EIR Daily Alert Service Tues, Sep 26, 2017

EDITORIAL

Helga Zepp-LaRouche Assesses German Election Catastrophe

Sept. 25 (EIRNS)—The Sunday national election in Germany has, as expected, left the nation in a state of chaos. Both of the traditional leading parties were crushed, while the third largest party is now the newly created Alternative for Germany (AfD), a right-wing party, without a program, which emerged through anti-refugee fear-mongering. Chancellor Merkel’s Christian Democratic/Christian Social Union (CDU/CSU) coalition took only 33% of the vote—the party’s worst total since 1949—while its opposition, the Social Democratic Party (SPD), which has been in a “grand coalition” with Merkel since the 2013 election, received only 20.5%—their worst total since the administration of Bismarck!

Merkel must attempt to form a coalition government. The SPD had earlier asserted that it will not continue in the current coalition, and it will probably stick to that position. The likely partners Merkel will approach are the Free Democratic Party (FDP) and the Greens—two parties with vastly different policies from Merkel and from each other. Even Merkel admits that she is not likely to form a government until the end of the year. A new snap election is a possibility, but is not likely to get a different result.

While the AfD is not a fascist party, it includes extreme right-wing elements and racists. It will now have 94 seats among the 709 members in the Bundestag.

Helga Zepp-LaRouche, who was the lead candidate for the BüSo party, described the general election result as catastrophic, given that Germany was the last relatively stable government in Europe. She issued the following statement today (translated from the German), identifying the cause of the crisis and the necessary solutions, which BüSo will pursue with increased vigor:

Helga Zepp-LaRouche: German Voters Reject the Neo-Liberal Policy

The political landslide that made the Alternative for Germany (AfD) the third largest party in Germany, as well as the winner in Saxony, and the second largest force in other states in the East of the country, is yet another expression of the rejection of the neo-liberal policy, which led to the Brexit and to the defeat of Hillary Clinton. Chancellor Angela Merkel’s comment that the CDU/CSU is still the strongest group in the Bundestag against which no one could govern—just some 1 million voters had walked away from it—shows that Mrs. Merkel is just as unwilling as Hillary Clinton to admit the reasons for her poor performance.

The parties in the Grand Coalition [CDU-SPD] were punished for their neo-liberal policy, for Hartz 4 [labor “reform”], for the balanced-budget policy, which have driven a growing percentage of the population into precariousness in spite of abundant tax revenues. What has occurred is exactly what I had already warned of in the Brexit, Trump’s electoral victory and the referendum on changing the Italian Constitution: This wave will continue until the injustices of the neo-liberal policy have been eliminated.

The absurdity of this election campaign became clear in the so-called “elephants round” [a TV talk show with the “heavyweight” candidates]. After the media and the candidates of the established parties had presented an election campaign devoid of any of the great issues, this talk show, after the election, turned into a slugfest, in which the participants at least gave free rein to their frustrations. [Hostess] Anne Will made a point of challenging [AfD leader] Alexander Gauland, in which he admitted that the AfD is only against things, but has no solutions. That is true, of course, but solutions are also not found in the two major parties, or in the other three that are now in the Bundestag.

The elephant in the room of the “elephants round” is the imminent new financial crash, which threatens to dwarf that of 2007-2008. The BüSo intends to increase its efforts for the implementation of a global Glass-Steagall system of bank separation as the only way to prevent uncontrolled chaos, together with friendly forces in different European nations and the United States.

The BüSo will also escalate its campaign to get Germany and the other European countries to take up China’s offer to work together in building the New Silk Road. That is the only way to develop the economies of Eastern and Central Europe and the Balkans, and to industrialize the Middle East and Africa. Building the New Silk Road offers the only avenue to surmounting the causes of the refugee wave in a humane way. The BüSo fought for that during the election campaign, and will do so even more now. And our policy will prevail, despite the media censorship, because it is in the interest of Germany and of all mankind.

U.S. POLITICAL AND ECONOMIC

The Battle over Christopher Columbus Escalates in Manhattan

Sept. 25 (EIRNS)—On Sept. 12, a 125-year-old bronze statue of Christopher Columbus in New York City’s Central Park was defaced, covering his hands with red paint that looked like blood, and writing in white on that statue’s pedestal: “Hate Will Not Be Tolerated,” and #SOMETHINGSCOMING.

A few days later New York Mayor Bill de Blasio set up a panel to review “all possible symbols of hate on city property”—Columbus included! This abomination, adding to the antifa “Deface Columbus Day” campaign, and dozens of cities which are cancelling Columbus Day and renaming it “Indigenous People’s Day,” has properly enraged Italian-Americans and others who know anything about the Italian Renaissance and Christopher Columbus’s role in it.  The New York Post reported that Philip Foglia of the Italian American Legal Defense and Higher Education Fund, on behalf of 40 other groups, issued a statement to members of the Mayor’s panel calling on them to resign: “The level of pretension by the Mayor’s ill-advised and divisive commission has created an atmosphere of ethnic tension and division. Alienating Italian Americans and Catholics is not a healing gesture. The only honorable thing for Commission members to do is resign,” the letter said.

The activists consider a non-response a “lack of support,” the Postwrote. In addition to the statue of Columbus on Columbus Circle, there are four other Columbus statues on city land.

Columbus Day falls on Monday Oct. 9 this year. The Schiller Institute is mobilizing a fight internationally against the degenerate attack on the Renaissance tradition which led to the voyages of discovery by Columbus.

On Sept. 23, the leader of Lyndon LaRouche’s Manhattan Project Dennis Speed responded to a question about the antifa hate campaign, characterizing it as “a Soros-network-originated operation.” But, he elaborated, “The other element is that the name ‘Columbus,’ when you talk about America, always means ‘America.’ It’s just like Amerigo Vespucci: Columbus as in ‘Columbia, the Gem of the Ocean’; or as in Columbia University; or as the city of Columbus. That’s what you’re talking about.  So the term ‘Columbus’ means ‘America,’ and that’s actually what’s being attacked. We should just be aware that this is part of the same thing we saw in Charlottesville and not have any illusion that it’s part of something else.”

STRATEGIC WAR DANGER

Lavrov: U.S. Only Attacks Countries Which Do Not Have Nuclear Weapons

Sept. 25 (EIRNS)—Russian Foreign Minister Sergey Lavrov told the NTV’s Sunday program, yesterday, that he believes the United States will not attack North Korea, knowing that it possesses nuclear weapons. “On [North] Korea the U.S. will not deliver a strike, as they not only suspect, but know for sure, that they have nuclear bombs,” he was quoted as saying by TASS. “President [Vladimir] Putin reiterated a few times that it is impossible to imagine the U.S. or anybody else having 100% information about absolutely all facilities.”

He continued, “I am not protecting North Korea, I simply say practically that all agree on this analysis,” referring to the consensus among his counterparts attending the UN General Assembly, on the basis of the experience with the U.S. in Iraq, according to TASS.

“They made a strike on Iraq exclusively, as they had 100% information that no weapons of mass destruction remained there. There, a UN Commission had been working, and they intrusively crossed the country’s territory, visited all facilities they wanted…. Thus, as the Commission came to the conclusion Iraq had not met fully the requirements, those who issued orders on strikes realized clearly those were lies,” he continued.

“Those, who ran that Commission—let’s not go into details, there was somebody from Australia—committed a huge sin.” This is a reference to Richard Butler, who headed the Commission and colluded with the Bush-Cheney regime during his mandate. Nonetheless, he opposed the 2003 invasion of Iraq.

Lavrov hoped that the current U.S. administration would follow this logic; otherwise the situation may fail, “and suffering would be thousands and thousands, dozens of thousands, or even hundreds [of thousands] of innocent people in South Korea, North Korea, and of course, in Japan, and Russia and China are very close there.”

Iraqi Kurds’ Independence Vote Today Creates Risk of Further Regional Chaos

Sept. 25 (EIRNS)—Iraqi Kurds went to the polls today in the Kurdistan Regional Government (K.R.G.), to vote on the question of independence for Iraqi Kurdistan in a referendum not recognized as constitutional in Baghdad or, for that matter, anywhere else in the region except for Israel. Despite the caveats about the referendum’s not being binding, it appears that Masoud Barzani, the president of the Kurdish Regional Government, has every intention of creating an independent Kurdistan with himself as its national president. The vote, Reuters reports, is designed to give Barzani a mandate to negotiate the secession of the Kurdish region—and its great oil wealth—with Baghdad and neighboring states. Barzani said in a press conference in the K.R.G. capital Erbil, yesterday, that Kurdistan was going ahead with the referendum, and that “partnership with Iraq is over.”

“It was Baghdad that had declined to accept us,” Barzani said, and saying that his government had sought to resolve issues of dispute with Baghdad through the international community. He, said, however, that Erbil would engage in “open negotiations” with Baghdad after the referendum, and that security cooperation would continue regarding the war against Islamic State terrorists.  “We will not allow a war to break out among Arabs, Kurds, and Turkmen,” Barzani stated.

Sirwan Barzani, the head of Peshmerga, the Kurdish militia, said they were ready to fight. “In my opinion, without doubt, Peshmerga is in the state of combat readiness. We were able to fight the Iraqi army comprising many millions of people, the strongest army in the region at the time, only armed with Kalashnikov rifles. Of course, we are ready to repel [an attack] by whoever,” he said.

In a speech aired at the same time as Masoud Barzani’s press conference, Iraqi Prime Minister Haider al-Abadi said, “To take a unilateral decision affecting the unity of Iraq and its security, and the security of the region, with a referendum on separation, is unconstitutional and against civil peace. We will take the necessary measures to preserve the unity of the country.”

“We will never forsake our Kurdish citizens, their security, and welfare. We reject the sectarian, racist state,” Abadi went on, alluding to the independent state sought by the Kurds. He said leaderships had the duty of “protecting civilians from surrounding dangers rather than endangering them and implicating them in useless conflicts,” in an obvious repetition of his earlier warning that the vote could spark a civil war.

Barzani claims that independence is the only way to provide security for the Kurdish people, but the state he seeks to create would be landlocked and surrounded on all four sides by powers hostile to its existence. Iran, Turkey, and Syria, above all, have serious concerns about the impact of Iraqi Kurdish independence on the Kurdish populations in their countries.

The reality, in any case, is that ever since the British and French empires carved up the region after the end of World War I, the Kurds have been a tool of British geopolitical power, as expressed in the “Bernard Lewis plan” or Zbigniew Brzezinski’s “Arc of Crisis,” aiming to use the Kurds to destabilize Turkey and northern Iran. This intention is what’s behind Israeli involvement with the Kurds dating back to the 1950s and the various U.S. manipulations in the region dating from the time of Henry Kissinger in the 1970s.

Independence will not free Kurdistan from these geopolitical manipulations. The only viable solution for the Kurds is that offered by China’s Belt and One Initiative policy of massive physical economic development. As EIR Arabic editor Hussein Askary wrote in the July 2, 2004, issue of EIR weekly, when the solution was expressed as Lyndon and Helga LaRouche’s Eurasian Land-Bridge policy, “The Kurds could turn their region into a center of development, transportation, and trade among peacefully cooperating nation-states; nation-states that are equally sovereign and unified, in each respective nation, the Kurds are regarded as equal citizens, although retaining their distinct language and cultural features that have to be respected and protected.”

COLLAPSING WESTERN FINANCIAL SYSTEM

Leveraged Loans Are Back to Pre-2007 Levels, and Could Quickly Surpass Them

Sept. 25 (EIRNS)—A Sept. 24 Wall Street Journal article sounds a nervous alarm on the rapid growth of lending to the most highly-indebted companies in the United States and Europe, which, investors worry, “could pressure financial markets if the global expansion starts to fade.” Has the Journal figured out that the fading has already begun?

So far this year, volume in the U.S. for these leveraged loans is up 53%, which means it can easily surpass the 2007 record of $534 billion, according to S&P Global Market Intelligence’s Leveraged Commentary & Data (LCD) unit. Right before 2007, the boom in leveraged loans was one of the signs of a “overheated” market, as the Journal delicately puts it. But then, as the crisis intensified in 2008, investors in U.S. leveraged loans lost nearly 30%, reported the S&P/LSTA Leveraged Loan Index.

The Journal nervously remarks that while global growth is “picking up” and default levels are low, “the lending boom could prove troublesome when market conditions change or the economy slows.” It feels like the market “is getting frothy,” said Henrik Johnsson, the co-head of Deutsche Bank AG’s global debt-capital markets. “We’re overdue a correction.”

The way this phenomenon plays out in Europe, is that recent loans offer fewer investor safeguards than in the past; hence this year, 70% of the region’s new leveraged loans are what are known as “covenant-lite”—meaning they impose fewer restrictions on the borrowers’ debt service capabilities—which is more than triple the number four years ago. In its recent quarterly report, the Bank for International Settlements, took special note of the proliferation of “cov-lite” loans, and warned that U.S. companies are more leveraged than at any time since the beginning of the millennium. Its understated conclusion was that in the event of a “downturn” or increased interest rate, this could “harm the economy.”

A few facts worth noting:

Private-equity firms have long favored the leveraged loan market, in order to raise cash to finance company takeovers. But today, the Journal explains, investors are jumping in because QE has pushed down returns across bond and equity markets. Just in the U.S., investors have poured $16.9 billion into loan funds this year, bringing total assets to $141.2 billion by the end of August, Thomson Reuters Lipper reports. Loans issued in the U.S. to fund leveraged buyouts from private-equity companies so far this year total $88.5 billion, up 74% from the same period of 2016, and on track to become the largest amount since 2007.

In the U.S., nearly a third of loans to private-equity- backed companies, are leveraged six times or more, according to LCD. And this is despite 2013 guidelines from U.S. regulators, including the Federal Reserve, on loan underwriting, warning that leverage of more than six times “raises concerns for most industries.”

THE NEW GLOBAL ECONOMIC ORDER

Mexico’s Notimex Director Welcomes Rich Potential of Cooperation along the New Silk Road

Sept. 25 (EIRNS)—Speaking at the inauguration of the New Silk Road International Cultural Expo in Dunhuang, China last week, Alejandro Ramos Esquivel, Director General of Mexico’s official news agency, Notimex, urged the representatives of media present from around the world to spread the word “in favor of an ordered development of this new Silk Road.”

The Notimex wire reporting on Ramos Esquivel’s message (published on Sept. 20 on the Mexico edition website for “20 Minutos,” minimally) tells Mexicans that “the New Silk Road promoted by China is a project of global relevance, since in involves 70% of the world’s population, who produce more than half the GDP of the world.” What began as a commercial project, has brought together geographically separated peoples representing a richness of traditions, cultural expressions and religions, becoming “an emblem of cooperation,” he said.

Ramos Esquivel enthusiastically called for news of the Silk Road potential to be reported, saying, “Let us, from our platforms, our print media, our websites do this; let us make use of our social networks to invite the new generations to be part of the project for cooperation and interaction.”

Enthusiasm from the leadership of Notimex for the New Silk Road, following upon President Enrique Peña Nieto’s participation in the Sept. 3-5 BRICS conference in Xiamen, China, is good news, indeed, for Mexico.

OTHER

British ‘Catalan Separatist’ Operation Threatens Disintegration of Spain, Turmoil in Europe

Sept. 25 (EIRNS)—With the trans-Atlantic region again at the brink of general financial collapse, and some in Europe, including Spanish Prime Minister Mariano Rajoy, waking up to the reality that their alternative lies with China’s New Silk Road project, separatists in the Spanish region of Catalonia, have gone for showdown, threatening to tear apart Europe’s fifth largest economy, Spain, and looking to London for help.

On Sept. 6, separatists in the parliament of Catalonia passed, over significant opposition, two laws: the first, to hold a binding referendum on whether to declare independence, and second, that if a majority of those who vote, vote in favor of leaving Spain, unilateral independence is to be declared within 48 hours of the vote, regardless of the number of people who participate in the referendum set for less than a month later, on Oct. 1.

Some separatists in Spain’s Basque region are now organizing for a similar independence referendum there.

With the question of Spain’s unity as a nation being called into question, the Supreme Court rightly ruled the referendum unconstitutional. The government has taken steps to prevent it from occurring, seizing the ballots, arresting 14 state officials involved in the referendum, asserting national control over the state police, etc. Several thousand members of the Guardia Civil are now positioned in boats off the ports of Barcelona and Tarragona. The government cannot sit back and let the country disintegrate, but if the Catalan separatists succeed in their bid for independence and the government intervenes under Art. 155 of the Constitution to suspend autonomy, a bloody confrontation in the streets could result.

EIR has documented that various, semi-feudal separatist movements inside Spain—Catalonia and the Basque Country being the biggest—have been historically fomented and spread by the British Monarchy. That separatism exploded into mass hysteria in Catalonia, in particular, under the conditions of economic genocide inflicted on Spain under the British system’s European Union austerity after 2008.

Pitching his bid for international support on the sophistry that this is a fight over “democracy,” the President of the Catalan region, Carles Puigdemont, penned an appeal in Britain’s Guardian on Sept. 21, for Europe and the international community “to stand with Catalonia in its defense of democracy and true European values,” because “Catalan citizens are peaceful, European and open-minded.”

Eighteen members MPs and Lords from the All-Party Parliamentary Group on Catalonia—most of them from the Scottish National Party—issued a letter on Sept. 21, backing them up. “We are extremely disturbed by the measures taken by the Spanish government to prevent the referendum, agreed to by the Catalan Parliament…. We call on the Spanish Government to allow this democratic test of Catalan opinion to go ahead without further hindrance,” they intoned.

Meanwhile, such City of London mouthpieces as the Sunday Timesand the Independent are pumping out articles painting Prime Minister Rajoy as a new Dictator Francisco Franco, out to crush “democracy” in Catalonia.

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