressed hope that “the Council will play a leading role in the process.”
For their part, Japanese companies belonging to the organization asked Seko to provide governmental support to Russian-Japanese projects in the area of urban planning, transport infrastructure, and finances.
Seko’s comments should be seen in the context of Japanese Prime Minister Shinzo Abe’s eight-point Russian-Japanese cooperation plan, which he put forward during his meeting with Russian President Vladimir Putin in Sochi on May 6. Putin is expected to be in Japan on Dec. 15.
Ambassador Chas Freeman on ‘Living with a China Made Great Again’
Nov. 29 (EIRNS)—Ambassador Chas Freeman, a retired career U.S. diplomat, spoke at the Harvard University Asia Center, as reported in the Center’s website on Nov. 28, on the theme: “Critical Issues Confronting China Summary: Living with a China Made Great Again.” Among his many diplomatic and other government posts, Ambassador Freeman worked as Deputy Chief of Mission and Chargé d’Affaires in the American Embassy in Beijing (1981-1984). He was Director for Chinese Affairs at the U.S. Department of State from 1979-1981. He was the principal American interpreter during the late President Nixon’s path-breaking visit to China in 1972.
While his speech at Harvard is not now available, the internet summary conveys his analysis.
“Liberal democracies have been out-performed by autocracies in recent years…. One of the presumptions that we take for granted is that laissez-faire economies produce better economic growth than industrial policies. But it turns out that countries with industrial policies grow faster. We assume that freedom of speech and press is necessary for scientific advancement and technological innovation, but China proves otherwise; its censorship only applies to politically sensitive areas. We also assume that market economy and material prosperity will lead to political liberalization, but China’s growing middle class seems to prefer social stability and personal security over political liberalization….
“Our assumption of American primacy for the world order does not stand close scrutiny. We insist on freedom of navigation in the South China Sea, while two-thirds of the annual trade passing there is to and from China. The U.S.’ main claim to legitimacy is its establishment of a rule-based international order, but China now seems to respect the UN charter and other international laws more than the U.S. does….
“China’s industrial output is about one and half times of that of the U.S…. China dominates the world’s trade and commodities markets from metals to grains…. This, combined with a massive and mostly well-educated labor force and a first-rate infrastructure, has resulted in unparalleled productivity growth in China.
“Freeman anticipates that China’s One-Belt and One-Road Project, supported by multiple newly established funds, will make much of Eurasia and Indo-Pacific Sinocentric. The Trans-Pacific Partnership (TPP), which includes the U.S. and its so-called “allies” in the Pacific but excludes China, would not have changed this general prospect, especially now that the TPP deal is dead. New China-initiated banks offer countries a real source of funding, as the Bretton Woods institutions no longer can. Rather than challenging the existing rules, these banks have collaborated with the World Bank and the Asian Development Bank in funding projects….
“Chinese investment abroad is now twice the investment by foreigners into China. Even the Chinese court system, once incompetent in the area of intellectual property rights, is becoming efficient. Some foreign companies are litigating each other in China.
“China’s investment into R&D is now about 20% of the world’s total, second only to the U.S. China turns out 30,000 PhDs in science and engineering each year and is beginning to take the lead in many cutting-edge research areas….
“Freeman concluded that we misconceive China as just a power in East Asia or the Pacific. It is also one in Central Asia, Europe, Africa, as well as in cyber and outer space. He called for the U.S. to re-imagine a different path to deal with China, taking into account the new reality that China has become a world magnet of trade and finance, and increasingly of talent as well. While intensifying its ties with Russia, the EU, the Arab world and Africa … China focuses on sustaining its system while strengthening itself into a great world power.”
COLLAPSING WESTERN FINANCIAL SYSTEM
Glass-Steagall Works in China, while the Volcker Rule Is MIA on Wall Street
Nov. 29 (EIRNS)—China’s banking system, which by some estimates has issued $20 trillion in credit for economic expansion since 2008, nonetheless has an exposure to derivatives in the low single-digit trillions of dollars nominal value, of the BIS’ estimated $600 trillion global derivatives total.
Nonetheless China, which has had legislative separation of commercial banks from shadow banks on the Glass-Steagall model since 1993, is further tightening up on commercial banks’ derivatives exposure. The China Banking Regulatory Commission (CBRC) is doing what the Federal Reserve was tasked to do by the original 1933 Glass-Steagall Act—protecting commercial banks from themselves, limiting them to loans and generally sound investments.
CBRC’s new regulations circulated Nov. 28, according to Xinhua, set much more detailed guidelines on how banks must calculate their financial exposure to counterparty risk, in both exchange-traded options/futures and over-the-counter derivative contracts on interest rates, etc. Xinhua reports the new rules raise the banks’ capital reserve requirements for derivatives positions, and “Compared with current requirements, set clear standards on what risk factors should take precedence under which circumstances. This reduces ambiguity that has been exploited by some banks to understate the risk they actually face in the derivatives business.”
China’s banks had just $1.4 trillion in nominal derivatives exposure in 2012, but this 0.33% of the global total has grown somewhat since, and CBRC is toughening its already tough restrictions on commercial banks’ derivatives trading.
The United States, to avoid restoring Glass-Steagall, adopted the Volcker Rule in 2010. By now, even its creators have developed existential doubts as to its existence. Two new examples reported Nov. 28 in the Seeking Alpha platform show why.
First, Goldman Sachs found that one trader, Thomas Malafronte, made $250 million profit for the firm this year by trading junk bonds—recall that Volcker “forbids” banks’ proprietary trading for their own accounts. But Goldman “conducted an internal investigation and concluded Malafronte did not violate the so-called Volcker Rule.”
In addition, at Citigroup, a team of derivatives traders on its U.S. dollar interest-rate swaps desk made $300 million profit for the bank this year. (At what expense to their clients? one may ask.) Again, the “so-called” Volcker rule did not come into play.
The Volcker Rule may now be slated for revocation—neither Trump nor the GOP Congressional leadership want it—but its departure may not make any noticeable difference.
City of London Tries Terror To Stop a ‘No’ Victory in Italy Constitutional Referendum
Nov. 29 (EIRNS)—In what the Milan-based daily Il Giornale called “an act of financial terrorism,” the City of London’s Financial Timesyesterday warned (threatened) that “Up to eight of Italy’s troubled banks risk failing if Prime Minister Matteo Renzi loses a constitutional referendum next weekend and ensuing market turbulence deters investors from recapitalizing them.”
In the event of a “No” vote, and of Renzi’s exit, “bankers fear protracted uncertainty during the creation of a technocratic government.” Nota Bene: The Financial Times forecasts a victory for the No, a Renzi exit, and a technocratic government.
The eight banks would be: Monte dei Paschi, Popolare di Vicenza, Veneto Banca, Carige (Genoa), Banca Etruria, CariChieti, Banca delle Marche, and CariFerrara. The last four are the small banks which were rescued last year.
The Financial Times warns that, if the No wins, there will be turbulence and the current rescue plan (recapitalization) for Monte dei Paschi will fail, thus triggering a “wider loss of confidence in Italy” and forcing a resolution (read: bail-in) of all eight banks.
In reaction to the Financial Times article, all bank shares dropped on the Milan stock market yesterday, and the spread on sovereign debt between Italy and Germany grew to approach 200 points.
What the City of London fears is that the “No” will not only stop the EU plan for suppressing the Italian Constitution, but will also be another domino to fall in the process of ending establishment power.
U.S. POLITICAL AND ECONOMIC
Hysteria Erupts in the West over Syrian Army Victories in Aleppo
Nov. 29 (EIRNS)—The party for regime-change in Syria, led by U.S. Secretary of State John Kerry, is beside itself about the Syrian army’s recent victories over the Western-sponsored terrorist groups occupying eastern Aleppo.
Washington Post columnist Josh Rogin (himself favorable to the regime-change party) reported on Nov. 27 that Kerry has been making frequent phone calls to Russian Foreign Minister Sergey Lavrov, frantically hoping to make some sort of a deal that would stop the Syrian army offensive on the jihadi-controlled districts of east Aleppo in return for yet another promise to separate the “moderate” opposition from Jabhat al Nusra, the al-Qaeda group in Syria.
Russian officials have confirmed Kerry’s outreach and don’t think much of it.
“This [effort] could be called unbelievable, in terms that there have never been so many phone calls between the Secretary of State and Russia’s [Foreign Minister] FM which were focused on discussing a single issue—Syria,” said Russian Presidential aide Yuri Ushakov, reports RT. At the Foreign Ministry, Deputy Foreign Minister Sergei Ryabkov also confirmed that contacts between Kerry and Lavrov are ongoing, though “The situation has changed both in the course of these consultations and talks and directly on the ground,” he told journalists, according to TASS. “That is why I would call the Washington Post’s allegations” that the United States is trying to reach an agreement with Russia on lifting blockade of Aleppo in exchange for separating the terrorists from the opposition “as ‘the snows of yesteryear,’ ” quoting the famous poem of François Villon.
French Foreign Minister Jean-Marc Ayrault is so worried about the “implications” of the Syrian victories in Aleppo that this morning he called for an immediate session of the UN Security Council to discuss the situation there.
“More than ever before, we need to urgently put in place means to end the hostilities and to allow humanitarian aid to get through unhindered,” Ayrault said in a statement. A French diplomatic source said that Ayrault and Germany’s Frank-Walter Steinmeier would discuss Aleppo with Lavrov on the sidelines of the meeting in Minsk today. Steinmeier confirmed this. “I believe we will use the talks in Minsk with the Russian side to make sure that there is an opportunity to send humanitarian aid there within the next few days,” he said this morning.
Ryabkov pointed out, however, what almost no Western media or government officials have acknowledged that the Russian military in Syria has been delivering humanitarian relief supplies on an almost daily basis in Syria, including Aleppo, for months. “The Russian side for the last several weeks, practically alone, without support, has been alleviating the situation for residents of this city by delivering appropriate humanitarian aid,” he said.
STRATEGIC WAR DANGER
U.S. Military Explanation of Air Strike on Syria Troops Falls Short
Nov. 29 (EIRNS)—“Confirmation bias,” and a series of other related errors resulted in the air strike by U.S., Danish, and Australian jets on Syrian forces outside of Deir ez-Zor on Sept. 17, the U.S. claims. That strike began the rapid collapse of the U.S.-Russian truce agreement in Syria that had been announced only days before. Brig. Gen. Richard Coe, the investigating officer, told reporters by phone, this morning, that the attacking pilots believed they were striking ISIS forces because the troops on the ground weren’t wearing uniforms or insignia or displaying flags, a bias that stemmed from the prior assessment of a vehicle that was tracked to the targeted troops as belonging to ISIS, according to news reports, an assessment which colored all subsequent decisions. In many ways, they looked and acted like the forces the coalition has been targeting for the past few years, Coe claimed, though he admitted that there was at least one intelligence analyst watching the scene on video, who typed in a chat room, “What we’re looking at can’t possibly be ISIL” (Islamic State of Iraq and the Levant, or ISIL, is the Pentagon’s preferred name for Islamic State/ISIS/Daesh.) His assessment, however, was not widely circulated, because everyone was already convinced it was ISIS being viewed.
The second factor in the attack was that the U.S. military, using the flight safety hotline, notified the Russian military in Syria that the air strike was coming, but gave the Russians the wrong location! Coe admitted that if the U.S. had provided the Russians with the right location they might have been able to say, at the time, that there were Syrian troops at the location that was hit.
The third factor was that when the Russians did call the U.S. headquarters, the officer who was the point of contact was unexplainably not there and wouldn’t be reached for 27 minutes.
According to Coe, the strike was carried out by U.S. A-10s, Danish F-16s, and Australian F/A-18s, which released a total of 34 precision-guided munitions and fired 380 30mm cannon rounds. He said that the attack killed at least 15 Syrian troops; the Syrian Observatory for Human Rights reported 83 killed. [CJO]
SCIENCE AND INFRASTRUCTURE
Decision on Moscow-Kazan Rail Route Nearing
Nov. 29 (EIRNS)—Russian State Railway (RZD) is hoping to launch its planned Moscow-Kazan high-speed railway by 2022, according to a statement made by CEO Oleg Belozerov, at the International Forum on Energy Efficiency and Energy Development. “We have come a long way with our Chinese and European partners in pulling this project together, and we believe that by 2022 we will go beyond Vladimir, probably as far as Kazan,” RZD’s Belozerov said.
The railway’s design has reached its final stage, Belozerov stated, and the plan covering the area extending to Vladimir is ready to be reviewed by GlavGosExpertiza, a federal assessment agency. The total investment costs are estimated to be more than €14.6 billion. It is possible that in the future the Moscow-Kazan stretch will be part of a greater Moscow-Beijing high-speed line, nicknamed “Silk Road,” which will link China with Europe and the Middle East.
To construct the railway, China is ready to issue a 20-year €5.86 billion loan and €1.46 billion as a contribution to the shareholders’ equity of a newly created company. The project will be partially financed by a German consortium (formed by Siemens, Deutsche Bahn and Deutsche Bank), which offered €2.7 billion.
The high-speed rail will extend over 770 km, allowing for a top speed of 400 kph. Travel time between Moscow and Kazan will drop significantly from the current 14 hours to 3.5 hours.
OTHER
Duterte’s Security Team Hit with Roadside Bomb, Seven Hurt
Nov. 29 (EIRNS)—At least seven members of Philippines President Rodrigo Duterte’s security team were injured by an IED (improvised explosive device) roadside bomb in Lanao del Sur province of Mindanao today. The detail was preparing for a visit by the President to the region. Defense Secretary Delfin Lorenzana said there was no firefight.
Reuters reports that Lorenzana advised Duterte to cancel the trip, scheduled for Wednesday, Nov. 30, but Duterte said: “The advice was to postpone. I said no, I will go there. And if possible, take the same route. Maybe we can have a little gunfight here, gunfight there.”
The suspected terrorist group is called Maute, a split-off from the Moro Islamic Liberation Front (MILF). They are tied to the Abu Sayyaf and have pledged allegiance to ISIS. A bomb found outside the U.S. Embassy in Manila this week was also suspected to have been planted by Maute. The Philippines military attacked the central Maute camp in Mindanao in February, killing 35 of the terrorists.
Maute was also responsible for the Davao City bombing in September, which killed 15 and provoked Duterte to declare an emergency.
Defense Secretary Delfin Lorenzana is due to fly to Russia next week to discuss arms purchases and defense cooperation with Russian Defense Minister Sergei Shoigu. On the list will be rifles for ground troops, following the cancellation by the U.S. of a planned sale of rifles due to “human rights” issues—i.e., Duterte’s war on drugs.
