EIR Daily Alert Service

EDITORIAL

The Opposite of Fake News? Real Truth: We Can Win!

March 21 (EIRNS)—An international media frenzy of fake news was set off on the occasion of the March 20 hearing by the House of Representatives Intelligence Committee, on the topic of “Russian Active Measures Investigation,” proclaiming—as Germany’s Bildzeitung headlined today—that “Trumpgate” is well underway, and the U.S. will soon be decapitated. Former German government figures were quoted observing, how “historic” and “unique” and “grave” the situation is in the United States, to have the head of state’s credibility gone.

In reality, this was but another moment in the ongoing filthy operation in the attempt to dump Trump and demonize Russia. The process consists of scare-mongering and lies, augmented yesterday by grandstanding against Trump by certain Democrats, whose conduct was in the tradition of Truman and McCarthyism. What today’s media hype actually shows, is the wishful thinking of the controlling interests behind the fake news, which are tied to the expiring British system, threatened by the fact that the Trump election is part of a momentous potential shift to a whole new world order.

The continuing potential for this shift is shown by several events of the day. In Kentucky Monday night, President Trump addressed a Louisville rally, speaking strongly about the need to return to the “American System.” Citing famous leaders born in, or associated with, Kentucky—Abraham Lincoln and Daniel Boone—Trump dwelt on Henry Clay, as a “fierce advocate for American manufacturing,” and a backer of foreign trade that “must be fair, equal and reciprocal” Trump said, “For too long our government has abandoned the American System.” He spoke of re-industrialization, restoring coal-miner jobs and more.

Then again tonight, at the Republican Congressional Dinner, Trump spoke of historical leaders and projects of U.S. development. He said that the American System was what the Founding Fathers always intended. Later, look at the Trans-Continental Railway. He pointed to the 1896 Republican platform (under McKinley) on protection and reciprocity in trade.

The American System is exactly what Lyndon LaRouche has argued for, for 40 years—that the American System practice of directed credit for industry, science and infrastructure has been discarded in the United States, especially since the death of Franklin Roosevelt, and must be restored immediately to prevent economic disaster.

Meantime, the push continues for the means to make this happen—reinstating Glass-Steagall. In North Carolina on Monday, a resolution was introduced in the General Assembly, calling on Congress to enact Glass-Steagall, and an “American Economic Recovery Program,” as outlined by Lyndon LaRouche’s “Four Laws.” Fortune yesterday posted a commentary supporting Glass-Steagall, headlined, “Will Donald Trump Keep His Campaign Promise To Reinstate Glass-Steagall?

In parallel to domestic policy, there are foreign policy initiatives in a new direction. Trump’s Secretary of State Rex Tillerson, after discussions in China with President Xi Jinping last weekend—preparing a meeting between Xi and Trump—is now going to go to Russia in April, according to reports from the State Department to TASS today. The indicated timetable will be that Tillerson remains in the United States during the likely April 6-7 meeting in Florida between Presidents Xi and Trump. (Tillerson will skip the NATO Foreign Ministers meeting taking place at the same time, on April 5-6, which will be attended by Undersecretary of State Tom Shannon.) Then Tillerson goes to Italy April 10-11 for the Group of Seven Foreign Ministers meeting, and thence to Moscow.

These initiatives, in the context of the continuing achievements and commitments of the Belt and Road Initiative internationally—signified by the Belt and Road Forum for International Cooperation in China in less than two months—are putting out of existence the decades-long fakery of all kinds, promoted by the Club of Rome, the World Wildlife Fund/Worldwide Fund for Nature, and the Royal This & That.

The real truth is, humanity can win.

(At end of this Alert, see, “Put March 20 House Intelligence Committee Hearing in Perspective.”)

U.S. POLITICAL AND ECONOMIC

Trump Evokes American System, Abraham Lincoln, and Henry Clay at Louisville Rally

March 21 (EIRNS)—Addressing the packed stands at Freedom Hall in Louisville, Kentucky, the evening of March 20, President Donald Trump took a page out of American history, when he evoked Abraham Lincoln, Henry Clay, and Clay’s belief in the “American System.” Trump pointed out that “Abraham Lincoln was born right here in Kentucky. The legendary pioneer Daniel Boone helped settle the Kentucky frontier, and the great 19th-century American statesman Henry Clay represented Kentucky in the United States Congress.”

He said, “Like Henry Clay, we want to put our own people to work.” Further, “We believe in two simple rules: Buy American, and hire American.”

Taking a swipe at free trade, Trump pointed out that “Clay said very strongly, free trade, which would throw wide open our ports to foreign production without duties while theirs remain closed to us—that was his [Clay’s] quote—Clay said trade must be fair, equal and reciprocal. I am talking about reciprocal trade. And explaining his American System, Clay argued that the sole object to the tariff is to tax the produce of foreign industry with the view of promoting American industry. For too long our government has abandoned the American System.”

Trump drew one of the biggest cheers of the night when he promised to restore the nation’s struggling coal industry, which has hit Kentucky especially hard with job losses. “We are going to put our coal miners back to work. The miners are coming back.”

Tillerson To Go to Russia in April, After Trump-Xi Meeting

March 21 (EIRNS)—U.S. Secretary of State Rex Tillerson will go to Russia in April, reported TASS today, citing confirmation from the U.S. State Department. The TASS report also said, citing an unnamed U.S. official, that Tillerson would skip the April NATO foreign ministers meeting, so as to be able to take part in the talks with Chinese President Xi Jinping, who would be visiting the United States around the same time, and likely meeting with President Trump at Mar-a-Lago in Florida, April 6-7.

The schedule of April meetings for Secretary Tillerson, subject to confirmation is:

April 6-7 in the United States, at the time of President Xi’s visit to the U.S.

(April 5-6 NATO meeting in Brussels, to be attended by Under Secretary of State for Political Affairs Tom Shannon.)

April 10-11 at the Group of Seven Foreign Ministers meeting in Luca, Italy.

April 11 follow-on. In Moscow at some point.

Call for Congress To Act on Glass-Steagall Filed in North Carolina Legislature

March 21 (EIRNS)—Yesterday, a resolution was filed in the General Assembly of North Carolina, “urging Congress to enact, without delay, an ‘American Economic Recovery Program,’ with suggested parameters and specifics in order to provide mechanisms to restore the economic health and well-being of America and its citizens.” The state bill is House Joint Resolution 391.

After citing aspects of the U.S. “financial crisis,” the resolution specifies four actions to be taken, based on the 2014 “Four Laws” by Lyndon LaRouche, beginning with restoring the provisions of the Glass-Steagall Act.

STRATEGIC WAR DANGER

Next Phase of Intra-Syrian Talks To Open in Geneva on March 23

March 21 (EIRNS)—The next round of the intra-Syrian talks in Geneva will open on Thursday, March 23. According to news reports, Alessandra Vellucci, the spokeswoman for UN Special Envoy Staffan de Mistura, said that all factions of the opposition—the Riyadh, Moscow, and Cairo groups—have agreed to send delegations to the talks. Vellucci also reported that de Mistura will not arrive until March 24, Friday, because he will be heavily engaged in shuttle diplomacy between Ankara and Moscow before going to Geneva. The meeting, therefore, will be opened by de Mistura’s deputy, Ramzi Izz Eddin Ramzi.

In a statement that Vellucci read in Geneva this morning, de Mistura urged all sides “to do the necessary preparations in advance of the fifth round, to be ready to engage substantively and proactively on the substance of all four baskets on the agenda in parallel.” The four baskets, as agreed on during the previous round of talks, consist of governance, constitutional change, UN-sponsored elections, and counter-terrorism measures.

The fly in the ointment remains al-Qaeda, which launched a new assault in east Damascus over the past few days which is aimed at the peace talks. Hayat Fatah al-Sham leader Abu Mohammed al-Golani said in an online video, that a similar attack in Homs should be a lesson to opposition politicians taking part in peace talks, adding that they “should leave the field to the fighters and step aside.”

Regardless, the Geneva/Astana process, sponsored by the UN and led by Russia, is ultimately guided by the intention to seek a peaceful resolution to the conflict and the end of geopolitics for the entire region.

In Iraq, the U.S.-backed assault to expel ISIS from Mosul, Iraq’s second city, is an expression of the legacy of U.S.-led regime-change wars in the region. The assault, in fact, is leading to a huge humanitarian disaster. Iraq’s Immigration Minister Jassim Mohammed told Reuters on March 20 that the number of displaced people from both sides of the city since the start of the campaign five months ago had reached 355,000. Civilians are caught in the crossfire between ISIS militants fighting to hold on to the city, and Iraqi forces, backed by U.S. airstrikes which are said to be devastating to civilians. The same Reuters report also indicates that the refugee camps being set up by both the Iraqi government and the UN are wholly inadequate to meet the needs of the hundreds of thousands of civilians who are fleeing the fighting.

U.S. Marines, Russian Airborne Troops Exercising at Opposite Ends of the Black Sea

March 21 (EIRNS)—A contingent of 450 U.S. Marines, from the amphibious assault ship U.S.S Carter Hall, which crossed into the Black Sea a couple of days ago, is in Romania, participating with 750 Romanian troops in the exercise Spring Storm 2017. The intent of the Spring Storm 17 exercises, according to the de rigueur slant of the Associated Press, are to increase inter-operability of Romanian and U.S. troops in a region where NATO members are uneasy after Russia’s alleged interventions in Ukraine.

At the same time, just a few hundred kilometers to the east, in Crimea, hundreds of Russian Airborne troops are participating in assault exercises, both from the air and from aboard ships. So far, according to a report in TASS, some 300 troops from the Novorossiysk division of the Airborne Troops were delivered to the coastline at the Opuk training range in Crimea. This operation was followed by the air assault landing of another 200 troops by helicopter. In total, reported the Russian Defense Ministry in a statement, posted on March 20, some 2,500 troops, with 600 units of combat hardware, are taking part in the exercise.

COLLAPSING WESTERN FINANCIAL SYSTEM

Deutsche Bank Derivatives Bomb and the ECB Cover-Up

March 21 (EIRNS)—The derivatives bomb of Deutsche Bank has not vanished: It is still there and has been covered up by the ECB, according to an investigation by the Italian financial daily Il Sole 24 Ore. Il Sole’s story, published March 17, has provoked a bitter public reaction by Danièle Nouy, head of the Single Supervisory Mechanism (SSM).

According to Il Sole, the SSM has neglected twice, in 2014 and 2016, to assess the Level 3 derivative assets of Deutsche Bank because 1) it would take too long and 2) the SSM does not even have the competence to do that.

(“Level 3” assets have no market price because they have no market. They are so toxic that a transaction can occur only bilaterally on a fideistic basis, one banking expert told EIR. As a matter of fact, their value is zero, but banks are allowed to price them according to their own model. So, at the end of 2015, Deutsche Bank had priced its Level 3 toxic waste at €31 billion!)

Il Sole reports that in 2014, “both the SSM and its advisors, Oliver Wyman, had openly decided not to assess Level 3 assets. Il Sole learned that the Oliver Wyman team head, Ian Shipley, explained that it would not be possible to certify highly structured products because both central banks and consultants such as Oliver Wyman lack the competence.”

Shipley, Il Sole writes, “insisted that with derivatives, the only ones able to apply models that allow one to prove balance sheet values, are American investment banks, from Goldman Sachs to Morgan Stanley, which had invented the products [sic] themselves and sold them to European banks. To involve them, would mean a potential conflict of interest.”

Indeed, as EIR at that time reported, SSM head Danièle Nouy admitted in a European Parliament hearing Nov. 3, 2014, that the SSM did not assess Level 3 assets for … lack of time!

Now, the SSM insists that they do have such competence, but experts interviewed by Il Sole deny that. Emilio Barucci, expert of quantitative finance at the Milan Politecnico University, says that “The SSM has apparently not made those estimates even in the second round of stress tests, which leads me to conclude that they have not yet developed internal competence to put them in the condition to face the situation.”

Nicolas Veron, a Breugel economist who is considered to be close to the ECB, also thinks that the SSM has not yet achieved that capability.

That is why the “inspection letter” with the mandate from the ECB to the inspection team for Deutsche Bank did not include the job of pricing derivatives, Il Sole explains.

Despite public denials, the SSM and the ECB are, themselves, aware of the problem: In fact, even the final findings report on Deutsche Bank, not yet published, says that the risk management office is weak. Well, is this because the chief risk officer of Deutsche Bank is Stuart Lewis, who has been there since 1996, including when the risk management structure was accused of covering failures that caused the SEC to impose a $55 million fine?

Il Sole 24 Ore has also found out that also Bill Broeksmit, the Deutsche Bank official who was expert in risk management and unanimously considered a person of high moral standard, had expressed doubts about Lewis. On January 26, 2014, in the midst of a period when the bank was under several investigations, Broeksmit took his life. In an email to a friend before dying, Broeksmit wrote: ‘Stuart’s background is credit risk. He is not particularly fluent in model risk.’ And yet, since 2012 Deutsche Bank has given him the task of monitoring the biggest risk it has, the model risk.”

(Credit risk is the risk associated with commercial loans and it is relatively easy to assess. Model risk is the risk associated with so-called financial products, whose pricing is assessed by models. )

Behind the curtain, the SSM is aware of the mess inside Deutsche Bank, and has activated a task force with the mandate of performing a “thematic review,” involving Patrick Amis, one of the two deputy general directors of micro-prudential supervision. The ECB has a “no comment” on that.

Of course, Il Sole contrasts the soft approach used by SSM with Deutsche Bank, with the super-hard approach used with Monte dei Paschi.

Danièle Nouy has written a long response to Il Sole, but without denying one single fact, according to author Claudio Gatti.

THE NEW GLOBAL ECONOMIC ORDER

A Silk Road Institute in China Encourages Trump To Attend May Belt and Road Forum

March 21 (EIRNS)—Liang Haiming, the chief economist of China Silk Road Valley Research Institute, a Guangzhou-based think tank, wrote an article in the Global Times today on the Belt and Road Forum for International Cooperation on May 14-15 in Beijing, specifically calling on President Trump to attend, and presenting the win-win benefits.

“Trump should give serious consideration to joining the B&R initiative,” Liang wrote, which could “increase jobs and push forward his large-scale infrastructure plan…. If Trump doesn’t want manufacturing revitalization to end up as just a campaign promise, he should consider seeking cooperation with China on the B&R initiative.”

Liang points to the potential funding of projects from China, as well as Chinese factories producing in the U.S., adding that “cooperation between the Trump administration and China on the B&R initiative would strengthen connectivity in terms of policy, trade and capital, which would be favorable for the U.S. to increase manufacturing exports to China.”

On Trump’s $1 trillion infrastructure plan, Liang says that “what the U.S. needs, China can offer. China’s cooperation with countries along the Belt and Road route usually starts with infrastructure construction. With China’s rich experience in overseas infrastructure projects, cooperation in this field would be a win-win for the two countries.”

He also notes that the huge Chinese holdings of U.S. Treasury debt could be a problem for the U.S. if China started selling the bonds off, but that these resources from China “may help solve the infrastructure financing problem” in the U.S. LaRouche has proposed a national development bank, which would be the perfect vehicle for moving those Chinese holdings into productive investment in the U.S.

And, Liang adds, joining the B&R initiative “and conducting cooperation in third-party markets will allow the U.S. manufacturing sector to explore new markets and drive its economy and add new jobs,” while working with China to “share the risks, reduce confrontation and cultivate new economic growth momentum.”

This is all very much in keeping with the Schiller Institute effort to get the Trump Administration to bring the U.S. into the Silk Road, and for the President to attend the May Forum.

OTHER

Put the March 20 House Intelligence Committee Hearing into Perspective

March 21 (EIRNS)—In an interview with RT yesterday, former CIA analyst Ray McGovern put yesterday’s House of Representatives Intelligence Committee hearing, “Russian Active Measures Investigation,” into perspective:

(1) The Democrats and the media are committed to the Trump/Russia election interference narrative, because they refuse to accept that Hillary Clinton was a deeply flawed candidate, and because the Anglo-American elite are intent on ensuring that there is no rapprochement with Russia under any circumstances;

(2) The hearing itself was a circus, in which nothing fundamentally new was revealed, but the hearing has been completely mischaracterized by the news media, which are the main problems for Trump;

(3) There was no Russian hacking to tip the scales for Trump as assessed in the U.S. intelligence community reports to Barack Obama of January 2017, the precipitating event for the current Senate and House investigations of Russian interference in the elections and coordination with the Trump campaign. McGovern continues to insist that the so-called hacks of the DNC were leaks internally from the DNC by people appalled by how Clinton was stealing the election from Bernie Sanders;

(4) McGovern said that the attempt to impute to Putin a desire for Trump to be elected and to take reckless actions to effect this result, flies in the face of everything he knows about the Russians, whom he studied for more than 20 years in the CIA. Why would Putin want someone in the White House who is profiled as rash, impulsive, and unpredictable? Why would he take a shot on Trump when every poll showed him losing and the Russians themselves believed he would lose? McGovern said that the propaganda campaign now occurring in the United States reminds him of the techniques and methods used in the run-up to the Iraq war.

The transcript of the hearing, itself, shows that McGovern is largely correct. The overall hearing transcript is a frontal assault on Putin and Russia as the bad actor of all world history, by both Republican and Democratic Party congressmen.

The headlines are that James Comey, Director of the FBI, announced that there is an ongoing counterintelligence investigation of Russian interference in the elections and whether there was coordination in these activities with individuals associated with the Trump campaign. This investigation has been in existence since July of 2016. As is normal in such processes, Comey said, it would include an assessment as to whether any crimes were committed. He refused to put a time frame on when this investigation would be completed, stating that, in terms of counterintelligence investigations, this one was fairly young. This provoked repeated appeals to fundamental fairness and the need for domestic stability from some Republican Congressmen, most notably Peter King from New York, but Comey refused to provide a time frame.

Comey stated that he was authorized by the Department of Justice to report this classified investigation publicly in Monday’s hearing, a highly unusual and very political gambit. He has been attacked by legal ethics experts as violating legal ethics, both in his public discussions of the Hillary Clinton investigation during the election and now, in his discussion of this investigation in the current climate. As Lyndon LaRouche commented today, the FBI is clearly trying to stir up trouble.

The fact of the investigation itself is not new. It has otherwise been widely reported through leaks in the press generated by individuals in the intelligence community, the Clinton campaign, and by the Obama Administration, during the election campaign and subsequently. The FBI Director’s public characterization of it and the words he used, however, were sure to set off a media firestorm, and he knew that.

The opening of this investigation occurred shortly after the DNC went public with its claim that its computers had been hacked by the Russians. Comey also confirmed in the hearing that the FBI had been alerted about the DNC hacks in August of 2015, a full one year earlier, and that his agents had followed normal procedures in immediately notifying the DNC. British newspaper reports have stated that the original 2015 notification came to the FBI through British intelligence, specifically GCHQ, concerned about Trump’s pro-Russian stance. Comey also confirmed that the FBI was never given access to the DNC’s computers and instead relied on the forensics provided by Crowdstrike, the anti-Putin, Ukrainian intelligence-connected vendor the DNC hired to examine them.

The second headline from the hearing concerns the President’s claim that he was illegally surveilled by the Obama Administration. The media and the Democrats have focused on the literal term “wiretap,” the literal reading of Trump personally as the target, and the literal allegation that Obama personally authorized it, to portray the President as an unhinged madman. Comey and NSA Director Rogers confined their testimony to stating that nothing like what the President said in a literal sense in his tweet actually occurred.

Former NSA Executive William Binney, however, has continued to state, as recently as March 7th, that the surveillance of Trump evidenced by such things as the leaking of transcripts of his calls with foreign leaders as well as other leaks of classified information, are based in NSA programs under E.O. 12333 and have nothing to do with the FISA regime discussed at the hearing. With respect to the claim that GCHQ was responsible for the surveillance, both the NSA’s Rogers and the FBI’s Comey only stated that neither they nor Obama asked the GCHQ to do this.

Otherwise, the House Republicans focused on the leaks themselves, and on the fact that unmasking the names of U.S. citizens swept up in FISA-authorized surveillance is a crime, punishable by 10 years in prison. They elicited testimony that numerous people in the core intelligence community and its largely privatized contractors have the authority to unmask names, however, making a leak investigation extremely difficult.

The Republicans were also focused on the fact that James Clapper and others stated no less than two weeks ago, that, despite all the hullabaloo, there was absolutely no evidence of any collusion between the Trump campaign and the Russian hacking episode. All ranking members of the Committee, including Adam Schiff and Chairman Devin Nunes, had also been presented with the entirety of the FBI’s investigation to date in a classified setting. Nunes and other Republicans familiar with that presentation stated unequivocally prior to the hearing, that they had seen no evidence of any collusion between the Russians and the Trump campaign. Comey’s presentation clearly obscured what has otherwise been very clear.

The Democrats were absurd and obscene, weaving conspiracy theories and innuendos in an overt and disgusting display of McCarthyism. The opening statement of ranking Democrat Adam Schiff was typical. He wove a long, circumstantial case to paint the President and his close advisors as Russian agents, entirely based on the “dodgy dossier” of British MI6 agent Christopher Steele. Much of the hearing consisted of Democrats making this or that wild assertion based upon Schiff’s opening statement and asking Comey or Rogers to comment. Both refused to comment, because they are not allowed to comment about anything involving a specific U.S. person or any matters involved in classified investigations. This is what created the media circus atmosphere cited by Ray McGovern.

Finally, FBI Director Comey testified that the FBI had changed its view that the Russians’ alleged hacks were meant to interfere in the elections and hurt Clinton, to the view that the hacks were directed at helping Trump only in December 2016. This was, of course, when the CIA, under John Brennan, made its widely debunked assessment to this effect.

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