EIR Daily Alert Service

EDITORIAL

War Danger Intensifies—We Must ‘Go Like Hell’ To Expose and Destroy Russia-gate

Aug. 1 (EIRNS)—The war party in the U.S. is escalating to a fever pitch for war, not only with Russia but now also with China. While the media and the Congress continue making up new excuses to attack Trump, to subvert his effort to build constructive relations with Putin and Xi Jinping, the British and their assets in the U.S. have dropped any pretense of sanity, demanding preparation for a nuclear world war.

Secretary Tillerson today drew out the battle lines in a press briefing at the State Department. Asked about the new sanctions on Russia passed overwhelmingly by the Congress, Tillerson was direct: “I think the American people want the two most powerful nuclear powers in the world to have a better relationship…. Neither the President nor I is very happy about how Congress went about the sanctions bill, but we can’t let it take us off-track in trying to restore the relationship.”

Some people in the Administration did not get the message—or are out to wreck it. Vice President Mike Pence, speaking at a press conference July 31 in Estonia with the three Presidents of the Baltic states, spoke with the coldest of Cold War rhetoric: “A strong and united NATO is more necessary today than at any point since the collapse of communism a quarter-century ago, and no threat looms larger in the Baltic states than the specter of aggression from your unpredictable neighbor to the east.” Today in Georgia, Pence claimed that Russia was occupying one-fifth of Georgian territory (referring to Abkhazia and South Ossetia), then said: “We stand here today in the gap—on a front line of freedom, a front line compromised by Russian aggression nearly a decade ago.”

The same end-game confrontation is being launched by the Congress against China, going for the kill on Trump’s effort to bring the U.S. and China together in the New Silk Road process. Sen. Lindsey Graham (R-SC), speaking on NBC this morning, said that “There is a military option to destroy North Korea’s [nuclear] program, and North Korea itself. If there is going to be a war to stop [Kim Jong-un], it will be over there. If thousands are going to die, they are going to die there, they’re not going to die here.” He claimed President Trump agreed, referencing Trump saying that China could stop North Korea’s nuclear program but wasn’t doing enough.

Not to be outdone in the British imperial “divide and conquer” madness, Sen. Chuck Schumer (D-NY) sent a letter to the President calling for the suspension of “all mergers and acquisitions in the U.S by Chinese entities.” Keep in mind that Trump wisely invited China to bring its Belt and Road infrastructure development program to the U.S., to help restore the devastated infrastructure and industrial capacity of the nation. Schumer ranted: “It is my assessment that China will not deter North Korea unless the United States exacts greater economic pressure on China. The U.S. must send a clear message to China’s government.”

The message is clear indeed—the Congressional leaders from both parties will not allow the rebuilding of the U.S. economy, and would rather launch World War III than to see Trump’s plan succeed.

Here, too, Tillerson today was a voice of reason against the war party: “We certainly don’t blame the Chinese for the situation in North Korea,” he said. “Only the North Koreans are to blame for this situation. We are trying to convey to the North Koreans: We are not your enemy, we are not your threat. But you are presenting an unacceptable threat to us, and we have to respond. And we hope that at some point they will begin to understand that, and then we would like to sit down and have a dialogue with them about the future that will give them the security they seek and the future economic prosperity for North Korea.”

It must be emphasized that the entire Russophobia rests on the now discredited “Russia stole the election” myth, which was constructed out of whole cloth by British intelligence and their collaborators in the corrupted Obama intelligence community. The LaRouche movement is now in full mobilization mode, within the U.S. and around the world, to circulate the Veteran Intelligence Professionals for Sanity (VIPS) July report to the President, proving definitively that the Russians did no such thing, but that angry Democrats leaked the infamous DNC emails to WikiLeaks in order to expose the Democratic Party leadership’s internal decision to prevent Bernie Sanders from getting the party nomination over war party asset Hillary Clinton. The British stole the Democratic primary election from Bernie Sanders, and then blamed Russia in order to stop Donald Trump in the November election. They failed in that effort, but are still trying to bring down his presidency today.

A special prosecutor must be appointed to bring these criminals to justice, before the U.S. destroys itself and the world in a new war.

The Russians have been careful to distinguish between the illegal and dangerous sanctions voted up by the Congress, and President Trump’s own actions. But Trump has little time to take off the gloves, to expose the Russia-gate treason against the presidency.

As Helga Zepp-LaRouche has said, “Go like hell” to force a full investigation of the crimes exposed in the VIPS report, which is reprinted in the July 28 issue of EIR.

U.S. POLITICAL AND ECONOMIC

Moscow Not Criticizing Trump

Aug. 1 (EIRNS)—Moscow is being careful not to make the diplomatic crisis between the U.S. and Russia about U.S. President Donald Trump. Kremlin spokesman Dmitry Peskov told reporters on July 31 that Trump was irrelevant to the decision to expel hundreds of U.S. diplomatic staff from Russia which was actually in response to the House and Senate votes on the Iran-Russia sanctions bill, last week (although a mirror response to Obama’s provocative action in December). “It will de facto become a law even if the U.S. President does not sign it,” Peskov explained. “So there was no need to wait,” he said. “Things are pretty obvious.”

Anti-Russia War Delirium among U.S. Media

Aug. 1 (EIRNS)—Certain U.S. news media outlets have been hyping the alleged threat that Russia supposedly presents to Eastern Europe over the past 24-48 hours, using the joint Russia-Belarus Zapad 2017 exercise scheduled for September as their starting point. One of the think tank experts in the middle of the war hype is Philip Karber, president of the Potomac Foundation in Washington, D.C. Karber was exposed in 2016 as one of the sources of fake intelligence about the war in southeast Ukraine that was being used by then-NATO commander Gen. Philip Breedlove to hype the supposed Russia threat. Karber is cited in coverage by both the New York Times and USA Today in articles that appeared, yesterday, pushing the Russian military threat.

“Russia is preparing to send as many as 100,000 troops to the eastern edge of NATO territory at the end of the summer” screamed the New York Times (Russia has reported that less than 20,000 will be involved.) The focus is on the First Guards Tank Army, the command that was re-established in November 2014 and is expected to participate in the upcoming Zapad exercise. “Beyond Russia’s interference in the 2016 presidential election in support of the Trump campaign, which has seized attention in the United States,” the Times hyperventilates, “its military has in recent years deployed forces to Syria, seized Crimea and intervened in eastern Ukraine, rattled the Baltic states with snap exercises and buzzed NATO planes and ships.” The Times quotes commander of the U.S. Army Europe Gen. Ben Hodges claiming that the only purpose of the First Guards Tank Army is to conduct offensive operations, while Karber is quoted saying that its presence near the Polish frontier poses a dilemma for NATO: It can defend Poland or it can defend the Baltics but it can’t do both in a short time.

USA Today, in its coverage, reported that the U.S. military is developing plans to provide lethal weaponry to Ukraine. The planning, USA Today reports, “marks a change” in U.S. thinking about the conflict since it began in 2014, when Obama and Merkel said that providing weapons to Ukraine would provoke Russia. “But the Russians are doing all this anyway,” and now threaten other NATO countries in Eastern Europe, Karber lies. “There’s a realization that there has to be a response, at least by the military,” he said. Karber is calling on the U.S. to provide anti-tank weapons to the Kiev regime. In all of this there is hardly any mention that NATO is 1,000 km closer to Moscow than it was during the Cold War, or that the U.S. and EU backed the violent overthrow of the Ukraine government in 2014 by gangs of neo-Nazis, or that NATO is building up its own forces all along Russia’s western borders.

Will the U.S. Save Its Nuclear Industry? Half of Plants under Construction Put on Hold

Aug. 1 (EIRNS)—Construction has been halted on two new nuclear power plants in South Carolina, it was announced by the utility owners yesterday. Completion of the two V.C. Summer AP1000 units had been put in limbo with the March bankruptcy of Westinghouse. Although four days ago, Toshiba, which owns Westinghouse, agreed to pay the utilities $2.168 billion to settle the contract, co-owner, state-owned utility Santee Cooper determined that, since that is not enough money to complete the plants, and further price increases for customers would be required, they will suspend construction. Co-owner South Carolina Electric & Gas, which had been considering the option of completing one unit, then had no choice, but to follow suit.

There are numerous reasons why the cost of the two reactors could nearly double from the original estimate made nearly a decade ago. But the most fundamental is the state of the nuclear supply industry, which has not built a plant from scratch for 30 years. (The two TVA plants that have come online over the past two decades were nearly-completed mothballed plants.) The broad problem, said Rich Powell, from the Clear-Path Foundation, is that “We’ve let our nuclear industry atrophy for 30 years, and we’ve lost the robust supply chains and expertise needed.”

It is also the case that the AP1000 reactors, ordered for the South Carolina V.C. Summer project, and the Georgia Vogtle project, are new, Generation 3+ designs, with increased safety, and other improved features, and any first-of-a-kind project will almost always be over cost and behind schedule. But the fact that nuclear power plants have to “compete” with heavily subsidized “renewables” and with fracked natural gas means that new, more advanced nuclear technology, unable to “compete,” would never be able to come online, at all.

Santee Cooper has directed its management to “preserve and protect the site and related components,” World Nuclear News reports. “During the wind-down,” said Santee Cooper President Lonnie Carter, “Santee Cooper will also continue investigating federal support and additional partners to see if we can make the project economical again.” The parent company of South Carolina Electric & Gas had also “reached out to other potential partners and pursued government support” but without success, CEO Kevin Marsh told investors.

Policymakers can continue to complain and fear-monger over the global high-technology business that is being grabbed up by China and Russia, which includes the export of nuclear power plants, but these countries are really filling a vacuum left by a U.S. industry, which without a new policy from Washington, can’t even build a couple of plants on home ground.

STRATEGIC WAR DANGER

Xi Jinping on PLA 90th Anniversary: ‘All Thoughts Must Be Put on Combat’

Aug. 1 (EIRNS)—Chinese President Xi Jinping, at the ceremony to mark the 90th anniversary of the founding of the People’s Liberation Army, which falls on Aug. 1, gave an address in the Great Hall of the People in Beijing, calling for combat readiness by the PLA in this time of global instability and threats to China’s sovereignty.

“The Chinese people love peace,” Xi said. “We will never seek aggression or expansion, but we have the confidence to defeat all invasions. We will never allow any people, organization or political party to split any part of Chinese territory from the country at any time, in any form.”

“No one should expect us to swallow bitter fruit that is harmful to our sovereignty, security or development interests,” he said. The people’s army should firmly safeguard the CPC’s leadership and the socialist system, protect national sovereignty, security and development interests as well as regional and world peace, he said, as reported by Xinhua.

He urged the PLA to focus on war preparedness to forge an elite and powerful force that is always “ready for the fight, capable of combat and sure to win.” There are various means and choices to safeguard peace and security and prevent war, but military means should remain the final guarantee, he said. “The life of the people’s military lies in combat ability,” he said, urging the PLA to strengthen its awareness of being prepared for any eventualities.

“All thoughts must be put on combat, and all work should focus on combat so the military can assemble, charge forward and win any time the Party and the people need them to,” he said. The level of military training should be raised to actual combat standards, he said.

U.S. Cuts Off Support to Syrian Opposition Group

Aug. 1 (EIRNS)—Army Col. Ryan Dillon, the U.S. military spokesman in Baghdad, confirmed to reporters at the Pentagon on July 27, that the U.S. military had cut off support to a Syrian opposition group that was not willing to limit its activities to fighting ISIS. “They were a partner force of ours, and we can no longer support them because they don’t want to fight ISIS,” he said. “We are in the process of ceasing our support,” and discussions were underway to get back weapons and other equipment supplied by the U.S. to the group, Dillon said. “We are going to retrieve some of the equipment we provided to them to fight ISIS.” He stressed U.S. policy now is to give support only to groups committed to fighting the Islamic State of Iraq and Syria. The rebel group “wanted to pursue other objectives, and those objectives were not consistent with fighting ISIS,” he said. “Fighting the regime could be one of those objectives,” said Dillon, who declined to be more definitive.

In a possibly related development, the Associated Press reported two days later that four members of an armed opposition group in southern Syria defected to the government in the days after the Washington Post first reported that President Trump had cut off CIA support to the armed opposition. Sputnik said it was “a clear demonstration of just how fundamental U.S. taxpayer dollars were to the war.” Sputnik cites the case of the Revolution Commando Army, which was previously known as the New Syrian Army from which the defected fighters came. Despite their apparent advantage stemming from the U.S.-supplied equipment in their possession, the group’s performance in Syria was surely underwhelming from a U.S. perspective—despite U.S. air support, its fighters failed to recapture the Syrian city of Al-Bukamal from ISIS/Daesh in July 2016. Sputnik says that U.S. support for these kinds of groups has motivated jihadis and their backers to step up their own destabilization efforts and effectively blocked any efforts to end the conflict inside Syria.  However, Trump’s decision to end the CIA support program has now breathed new life into the Syrian peace process, Sputnik says.

Liu Jieyi: U.S. and North Korea Are Responsible for Peace on Korean Peninsula, Not China

Aug. 1 (EIRNS)—China’s UN Ambassador Liu Jieyi said yesterday that the United States and North Korea hold “the primary responsibility” for de-escalating tensions and negotiating peace on the Korean Peninsula, not China, reports the Associated Press. Liu, speaking at a press conference on the occasion of the end of China’s July rotation as president of the UN Security Council, said that if Washington and Pyongyang refuse to reduce tensions and hold new talks as called for in UN Security Council resolutions, “then no matter how capable China is, China’s efforts will not yield practical results because it depends on the two principal parties.”

Liu said instead of complying with Security Council calls to de-escalate tensions and re-launch six-party negotiations, tensions have heightened as a result of new missile tests, statements that “all options are on the table,” and the deployment of the U.S. THAAD anti-missile system, in South Korea.

COLLAPSING WESTERN FINANCIAL SYSTEM

Why Did New York Fed Produce a Meaningless Report on Glass-Steagall?

Aug. 1 (EIRNS)—Financial press coverage was given today a report just issued by the New York Federal Reserve Bank’s research group, about the Glass-Steagall Act and the 2007-08 international financial crash.

The reason for publicizing the report is stated in CNBC’s first sentence: “It’s an article of faith in some political circles that the end of Great Depression-era banking limits led to the 2008 financial crisis that devastated the U.S. economy.” These “political circles” in fact, now include many millions of thinking American, scores of unions and other constituency organizations, hundreds of state elected officials of both parties, at least 70 Members of Congress, and the drafters of the Presidential platforms of both major parties in 2016.

And, there is another debt-fueled banking system explosion coming on, in which forward-thinking Americans believe that if the Wall Street banks are not broken up first, by Glass-Steagall reinstatement, they will be bailed out again with the blood and tears of hundreds of millions.

The head researcher for the Fed report, Nicola Cetorelli, is quoted by CNBC (for example), as concluding, “Banking firms had already been widening their business scope for a long time, so it is not clear that a particular regulatory reform can be considered the catalyst of the Great Recession some 10 years later. Nor is it immediately obvious how reinstating restrictions per se would reduce the likelihood of a future crisis.”

Cetorelli’s typically vague, cocktail-party sort of attempt at a quick dismissal of Glass-Steagall’s importance, suggests how little thought or effort went into this “report.”

Given in evidence of the New York Fed’s claim is a chart, said to show the main “finding”: How many banks formed holding companies from 1970-2016, factoring in the new services they offered, it asks. The number of “unique financial activities of these bank holding companies collectively, grew from 21-23 in the 1970s and early 1980s, to 27 in 2000, and to 29 at the point of the 2008 crash.” That’s it! And the chart’s left-hand legend is constructed to go from 20 at the bottom to 30 at the top, falsely magnifying the “expansion of activities” before Glass-Steagall was killed in 1999.

The “finding” is meaningless. What mattered, after the killing of Glass-Steagall, was what did the big Wall Street banks do with their customers’ deposits? Lend them, or speculate with them? On this, an earlier, 2011 report by the same New York Federal Reserve Bank was far more meaningful, and provided strong evidence that eliminating Glass-Steagall had very large negative results. That report was called “Peeling the Onion: The Structure of Large Bank Holding Companies.”

What did Wall Street do with those trillions in deposits? A recent interview with Victor Haghani, a founder of the once world-famous hedge fund Long Term Capital Management (LTCM), gives one very powerful example. LTCM’s business was financial derivatives, exclusively. It collapsed in 1999, after being leveraged more than 100:1 with many billions of dollars in credit extended to it by 55 major banks in the United States and Europe. Glass-Steagall, when enforced, had prohibited such support by deposit banks to a purely speculative financial betting operation. Haghani recalls, “The world’s financial system ground to a halt, as the Fed had to cut rates for just this firm, and it was a hedge fund.” September 2008 almost came in 1999.

The Fed then made the same banks bail LTCM out, with more billions. The global derivatives markets then grew in nine years from $70 trillion nominal value, to over $700 trillion, and crashed.

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