EIR Daily Alert Service

WEDNESDAY, AUGUST 9, 2017

Volume 4, Number 157

EIR Daily Alert Service

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

EDITORIAL

LaRouche: Take Up the ‘Historical Challenge’

Aug. 8 (EIRNS)—Lyndon LaRouche, when briefed today on the latest dire economic headlines from Germany, responded that we are seeing an overall “collapse of the physical economy” in the trans-Atlantic. He spoke of what that means in terms of the policy crisis, stressing that, even if some people have good intentions, and make specific proposals, nevertheless they are functioning in the same, failed system. LaRouche summarized: The U.S. economy is going down. France is in a condition where it’s not contributing anything. Germany is not much better. And it’s getting worse and worse. The whole paradigm must be changed, and fast.

When it was mentioned that we are lucky Presidents Xi Jinping and Vladimir Putin are not hotheads, LaRouche concurred, but stressed, that our problem is, “others don’t want to do their job.” This is our “historical challenge.”

Our immediate task, especially in the United States, is to mobilize the forces to defeat the “color revolution” coup operation deployed against President Donald Trump, the nation itself, and Russia as well. It is coming from London, Inc., with the goal of killing the potential for good U.S.-Russia and U.S.-China relations, and friendly East-West relations generally, for the benefit of development and peace for all concerned. If this evil crowd succeeds, it means, not just privation, but all-out war. They must be stopped.

We’re up against a “hate storm,” is how one leading German political figure puts it. Free Democratic Party Chairman Christian Lindner, last week, simply called for a “constructive dialogue” with Russia, and, in particular, to put the hot issue of Crimea on hold (“in provisium”) during consultations. Then, Lindner said yesterday, he has been slammed with a “hate storm” of denunciations for his proposals, coming from Bildzeitung, a major German daily, and other quarters. Bildzeitung’s headline was, “Lindner’s Coziness Towards Putin.”

Likewise yesterday, Secretary of State Rex Tillerson came in for a public hate storm of denunciation for the imputed offense of not activating an anti-Russia propaganda unit in the State Department. Rep. Eliot Engel (D-NY) made public a letter he sent to Tillerson Aug. 4, accusing the Secretary of State of not acting “to combat the propaganda campaigns of Russia and ISIS…. It is unacceptable to members of Congress that information warfare from Russia and ISIS will go unanswered.” The Engel letter was sent to Tillerson Aug. 4, the day before Tillerson and Russian Foreign Minister Sergey Lavrov met in the Philippines, and agreed to continue diplomatic talks, despite differences.

These two instances of hysteria, typical of now-daily occurrences, do not manifest the strength of the enemy, but their derangement. As LaRouchePAC reports from organizing around the United States show, wherever people can be provided the basis for knowing the truth, and what can be done, their humanity comes through. Later this week, LaRouchePAC will issue its new petition-statement on the need to act now.

U.S. POLITICAL AND ECONOMIC

Rep. Engel Demands ‘Ministry of Truth’ for War with Russia

Aug. 8 (EIRNS)—New York’s Rep. Eliot Engel (D) is mobilizing for the U.S. Congress to follow up its late July unconstitutional anti-Russia sanctions bill, which usurps the Executive Branch’s responsibility to carry out foreign policy, by legislating that the State Department must carry out wartime anti-Russia psy-ops.

The threat was contained in a letter Engel sent to Secretary of State Rex Tillerson on Aug. 4, released to the press yesterday. It came in response to Politico’s report that State is sitting on $60 million earmarked for the State Department’s “Global Engagement Center,” instead of pumping out anti-Russia propaganda as it was mandated to do in the last days of the Obama administration.

Equating Russia with ISIS, Engel rants against the Trump Administration’s refusal to launch war on Russia. “I’m seriously concerned by reports that you have decided not to use resources Congress provided to combat the propaganda campaigns of Russia and ISIS. The threats we face from these adversaries are clear…

“It seems again that this Administration just isn’t getting the message about Russia, so let me put it plainly: Russia is not America’s friend. President Putin attacked American democracy. He wants to splinter Western unity and undermine our alliances. His actions merit a tough response, not the coddling that President Trump seems determined to offer him.”

Then, the threat: “Our bipartisan legislation, passed by overwhelming majorities in the House and Senate, was designed to protect the United States from Vladimir Putin’s aggression and punish Moscow for interfering with American democracy, invading Ukraine, and other malign actions…. It is unacceptable to members of Congress that information warfare from Russia and ISIS will go unanswered. Doing nothing is not an option. I urge you to come up with a strategy and work with Congress to implement it at once. Otherwise, the House and Senate will look for legislative alternatives to direct the Administration to treat the threats of Russia and ISIS with the seriousness they deserve.”

The interagency Global Engagement Center was established by Executive Order by President Obama in March 2016, initially based in the Pentagon and tasked with coordinating “Government-wide communications activities directed at foreign audiences abroad in order to counter the messaging and diminish the influence of international terrorist organizations,” such as ISIS. Before leaving office, in December 2016 Obama expanded the mission of the center to specifically target Russia, China and North Korea for “state-sponsored disinformation campaigns,” through a provision of the National Defense Authorization Act which also shifted the inter-agency center over to the State Department.

Americans should be clear that what Secretary Tillerson is resisting here, is the drive for war. This center, as Australian journalist John Pilger wrote on Aug. 5, is designed to be “a ministry of truth … tasked with providing an official narrative of facts that will prepare us for the real possibility of nuclear war.”

The Ministry of Truth was the Russellite media brainwashing center in George Orwell’s dystopia, 1984, whose motto was “War Is Peace, Freedom Is Slavery, Ignorance Is Strength.”

Tillerson Says the Policy on Russia Is for Cooperation on Syria, Afghanistan, and Ukraine

Aug. 8 (EIRNS)—In his Manila press conference Monday, Tillerson was asked, in a typical fake-news fashion: “How would you respond to critics who say that you are appeasing the Russians and despite their past attacks and ongoing attacks on Western democracy and you are seeking cooperation instead of deterring it?”

Tillerson gave lip service to the Russian “meddling in the elections,” saying he discussed it with Foreign Minister Sergey Lavrov, but then said:

“Now, having said that, we also have very important national security interests in the Middle East, in Syria. We have an important national security interest in Afghanistan and that region of the world. And we have serious needs to begin to address the situation in Ukraine. The Russians have indicated some willingness to begin to talk with us about a way forward on Ukraine. As you well know, we’ve appointed a special envoy to engage with Russia but also coordinating with all of the parties, so that this is full visibility to all the parties, that we’re not trying to cut some kind of a deal on the side that excludes their interests in any way.”

STRATEGIC WAR DANGER

In Germany, a ‘Hate Storm’ against FDP Leader Lindner for Urging Constructive Dialogue with Russia

Aug. 8 (EIRNS)—In the wake of Free Democratic Party (FDP) Chairman Christian Lindner’s politically incorrect call on Aug. 4 for an unprejudiced restart of dialogue with Russian President Vladimir Putin, including the tolerance (but not recognition) of Russia’s reunification with Crimea for the time being, a major hate storm has erupted against him in the mainstream media, as well as in the German government and the ruling parties, CDU and SPD. In Social Democrats, SPD, this is paradoxical, since Lindner referred to Willy Brandt’s “Ostpolitik” from 50 years ago, at the peak of the Cold War, at the time that SPD lead Brandt was Chancellor.

Now SPD Chancellor candidate Martin Schulz has said not a word about the sanctions, Russia and related issues in the past few weeks. The Greens are anti-Russian, and have joined in denouncing Lindner as well. He has, however, received support from Linke Bundestag group chairwoman Sahra Wagenknecht.

References to the old “Ostpolitik” are fine, Lyndon LaRouche commented today, but they belong to the old paradigm. The new paradigm is the New Silk Road, which Lindner unfortunately does not mention.

However, Lindner has not backed down, so far: He wrote yesterday on his Facebook page, that he was wondering about this hate storm, since he had “only said in public what most people are thinking and doing behind the scenes anyway.”

Today, he tells Bildzeitung in an interview, which the tabloid headlines “Lindner’s Coziness Toward Putin,” that although he is sticking to the Russia sanctions the same as everyone else, he does not want to “accept the threat of an escalation spiral and arms race.” Lindner says that improvements in relations with Russia will not begin on the big issues, but on the smaller ones, and that should be tested by Western diplomacy. he has never demanded anything more than that, Lindner confirms, and therefore he wonders why there is such great hysteria against his views.

Ryabkov: Russia Will Seek To Normalize Relations with the U.S. Despite the U.S. Congress

Aug. 8 (EIRNS)—Russian Deputy Foreign Minister Sergei Ryabkov stressed in an interview published on Aug. 7 that Russia will work to try to normalize relations with the U.S. despite the difficulties that have been injected into relations by the U.S. Congress, reports TASS. He told Mezhdunarodnaya Zhizn (International Life) that he hopes things don’t come to a U.S.-Russian confrontation, and that it will take a long time to normalize relations again, but that Russia will try to do that anyway. “[I]t will be difficult to overcome it all if both houses of Congress do not take decisions to cancel everything that they have done concerning Russian-U.S. relations. It will take a long time, without a doubt,” Ryabkov said. “As for foreign policy, I am disappointed and have to state that in many respects this is a continuation of the worst of [President Barack] Obama’s legacy, even a tougher policy in some aspects, directions, the rhetoric and the political line, which caused problems in relations with us and problems in Washington’s relations with other countries at the final stage of the previous administration’s tenure.”

Later on in the interview, Ryabkov went after the U.S. Democratic Party more generally. “It is a hard fact that an anti-Russian genie has been set free by the Democratic Party, whose candidate lost the presidential election.” he said. “This chase after a phantom external enemy triggered the effects we are witnesses to today, including the new law and the paranoid, unexplainable, and irrational wave of charges against Russia of all mortal sins, and a certain persecution mania many politicians and functionaries in Washington experience today,” he believes. “In an unprecedented fashion the Democrats have used Russia as a bugbear and the relations with it as a hammer to crush the Trump Presidency. In reality they have upset the chances of building more sensible relations with Russia for a long period to come,” Ryabkov said.

For his part, Secretary of State Rex Tillerson said, during a press conference in Manila yesterday, that he believes Washington and Russia can find a way to ease tensions, saying it wouldn’t be useful to cut ties over the single issue of suspected Russian meddling in the U.S. election. “We should find places we can work together…. In places we have differences we’re going to have to continue to find ways to address those,” Tillerson told reporters.

Philippines President Duterte: North Korea Would Be a Good ASEAN Dialogue Partner

Aug. 8 (EIRNS)—Philippine President Rodrigo Duterte continues to address reality in the face of hysteria. Today is the celebration of the 50th Anniversary of ASEAN, and Duterte, as host this year, invited North Korean Foreign Minister Ri Yong-ho, who was in Manila to attend the ASEAN Regional Forum. At the event, Duterte greeted Ri, saying:  “Your Excellency, welcome. We are very pleased to have you here,” according to the Philippine Daily Inquirer.

Ri then extended his congratulations to Duterte as Chairman of ASEAN, and thanked him for the invitation. Duterte responded: “You are always invited here. We would be a good dialogue partner.”

Rather like Trump, Duterte shoots from the hip. Just a week ago he said about the North Korean leader: “Kim Jong-un is a chubby-faced maniac playing with dangerous toys.” But when it came to real diplomacy, he intervened positively.

New Fake News ‘Leak’ Pushes for Trump To Start War on North Korea

Aug. 8 (EIRNS)—Right on schedule, the Washington Post has published another leak from unnamed “intelligence officials” from a “confidential assessment” which is clearly aimed to bum’s-rush President Trump into launching a war on North Korea, and the global war that would immediately follow.

“North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles, crossing a key threshold on the path to becoming a full-fledged nuclear power, U.S. intelligence officials have concluded in a confidential assessment,” writes the war-mongering, Trump-hating British agents at the Post, signed by three of their regular leakers of lies from their corrupt and treasonous sources.

They continue: “The new analysis completed last month by the Defense Intelligence Agency comes on the heels of another intelligence assessment that sharply raises the official estimate for the total number of bombs in the communist country’s atomic arsenal. The U.S. calculated last month that up to 60 nuclear weapons are now controlled by North Korean leader Kim Jong-un.”

The key is the following: “The nuclear progress further raises the stakes for President Trump, who has vowed that North Korea will never be allowed to threaten the United States with nuclear weapons.” You want us to let off the pressure, Donald? Nuke Pyongyang—

The Post at least had to acknowledge that top experts refute the fake intelligence estimates. They quote Siegfried Hecker, “director emeritus of the Los Alamos National Laboratory and the last known U.S. official to personally inspect North Korea’s nuclear facilities,” who says that the North has at most 25 bombs, but more importantly counters the entire premise of a threat from North Korea: “ ‘Overselling is particularly dangerous,’ said Hecker, who visited North Korea seven times between 2004 and 2010 and met with key leaders of the country’s weapons programs. ‘Some like to depict Kim as being crazy—a madman—and that makes the public believe that the guy is undeterrable. He’s not crazy and he’s not suicidal. And he’s not even unpredictable. The real threat, is we’re going to stumble into a nuclear war on the Korean Peninsula.’ ”

COLLAPSING WESTERN FINANCIAL SYSTEM

Debt Load on U.S. Corporations Goes Well Above Any Previous Level

Aug. 8 (EIRNS)—In a reminder that the debt of U.S. non-financial corporations, doubled in seven years, is going to collapse, Zero Hedge today published a report by a Goldman Sachs researcher. The report is that for all corporations except financial, the ratio of the net debt of the companies, to their earnings, is at the level of 1.8:1. The previous highest level ever reached, was 1.52:1 in the second half of 2008, immediately before the financial crash. The measure for the earnings is EBIDTA, “earnings before interest, taxes, depreciation and amortization”; so the ratio is based on a measure of revenue which is considerably more than the companies actually have available to pay any principal on their debts.

At the same time, the report notes, “The demand for high-yield paper [i.e., more new debt issued by companies which already are overindebted and are at risk for default—ed.] has never been greater.”

Blackout of Hoenig Shows Media Supporting Wall Street Leveraging

Aug. 8 (EIRNS)—The polar opposite of reinstating the Glass-Steagall Act is the current loud demands of Wall Street, the Republican Congressional leadership, and Treasury Secretary Steven Mnuchin, to eliminate or reduce regulations on big banks’ capital so that they can gain more debt leverage—and supposedly, lend more. These demands are loud, because they are constantly repeated and headlined in the financial press when Wall Street or Mnuchin makes them.

But Pam Martens’ Aug. 7 column in her Wall Street on Parade blog, “Federal Regulator Drops a Bombshell as Corporate Media Snoozes,” reports that FDIC vice-chair Thomas Hoenig’s letter to the Senate Banking Committee’s leadership on this subject, has been blacked out by the same financial press—Bloomberg, Wall Street JournalNew York TimesWashington Post.

The reason is what Hoenig told the Senate. To quote Martens’ report, “What the fearless Hoenig told the Senate Banking Committee was effectively this: The biggest Wall Street banks have been lying to the American people that overly stringent capital rules by their regulators are constraining their ability to lend to consumers and businesses. What’s really behind their inability to make more loans is the documented fact that the 10 largest banks in the country ‘will distribute, in aggregate, 99% of their net income on an annualized basis,’ by paying out dividends to shareholders and buying back excessive amounts of their own stock.” Hoenig included a chart, which Martens reproduced, showing that Citibank, JPMorgan Chase, Morgan Stanley and Bank of New York Mellon all pay out well over 100% of their earnings in dividends and stock buybacks.

Clearly, if allowed to have more debt leverage, they would use it to buy still more of their stock, and pay still more dividends.

Another factor, not mentioned by Hoenig, is that the big Wall Street banks in the recent period have shifted their derivatives betting away from the dominant interest-rate and commodity derivatives—trading in which has not been doing well for them—and toward “equity derivatives.” Of course, that means complex bets on stock market indices. And if the same banks’ massive stock buybacks are a significant factor driving the stock market up, profits from “equity derivatives” won’t be hard to come by.

Hoenig’s case is solid: The big banks won’t lend more if allowed less capital and more leverage; they’ll speculate more. And they’ll securitize more, which is their way of dumping more and more of the toxic load of corporate and consumer debt, onto other investors, in preparation for another crash.

Nomi Prins Polemicizes, Forget Wall Street Stock Buybacks; Go with Glass-Steagall

Aug. 8 (EIRNS)—That was a message raised by author and former Goldman Sachs banker Nomi Prins Aug. 2, on Public Radio International “To the Point” program, in which four economists answered questions on “The President and Economy: Winners and Losers.” Amidst some blather, those interviewed (Prins, New York Times Business and Financial section writer Gretchen Morgenson, former IMF economist Kenneth Rogoff, and American Action Forum’s Doug Holz-Eakin) were largely clear that the record height of the U.S. stock market is a cause for concern, not a sign of strength, because it is driven by massive stock buybacks being carried out by companies; “with both hands,” to the tune of “$390 billion, with a ‘b’, $13 billion more than in 2016,” as Morgenson put it.

It took Prins, however, to call the stock market high “speculation” based on the global $13 trillion of “cheap money” pumped into the system by international central banks since the 2007-2008 crisis. With virtually free money given out with no strings attached, not just pharma and other companies, but Wall Street itself, she said, are buying their own stocks rather than investing in the real economy. It looks good only on paper. She told the NPR interviewer that she advocates a return to Glass-Steagall, because that measure, adopted after the 1929 stock market crash, made banks choose: keep deposits, or create and trade securities—but on your own dime, with no government support. If Glass-Steagall were brought back today, these big banks would have to make that choice again. That would bring back the stability the financial system enjoyed over the 66 years from 1933-1999, barring the S&L crisis, which itself was the result of deregulations, she argued.

German ‘Upswing’: Exports and Imports Dropping in June

Aug. 8 (EIRNS)—Establishment economists in Germany still speak of an “upswing,” although their forecasts were wrong for the month of June, where they expected a plus of 0.2% in exports, but exports dropped by 2.8%, to the lowest level in two years. Imports dropped even more than 3% in June. Exports to the Eurozone increased by 2.7%, largely due to more exports to France. Exports to non-EU countries, including to China, however dropped by 1.7%. The German government, naturally, is sticking to the narrative of a “German success story.”

Looking at all of this, it is striking that nobody talks in public about what many medium-sized and small entrepreneurs are complaining of in private discussions: The banks no longer provide loans to productive industry, so that many companies cannot export because the pre-financing is not secured. Smaller firms, many of which are involved in machine-building, have no access to bank loans. That is also part of the explanation why exports to China have dropped, while they should not have, since the Chinese economy has a GDP growth of 6.5% which implies a high demand for high-technology goods from Germany.

THE NEW GLOBAL ECONOMIC ORDER

Malaysian East Coast Rail Project To Break Ground Aug. 9

Aug. 8 (EIRNS)—The Malaysian East Coast Rail Line project will break ground tomorrow, as a joint Malaysian-Chinese effort. Joining Malaysian officials at the ceremony will be Wang Yong, head of China’s state-owned Assets Supervision and Administration agency.  The rail line is to connect ports on the east and west coasts of the peninsula. The connection is a key part of the Belt and Road Initiative.

OTHER

Former Vatican Banker: The Euro Will Steal Deposits and Enforce Euthanasia on the Elderly

Aug. 8 (EIRNS)—Ettore Gotti Tedeschi, who from 2009-12 headed the Institute for the Works of Religion (IOR), known as the Vatican Bank, warned in an interview yesterday that the EU “could impose expropriation of citizens’ properties” in order to reduce government debt, and “could impose euthanasia for pensioners over 65, in order to cut public pensions and health spending” and reduce the budget deficit.

Speaking to Paolo Becchi e Cesare Sacchetti in the Aug. 7 issue of Libero, he said that to remain in the European Monetary Union means not only “an economic cost,” but could also cost the country in terms “of democratic freedom, which they could take away from us.”

“In order to work, the single currency needs a single European government, which must co-exist with a global world-government. We have moved towards this, at accelerated speed, after the 2007 global crisis, thanks to supranational organisms that impose laws, disciplines, democratic models, coopted rulers and above all, homogeneous moral views.”

Such moral views are “relativistic” and aim at achieving a “global pantheist, environmentalist (animal rights, vegan), neo-Malthusian religion, oriented towards de-growth.”

Gotti Tedeschi says he misses Pope Benedict, and refuses to answer a question on immigration, “lest I risk excommunication,” but says that immigrations are “planned.”

The opening day of the 2009 Copenhagen climate summit, Gotti Tedeschi signed an editorial in the Vatican daily Osservatore Romano, blasting the summit as a neo-Malthusian blueprint. That Vatican statement helped kill the summit, along with the forceful organizing of the Schiller Institute onsite throughout. With Pope Francis, things have been reversed in the Vatican.

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