EIR Daily Alert Service Tues, Sep 19, 2017

TUESDAY, SEPTEMBER 19, 2017

Volume 4, Number 186

EIR Daily Alert Service

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

EDITORIAL

Just Why Does Wall Street So Hate ‘The New Silk Road’ and Lyndon LaRouche?’

Sept. 18 (EIRNS)—Another crash is looming over the Wall Street-City of London financial system, and the warnings of it are coming faster and faster, from the IMF to the Bank for International Settlements to Britain’s Adam Smith Institute, whose report last week called it “an accident waiting to happen.” Even one of the biggest of those banks, Deutsche Bank, is itself warning of gigantic bubbles and a “sudden correction that could destabilize the financial system.” Some 10-20% of companies in the United States and European countries are going to go bankrupt with any significant rise in interest rates, they are warning—the Federal Reserve is likely to trigger that rise this week.

It is time to remember that Lyndon LaRouche made a dramatic, internationally broadcast warning in July 2007: “There is no possibility of a non-collapse of the present financial system—none! It’s finished, now! The present financial system can not continue to exist under any circumstances, under any Presidency, under any leadership, or any leadership of nations. Only a fundamental and sudden change in the world monetary financial system will prevent a general, immediate chain-reaction type of collapse.” And in that broadcast, he spelled out—including in legislative actions by the United States—what could have stopped that terrible breakdown collapse of 2008.

He has spelled it out again now.

There are three countries whose leadership must prevent another descent into chaos and mass unemployment like 2008: China, which came through that chaos and has driven the biggest share of economic progress since then with worldwide infrastructure projects; the United States, whose President Donald Trump warned late last year of “a giant bubble on Wall Street” and pledged to restore growth; and Russia. The very thought of those three great powers collaborating in a new economic development paradigm—China’s “New Silk Road” of great infrastructure projects—completely destabilizes the Anglo-American elite and “neo-cons,” and London and Wall Street themselves.

As the first authors, decades ago, of the new paradigm of great infrastructure projects now unfolding under China’s “Belt and Road Initiative,” Lyndon and Helga LaRouche are the key to the potential for that collaboration of great powers for progress. Donald Trump’s mold-breaking Presidency makes it possible for the United States to take part.

The Federal prosecutor who 30 years ago was assigned to organize the “Get LaRouche Task Force” of prosecutors to put Lyndon LaRouche in prison, is now the “special counsel” trying to drive Trump out of the Presidency. Robert Mueller is trying to give President Trump “the LaRouche treatment.”

So agitated are the neo-cons and financial barons about the possibility that the United States will join the New Silk Road, that their U.S. publication Foreign Policy has published a furious attack on the Helga LaRouche’s parliamentary campaign in Germany! They are determined to stop the progress of such a new paradigm anywhere in Europe or the United States.

But joining with the New Silk Road is exactly what the United States needs. If Trump is going to protect Americans from that “giant bubble on Wall Street” he warned of, and build a new economic infrastructure to make the nation productive and great again, this is the means. The American people need to take control over Wall Street by insisting on reinstating the Glass-Steagall breakup of the banks. That’s the first of the actions needed to bring the American economy into that international collaboration on great projects.

THE NEW GLOBAL ECONOMIC ORDER

Foreign Policy Attacks Lyndon and Helga LaRouche in Germany for New Silk Road Organizing

Sept. 18 (EIRNS)—Just days after a prominent interview with BüSo lead parliamentary candidate Helga Zepp-LaRouche was quickly “disappeared” from Germany’s Junge Welt publication, the U.S.-based neo-conservative magazine Foreign Policy has vented its spleen against Lyndon LaRouche for the very existence of Helga LaRouche’s campaign. Foreign Policy’s title—“Lyndon LaRouche Is Running a Pro-China Party in Germany”—makes clear the issue is China’s Belt and Road Initiative, or “New Silk Road,” which Helga LaRouche prominently represents both in China and in Europe.

The article, appearing just before the Sept. 24 parliamentary election, doesn’t show any signs of fact-checking: Lyndon LaRouche is not a millionaire; Helga LaRouche is not “Russian-German”; LaRouche doesn’t publish on websites only in Russian and German; etc. “Germany must join the New Silk Road” is hardly a “bizarre campaign poster” to any informed German. “Overhauling global banking to stop the collapse of the financial system” is not a “vague idea”: It is the return of the Glass-Steagall Act.

But this is fundamentally an attack by geopoliticians, on the new international paradigm which rejects British geopolitics in favor of collaboration for the mutual benefit of nations. The successful emergence of that new paradigm defines Lyndon and Helga LaRouche’s 40 years of work, and they represent it internationally.

The McCarthyite Russia-baiting by Foreign Policy is clear, charging both LaRouches with “promoting the interests of Russia and China in the West.” Even more clear is the fear of the LaRouches’ leadership with regard to the New Silk Road policy itself. “The question is whether the LaRouche movement’s real audience isn’t in Germany but rather in China, where there’s growing evidence the movement has influential followers.” Testily, Foreign Policy notes how often Helga Zepp-LaRouche is cited as an expert in the press in China; and the lengthy August China Daily profile of Helga LaRouche is denounced as “a puff piece.”

The author of the attack, Bethany Allen-Ebrahimian, comes from the East-West Institute in Hawaii, and the detestable contempt she affects for Chinese intelligentsia and leaders is a mark of neo-con geopoliticians. But it belies a real fear of the New Silk Road policy, and the LaRouches as leaders of it.

The Samuel Huntington-founded Foreign Policy will be one U.S.-based observer nervously counting votes of the BüSo parliamentary slate in Germany.

Belt and Road Is Guiding China-Ibero-America-Caribbean Cooperation

Sept. 18 (EIRNS)—There is much enthusiasm about the Nov. 9-11 China-Latin America-Caribbean International Exposition, that will take place in the city of Zhuhai, in China’s Guangdong province to strengthen mutual economic, scientific and cultural cooperation.

The Exposition is expected to attract 400-500 companies from all three regions and 40,000 visitors. Zhuhai’s Deputy Mayor Zhu Qingqiao, who also represents the China International Chamber of Commerce, told China Daily that “we invite businessmen and authorities to this new economic platform between China and Latin America, for mutual benefit and exchange. We propose to, together, write a new chapter in comprehensive cooperation, on behalf of prosperity and development.” The Exposition, he said, has a clear “strategic purpose,” and follows the guidelines laid out by China’s Belt and Road Initiative.

During the three-day Exposition, the giant park for economic and trade cooperation among these three regions, will also be inaugurated. The park, Xinhua reports, offers Ibero-American and Caribbean companies favorable investment policies, and establishes a platform for bilateral cultural and tourism exchanges, as well as cooperation in technology, cross-border e-commerce and modern commercial services.

A few weeks after the Zhuhai Exposition, on Nov. 30-Dec. 2 in Punta del Este, Uruguay, the China-Latin America-Caribbean Business Forum will take place, with businessmen and government officials from these three regions. Host country Uruguay, an enthusiastic supporter of the Belt and Road Initiative, has been organizing regional forums over the past few months to build for the conference, emphasizing that it will provide the nations of the regions an excellent opportunity to join the Belt and Road.

New Silk Road Erupts in High-Level Sino-European Forum in Paris

PARIS, Sept. 18 (EIRNS)—An exceptional Sino-European forum on China’s New Silk Road project took place in Paris, on Sept. 14-15, co-organized by the Boao Forum for Asia Paris Meeting and the Prospective and Innovation Foundation headed by former French Prime Minister Jean-Pierre Raffarin. The forum was a follow up to the May 14-15 Belt and Road Forum for International Cooperation in Beijing, where Raffarin represented President Emmanuel Macron, and was organized with the support of the authorities of both countries. The theme of the forum was “ ‘Belt and Road Initiative’: Building Synergy with EU Policies and Strategies.”

At the Sept. 15 plenary, 250 participants engaged in a thorough, day-long discussion on all aspects of the Chinese-led proposal. Raffarin made welcoming (and also closing) remarks; the keynote addresses were by former Vice-Premier of China Zeng Peiyan, Vice-Chairman of the Boao Forum for Asia; and by the President of the French Senate Gérard Larcher. This is the highest-level Franco-Chinese event in a long time, and perhaps the most important event organized thus far on the Belt and Road project in a major Western European country, since President Xi Jinping launched the policy in 2013. Clearly, the organizers want it to rapidly succeed now in Europe.

The representation from China was very high level, with delegations of several of China’s main infrastructure, transport, and engineering companies, and also financial and banking institutions, participating at the level of their presidents and vice presidents. From the Western side, speakers included the secretary general of the European Bank Reconstruction and Development (EBRD), as well as bankers, such as a Barclays Vice Chairman, fund managers and corporate CEOs. A Swiss company, AAQIUS, producing hydrogen cartridges to run electrical motors for small vehicles, signed a deal with a Chinese company on the sidelines of the forum. Three sessions with panelists addressed Infrastructure Connectivity; Promoting Trade and Investment; and Inclusive and Innovative Ways of Funding.

From all sides, this was a major effort, not only to describe the nature of the project, but to clear up any doubts, questions and concerns which have arisen in a depression-ridden and declining Europe, due to the enormity of the project and to its totally innovative quality. Since the Beijing Belt and Road Forum last May, the mainstream media and thinktanks, as well as strategists and important Sinologists, have come out denouncing the project as a geopolitical scheme from power-hungry China.

President Macron, who is not inimical to the project, nonetheless last June asked the EU to define a strategy to forbid the takeover of strategic companies and strategic infrastructure by foreign capital. At this point, it’s not clear whether they want to protect only the defense-sensitive companies, which China itself does at home, or to block collaboration with the New Silk Road project as a whole. The danger, if the EU gets involved, is that it will try to establish an EU-wide negative position, including all the Southern or Eastern and Central European countries that have developed close ties to China. Interestingly, thinktankers such as Barthélémy Courmont at France’s Institute for International and Strategic Affairs (IRIS), wonder if this is possible.

Zeng and Boao board member Shaukat Aziz, former Prime Minister of Pakistan, among other speakers, insisted on the specific role of infrastructure, which does not generate profit in the short term, but does in the long term and within the context of the overall development of a region.

SCIENCE AND INFRASTRUCTURE

Swiss Rail Offers Technology, Expertise To Build Bioceanic Railroad in South America

Sept. 18 (EIRNS)—Addressing the Sept. 14-15 of the Bioceanic Operations Group in Cochabamba, Bolivia, Swiss Railway board of directors member Michele Molinari said that his company wants to be involved in “all phases” of the Central Bioceanic Rail Corridor (CFBC), extending from the Atlantic coastal city of Santos, Brazil to the Peruvian port of Ilo on the Pacific. The conference was attended by representatives of Peru, Bolivia, Brazil, Paraguay and Argentina.

“We’re capable of bringing all the technology necessary to build all parts of the bioceanic [railway],” Molinari announced, according to the official Bolivian Information Agency (ABI) Sept. 14. Swiss Railway includes 110 companies with extensive experience in engineering and construction of railroads, as well as in supplying technology, rolling stock and maintenance, even in difficult terrain, which is certainly to be found along the proposed route through Bolivia and over the Andes Mountain range. The Swiss executive also reported that 180 German companies, and some from other nations, want to be involved in the project as well.

Molinari underscored that from the time he became involved in the bioceanic project, “I’ve viewed it as a very feasible, very reasonable” project, one that will bring economic development for the countries involved, not to mention the increased tonnage of cargo that will be transported. “We must consider,” he said, “that all of this is going to produce much greater development; it’s going to create many jobs, opportunities for young people, and new industries as well.”

The question of financing the CFBC remains unresolved, and some unviable options, such as public-public partnerships, are being discussed. According to the daily Los Tiempos, Peruvian Transportation Minister Martin Vizcarra reported that the Chinese government is interested in financing the project, as are European countries such as Germany. But nothing is settled at this point.

COLLAPSING WESTERN FINANCIAL SYSTEM

Two More Crash Warnings as Fed Gets Ready To Sell Assets

Sept. 18 (EIRNS)—Following the report of the U.K.-based Adam Smith Institute last week that City of London banks were more overleveraged than in 2007 and the system is “an accident waiting to happen,” two new warnings emerged today of the bigger crash threat from the U.S. and European corporate bond markets.

Deutsche Bank chief credit strategist followed up CEO John Cryan’s remarks last week that the central banks had created “bubbles everywhere,” with a warning that “asset prices globally are the most elevated in history.” This history involved is since 1800, and the measures complicated. But the bank is clearly reporting that the credit, or bond markets, are closer than ever before to the highest global average price possible, meaning the lowest global average interest rate possible. Their report says “While they remain this high there is always a risk of a sudden correction that could be destabilizing to a financial system and global economy that seems to require such elevated asset prices.”

The latest quarterly report of the Bank for International Settlements contains a warning about a potential corporate debt crisis or collapse. It estimates that 10% of all European non-financial firms are “zombie companies” which have become completely dependent on borrowing at near-zero interest rates, and will go bankrupt with any significant rate rise. They estimate that the ratio in the U.S. corporate sector is 16% “zombies.” Recall that the IMF 2017 global review three months earlier estimated that 20% or more of U.S. non-financial firms would “default” with any significant rate rise, not necessarily the same as going bankrupt; so this is an equally serious warning. “Ultra-low rates have allowed these companies to keep operating…. In the event of a slowdown or an upward adjustment in interest rates, high debt service payments and default risk could pose challenges to corporates, and thereby create headwinds for GDP growth.”

BIS says investors still think the central banks will return to quantitative easing as soon as any market quakes. “This underlines just how much asset prices appear to depend on the very low bond yields that have prevailed for so long.”

This week the Fed is deciding whether to start selling assets, pushing interest rates up if it announces that.

U.S. POLITICAL AND ECONOMIC

Houston Chronicle Op-Ed: ‘Government Can Do Monumental Things Again’

Sept. 18 (EIRNS)—The Houston Chronicle published an optimistic and on-target Sunday op-ed by Steven Fenberg, on the subject of the Reconstruction Finance Corporation (RFC), its head Jesse Jones, and the tasks of rebuilding after Hurricane Harvey.

“In the past, our government vigorously responded to the needs of its citizens by nurturing innovation and building vital infrastructure,” wrote Fenberg. “Today we lurch from one catastrophe to the next, spending borrowed money to rebuild destroyed lives, rather than employing government power to proactively protect communities. But like Jones said about realizing economic recovery in 1937, ‘It cannot be achieved if we let ourselves believe that our government is our enemy.’

“If we want to rebuild and fortify the Texas Gulf Coast to withstand the next destructive storm, we must embrace the power of good government. The U.S. government helped build the Houston Ship Channel, preserved capitalism during the Great Depression and saved democracy during World War II. Our government can do monumental things again—and even make a little money in the process.”

Fenberg reintroduced the RFC and Jones to the paper’s readership. Jones, a Houston businessman, raised the funds and organized the building of the Houston Ship Channel. “During the Great Depression, President Franklin D. Roosevelt tapped Jones to lead the Reconstruction Finance Corporation (RFC), which saved banks, homes, farms and businesses from bankruptcy. The RFC built major bridges, dams and aqueducts across the country, and developed high-speed trains. Most amazing of all, the RFC paid for itself, even returning a profit to the government in the middle of the country’s worst economic disaster.”

Naming large projects for which it was famous, Fenberg gives more detailed descriptions of smaller, numerous loans for household development and progress. This is urgent on the Texas Gulf Coast now, where many tens of thousands of people are still homeless while their homes get rebuilt (hotels, and so on, are full, despite vouchers). “The RFC’s massive projects were based not on big spending but on judicious lending. In 1937, after the Ohio and Mississippi Rivers flooded in 11 states, the RFC’s Disaster Loan Corporation sent hundreds of examiners and attorneys into the field and made thousands of loans to help people rebuild their homes and businesses. The federal government was the only institution willing and able to shoulder such a massive task.” http://www.houstonchronicle.com/opinion/outlook/article/Fenberg-One-of-Houston-s-greatest-12203338.php

U.S. Trade Representative Lighthizer Names China Number-One Trade Challenge

Sept. 18 (EIRNS)—It was a full house at CSIS today when U.S. Trade Representative Robert Lighthizer was to present the direction in U.S. trade policy and give an indication of what measures the United States was going to take against China, if any. Lighthizer was short on details, but his general orientation was clear. Among the challenges facing America in the trade arena, China was at the top of his list. Lighthizer attacked China’s “mercantilist” policy of subsidizing its industries and trying to create “national champions.”

Waving the banner of British-style free trade, he complained that the present system was neither free nor fair. “The U.S. would prevail with any level playing field,” Lighthizer said. He also expressed concern over the ability of the present structure of the World Trade Organization (WTO) to deal with U.S. concerns. “The WTO and its predecessor the General Agreement on Tariffs and Trade [GATT] were not designed to successfully manage mercantilism on this scale,” he said. “We must find other ways to defend our companies, workers, farmers and indeed our economic system. We must find new ways to ensure that a market-based economy prevails.” And with the Trump Administration, he said, “we are working with a different philosophy.”

STRATEGIC WAR DANGER

German Foreign Minister Calls for Diplomatic Engagement of North Korea

Sept. 18 (EIRNS)—At a meeting with Chinese State Councillor Yang Jiechi in Beijing on Sept. 17, German Foreign Minister Sigmar Gabriel urged international powers to engage diplomatically with North Korea to end its nuclear and ballistic missile programs. Gabriel called for a dual strategy of “pressure and dialogue” to deal with the Pyongyang government.

The international community must “decisively and completely implement” sanctions on North Korea, while taking “bold steps” to de-escalate tensions on the Korean Peninsula, for which the United States, China and Russia will have to sit at the table and negotiate, Gabriel said. “Without cooperation among these three states the problem will not be solved,” he was quoted as saying by Germany’s Deutsche Welle news agency.

In an interview with Germany’s Bild daily en route to China where he met with Yang Jiechi, Gabriel counseled patience: “It often takes time for the effects of sanctions to be felt. We saw this in Iran. However, just like North Korea, we need a different safety guarantee than the nuclear bomb. SPD Chancellors Brandt and Schmidt created this in Europe—the Conference on Security and Co-operation in Europe. It brought three powers to the table: the U.S., China, and Russia.”

Gabriel further told Bild, “North Korea’s dictator, Kim Jong-un, is not crazy at all. He is following a carefully developed strategy. He thinks that his regime will be safe if he has a nuclear bomb. Nobody will dare to threaten him.”

In Berlin rumors have it that Germany would offer to host diplomatic talks on North Korea, following the example of the Afghanistan talks at the Hotel Petersberg near Bonn, several years ago.

U.S.-South Korean Militaries Engage in Show of Force

Sept. 18 (EIRNS)—The U.S. and South Korean militaries engaged in a show of force today, that included the dropping of both inert and live weapons on a South Korean bombing range and a flight along the DMZ separating South and North Korea. According to a Yonhap report citing the U.S. Pacific Command,  a pair of B-1B bombers flying from Guam and 4 U.S. Marine Corps F-35B stealth fighters were joined by four South Korean F-15K fighters for the exercise for the two-and-a-half-hour drill “where they honed their attack capabilities.” After they released their weapons, they made the “highly unusual” move of approaching the tense inter-Korean border, reported Yonhap. Prior to arriving over Korea, the U.S. aircraft had drilled with F-2 fighters from the Japanese Air Self Defense Force over waters near Kyushu, reported the Japan Times.

There will be more such exercises to come. The South Korean Defense Ministry reported to the National Assembly, today, that the United States and South Korea will hold an exercise in October involving “the U.S. aircraft carrier strike group,” although it didn’t name the carrier involved. The ministry also reported that South Korea and the United States will also conduct a combined missile alert drill joined by Japan between late September and early October.

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