EIR Daily Alert Service, TUESDAY, DECEMBER 5, 2017


Volume 4, Number 241

EIR Daily Alert Service

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


All the Trees in the British Forest Could Fall

Dec. 4 (EIRNS)—Although the fake-news press and the anti-Russian political forces in both parties continue the daily diatribe against President Trump, the witchhunt led by “legal assassin” Robert Mueller to oust the President and bring down the U.S. government is facing exposure and an escalating counterattack by patriotic forces. The first 10,000 run of the EIR investigative report “Robert Mueller Is an Amoral Legal Assassin: He Will Do His Job If You Let Him,” has penetrated the Congress and other national political circles, and is having a powerful impact. It is now going into a second printing.

Over the weekend, the House Intelligence Committee under Rep. Devin Nunes threatened to bring Contempt of Congress charges against both the Department of Justice and the FBI if they failed to produce long-sought documents about the FBI role in the discredited dossier prepared by MI6 agent Christopher Steele, and their use of that fake document to launch the legal assault on President Donald Trump.

Monday morning the DOJ tried to appease Nunes by announcing that they will allow several of the FBI agents who are implicated in serious crimes in their coup attempt against Trump to testify before the House Intelligence Committee, as we report further below. As of this writing, it is not clear if Nunes will proceed with contempt proceedings, demanding full compliance by the rogue intelligence officials under the Constitutional mandate of Congressional oversight.

The effort to blame Trump’s election on Russian interference in the election has been obliterated: by Trump himself standing firm on the need to work with Russia on a friendly basis to fight terrorism in Syria and elsewhere; by leading constitutional experts like Alan Dershowitz demonstrating that Trump has acted entirely within the framework of the Constitutional powers of the Presidency; and by the Veteran Intelligence Professionals for Sanity (VIPS), who proved that there was no hacking of the Democratic Party computers, by the Russians or anybody else.

But there is a vulnerability in President Trump’s vision. Although committed to rebuilding American infrastructure and industrial capacity, and working with China and others in global development, he has thus far accepted the myth that the record-high stock market valuation is a sign of progress, rather than a dangerous speculative bubble which can not be sustained, and whose collapse is inevitable. Across Europe and America, the bankers themselves are sounding a panicked alarm (see below for such warnings from the Bundesbank, and the Bank for International Settlements), but have no idea how to solve it.

There is only one lifeboat—the restoration of Hamiltonian (American System) policies in the U.S. and Europe, as presented in LaRouche’s Four Laws, while bringing the East and the West together in the spirit of the New Silk Road spearheaded by China.

Helga Zepp-LaRouche spoke at the 21st Century Maritime Silk Road Forum in Zhuhai, Guangdong province on Nov. 29, calling her address “The Belt and Road Initiative and the Dialogue of Cultures, on the Basis of Their Higher Expressions.” She captured the nature of the current danger, and its necessary solution, in this excerpt:

“Geopolitics, the idea that a nation, or group of nations, has the right to pursue their interest against another group of nations, has led to two World Wars in the 20th century. It should be obvious to anyone, that in the age of thermonuclear weapons, war can no longer be a method of settling conflicts, if we as a human species are not to bring about our own annihilation. Humanity is distinct from all other species known in the universe so far, in that we are capable of creative reason. This means, that we can, unlike the animal species, consciously change the mode of our existence, continuously discover new universal principles in science and culture, develop a deeper and more profound knowledge about the physical universe, of which we are the most important part. So in a certain sense it is lawful, that mankind would come up with the idea on how to overcome geopolitics, and establish a system of self-governance, which would guarantee the long term survivability of humanity.

“The concept of a ‘community of a shared future of mankind’ presented by President Xi Jinping, is exactly that idea. By putting the notion of the one mankind, defined from the standpoint of our common future, as the reference point as how to think about political, economic, social and cultural issues, President Xi has established a higher level of reason, a conceptual basis for a peace order on the whole planet.”

She stressed that U.S. President Donald Trump has taken a small but crucial step in that direction through his historic Asian tour. While he must be defended from the British-directed coup attempt, he must also be moved by an inspired citizenry to fully join the New Paradigm which is now within our grasp.


House Intelligence Committee Can Question FBI’s McCabe, Strzok, and Unnamed Steele ‘Handler’

Dec. 4 (EIRNS)—Responding to House Intelligence Committee Chairman Devin Nunes’ threat to issue contempt of Congress charges against the FBI and Justice Department for failing to supply requested documents, Deputy Attorney General Rod Rosenstein has now agreed that FBI Deputy Director Andrew McCabe, demoted FBI agent Peter Strzok, and a third, unidentified agent said to be Christopher Steele’s handler, to be questioned by House Intelligence Committee investigators.

Forming the backdrop to this are revelations that came out over the weekend, that Agent Strzok had exchanged anti-Trump texts with his FBI mistress (while investigating Russiagate, Hillary Clinton email case, etc.), and was demoted to the human resources department by Mueller three months ago. But the real reasons for his demotion were only leaked to the press this past weekend.

As the Daily Caller and other media reports attest, there is real nervousness now that the revelations about Strzok’s anti-Trump bias, “could undermine the integrity of Mueller’s expansive investigation…. Strzok’s central role in the [collusion] probe is already raising questions about how and why the collusion investigation was opened in the first place,” the daily notes. Former Trump campaign adviser Carter Page told the Caller yesterday that he is “ ‘curious … whether [Strzok’s] fingerprints’ are on a secret surveillance warrant taken out against him in September 2016, just after he left the Trump team.”

It was Strzok who interviewed Hillary Clinton on July 2, 2016, and who was one of a small number of FBI agents asked to review a rough draft of the remarks that then-FBI Director James Comey planned to make in the Clinton case, announcing that she would not be prosecuted. The draft was circulated in May 2016, before Clinton was even interviewed.

According to the Western Journal, Strzok was also present during the FBI’s interviews with Michael Flynn. The Journal quotes a former intelligence official with knowledge of the interview between Flynn, Strzok, and a third, unnamed FBI official, who said that, given the revelations about Strzok’s texts, “it seems likely that the accuracy and veracity of the 302 [form] of Flynn’s interview as a whole should be reviewed and called into question.”

Washington’s ABC News affiliate, WJLA TV, commented this afternoon that the revelations about Strzok’s anti-Trump messages “has also lent some credibility to the President’s repeated complaints that the FBI and Department of Justice are leading a ‘witchhunt’ against him, while protecting his former rival, Hillary Clinton.”

Dershowitz Argues that Exercising Constitutional Powers Is Not Obstruction of Justice

Dec. 4 (EIRNS)—“You cannot charge a President with obstruction of justice for exercising his constitutional power.” Were Congress to do so, “we’d have a constitutional crisis.” These were the fiery words of Alan Dershowitz, this morning, during an interview with “Fox and Friends.” Dershowitz had been brought on the show to refute the assertions of Sen. Dianne Feinstein, who had said (to the Commonwealth Club in San Francisco) over the weekend, that an obstruction case was being “put together.”

Dershowitz, a Harvard Law School professor, listed a precedent going back 200 years.

“That’s what Thomas Jefferson did,” he said, referring to Jefferson’s use of executive power in his fight against Aaron Burr. “That’s what Lincoln did, that’s what Roosevelt did.” Even in the case of George H.W. Bush, who had pardoned Caspar Weinberger “in order to end the investigation that would have led to him [Bush], nobody suggested obstruction of justice,” Dershowitz said.

Were Trump really thinking about trying to end this investigation, Dershowitz continued, “[T]he President could have pardoned Flynn … and [he] would have the complete authority to do so.” The very fact that Trump has not exerted the use of powers that by law he has, “is proof that there is no obstruction going on,” he emphasized. Dershowitz called the charges of Feinstein (and others), “the triumph of hope over reality.”

Dershowitz, no friend of Trump’s, has nonetheless been on a tear on this issue in recent days. On Dec. 1, his New York Times op-ed piece, “When Politics Is Criminalized,” looked at the larger “Russia-gate” picture (beyond Mueller), where Congress is currently consumed by multiple investigations into corruption, collusion, cooperation, and the like. The Framers of the Constitution he said, had made it difficult to conduct political witchhunts, but those protections have been winnowed down over time, “[by] the use of politically neutral but overly malleable laws on obstruction of justice, corruption and conspiracy that can be used to prosecute the ethically questionable, but not necessarily criminal, activities of political rivals.”

Sessions Launches Drug Enforcement Agency War on Opioids

Dec. 1 (EIRNS)—On Tuesday, Nov. 28, Sen. Clair McCaskill (D-MO) held a sparsely-attended “round table” discussion with three former Drug Enforcement Agency (DEA) employees on the topic of repealing the Obama-Holder era “Ensuring Patient Access and Effective Drug Enforcement Act,” which gutted one of the most effective enforcement tools the DEA had to fight against the flood of “legal” opioids from Wall Street’s corporate drug distributors. There, McCaskill had lamented that she could get “not a single Republican” to co-sponsor her bill (S.1960) to repeal the 2016 Act and allow the DEA to protect Americans in this 21st-Century Opium War. Within 24 hours she got the support she was looking for, from the highest levels of the Trump administration.

On Wednesday, Nov. 29, Attorney General Jeff Sessions held a press conference to announce that the Department of Justice was launching a national effort to combat opioid addiction, involving a “complete restructuring of the DEA” in this process. “Today we are facing the deadliest drug crisis in American history,” Sessions said, with “one American dying every nine minutes” of an opioid overdose. Acknowledging that President Trump had early on given him an “executive order to go after transnational criminal organizations” (he mentioned gangs and cartels) in the pursuit of this end, Sessions said, “We will not cede one city, one neighborhood, or one street corner” to drug traffickers.

The effort, being directly coordinated with the White House by the personal Counselor to the President, Kelley Anne Conway, will involve a three-pronged approach, targetting “ground zero” of the opioid epidemic. Sessions announced that the DEA was establishing a new field office (to be located in Louisville, Kentucky) to focus on the three hardest-hit states: West Virginia, Kentucky, and Tennessee. $12 million dollars will be allocated to support the efforts of 90 special agents and 100 task force officers, under the direction 25-year DEA veteran Christopher Evans. Third, all U.S. Attorney offices (potentially 94 districts) have been directed to appoint an “Opioid Coordinator” to synchronize nationwide enforcement efforts at the local, state, and federal levels. Additionally, the DEA has assigned “experienced” prosecutors to the “twelve opioid hotspots” (unspecified) across the country.

A part of this effort will be directed at stopping imported shipments of illicit fentanyl (an extremely deadly synthetic opioid), originating primarily in China. Sessions said that Trump had discussed this problem with Xi Jinping on his recent visit, and that “hopefully” we will get China’s support.

In regard to the specific 2016 law which led to open season for the drug distributors—by disallowing the DEA to issue “Immediate Suspension Orders,”—Sessions said that he would support the law’s repeal, adding that he “was always suspicious” of it, and was one of the last to sign on (as a Senator) when it passed the Senate.


Former Defense Secretary Perry: Danger U.S. Will Blunder into Nuclear War with Russia

Dec. 4 (EIRNS)—Former Secretary of Defense William Perry delivered a speech on Nov. 28 at the National Cathedral in Washington, in which he warned that a confrontation between the U.S. and Russia, much more dangerous than that of the Cold War, is being created.

“Today, inexplicably to me, we’re recreating the geopolitical hostility of the Cold War, and we’re rebuilding the nuclear dangers,” Perry said. “We are doing this without any serious public discussion or any real understanding of the consequences of these actions. We are sleepwalking into a new Cold War, and there’s very real danger that we will blunder into a nuclear war.”

“I believe that the likelihood of some sort of a nuclear catastrophe today is actually greater than it was during the Cold War,” he said later in the speech. “Why do I believe that? Because the United States and Russia today are confronting each other with a hostility that is recreating the geopolitical dangers of the Cold War, and because the United States and Russia are rebuilding their Cold War nuclear arsenals, they’re recreating the military dangers of the Cold War. So, today, we are still vulnerable to blundering into a nuclear war if we have a crisis with Russia comparable to the Cuban Missile Crisis.”

Perry stated that both the U.S. and Russia have their nuclear forces in a launch-on-warning posture, which greatly increases the danger from a false alarm. He said he knew of five false alarms, three on the U.S. side and two on the Russian side, all of which were averted by thoughtful watch officers who questioned the warning data that they were seeing.

“That means ultimately the future of civilization will depend on the judgment of an anonymous watch officer and the judgment and the temperament of the American President or the Russian President, who have the sole authority to launch a nuclear attack.” The problem that needs to be addressed, he said, is that, “We do not now have the political will to act in reducing nuclear dangers, because we do not understand fully how real and how great those dangers are.”

The report and partial transcript of Perry’s speech published by Zero Hedge does not indicate that Perry mentioned that President Trump’s intention towards Russia is one of good relations that would, in fact, reduce the danger of a nuclear war, and that Robert Mueller’s so-called Russiagate investigation is actually intended to thwart Trump’s desire to have good relations with Russia.

The full video of the event is available on National Cathedral’s webpage for the event, “Nuclear Weapons: America, North Korea, Iran and the World at a Crossroad.”


Bank for International Settlements Sounds Alarm of Global Crash; Glass-Steagall Needed Now!

Dec. 4 (EIRNS)—In its latest quarterly financial report, released yesterday, the Bank for International Settlements (BIS) sounded the alarm that the global financial situation is fraught with dangers. Record-high asset prices and unsustainable domestic and foreign currency debt levels are reminiscent of the period prior to the 2008 financial crisis, despite central bank efforts to tighten credit, the BIS said, CNBC reported.

Claudio Borio, head of the BIS’s Monetary and Economic Department, spoke to media yesterday and warned that “the vulnerabilities that have built around the globe during the long period of unusually low interest rates have not gone away. High debt levels, in both domestic and foreign currency are still there. And so are frothy valuations.” What’s more, he continued, “the longer the risk-taking continues, the higher the underlying balance sheet exposures may become. Short-run calm comes at the expense of possible long-run turbulence.”

In terms of the U.S. economy, the BIS reported, the four increases in short-term interest rates since the end of 2015 don’t appear to have discouraged investors from taking on risk, as bloated asset prices indicate. The fall in equity prices and increase in broader borrowing costs for households and businesses that normally result when central banks raise interest rates haven’t materialized in the United States. The Federal Reserve’s tightening hasn’t made a dent in what Borio describes as market “ebullience.” Naturally, there is no mention of Glass-Steagall as the only means of stemming the unbridled speculation that accounts for such “ebullience.”

“It is as if time had stood still,” Borio remarked. “Financial market participants had basked in the light and warmth of their ‘Goldilocks economy’ in the previous quarter. They continued to do so in the most recent one.”

In its coverage of the BIS report, the Guardian points to warnings by Neil Woodford, founder of Woodford Investment Management in the U.K., who told the Financial Times in an interview published Dec. 1 that he believes that global stock markets are in a bubble, and when it bursts, it will be bigger and more dangerous than some of the worst market crashes in history.

“There are so many lights flashing red that I am losing count.”

Bundesbank Sees Threat to Financial Stability, Reports EIR Strategic Alert in Europe

Dec. 4 (EIRNS)—Although using the typical understatement of banker language, the 2017 Financial Stability Report of the German Bundesbank sees risks of a financial meltdown in both cases, of a rise in interest rates and of a continued low level of interest rates. This is a Catch-22 situation (or, damned if you do, damned if you don’t), which offers only one solution: replacing the current bankrupt system with a Glass-Steagall one.

There are several indications, the report says, that risk-premiums are systematically too low and risks are therefore underestimated. On the basis of the low interest rates, there is especially the risk that solvency of market participants is overestimated.

“Risks for the stability of the German financial system remain and could increase. They could result from a sudden increase of interest rates as well as from a continued low rates level. Here there is a danger that risks emerge from value corrections [sic] of wealth assets, interest rates change and credit [events], and they increase each other.”

The critical condition of German banks is shown by the fact that banks have increasingly borrowed at short-term and floating interest rates, and invested at long-term, fixed rates, creating a dangerous imbalance in case of a “correction” of interest rates or other external shocks. Particularly exposed are community banks, the report says. In particular, the claims towards non-banks have increased and are particularly high among saving banks and credit unions. At the same time, the average rate of short-term, one-day-maturity deposits has significantly increased.

The rate of residential housing credits with a ten-year fixed rate has increased from 23% to 45% in the last 14 years. In case of an increase in interest rates, banks will be forced to pay yields on deposits, higher than their return on those long-term investments. This represents a large systemic risk, given the volume of credits involved.

At the same time, a continued low-interest policy could increase the incentive to take increased risks in order to achieve higher returns and thus get banks in trouble.

The report analyzes the price dynamics of the residential housing market, noting with concern that housing prices in the largest German cities were, by one metric, 15-30% overvalued in 2016, as compared to only 10-20% in 2015.

Whereas the Bundesbank warns about systemic risks, the ECB is in a state of denial. Answering questions from members of the Economic and Monetary Committee of the European Parliament Nov. 20, European Central Bank President Mario Draghi said that he saw no bubbles and no systemic risk.


China-Latin America-Caribbean Summit Unprecedented Success

Dec. 4 (EIRNS)—The organizers and participants of the Eleventh China-Latin America-Caribbean Business Summit, which concluded Dec. 2 in Punta del Este, Uruguay, agreed that the gathering was a resounding success, having attracted the largest participation—2,500 people—since these events first began in 2007. At every level of discussion, the focus was on cooperation with China, and with the Belt and Road Initiative (BRI), with the understanding that this represents the opportunity for future economic development.

Speaking at the first plenary session Dec. 1, Chile’s former President Eduardo Frei, who is also President Michelle Bachelet’s special envoy for Asia-Pacific affairs, said it very clearly. Given what he called the U.S.’s “isolationist” policy, he said that Latin American and Caribbean countries should join forces to take advantage of what China is offering.

“The Belt and Road is a policy which will allow us to build large infrastructure projects in the region,” he said. “It means credit, investments, complementarity [of Chinese companies] with our countries’ companies and opportunities to compete in global markets. This means development. This means the Belt and Road.”

Speaking on the same panel, Uruguay’s Foreign Minister Rodolfo Nin Novoa offered statistics on how many Chinese and Asian citizens are expected to enter the middle class over the next 10 years, noting China’s success in lifting large numbers of its population out of poverty. Both Uruguay and Latin America, he said, possess the capability to provide food and other goods to this rapidly-expanding market.

Cai Dong, Executive Vice President of the China Development Bank (CDB), told Spain’s EFE news service that his bank was one of the first to support the Belt and Road strategy. Currently, he said, the CDB has 200 projects in 18 of the region’s countries underway, and thus it is playing a leading role “in the framework” of the BRI. He said his bank’s goal is to strengthen the ties between China and the LAC countries and “deploy financial [resources] as a motor.”

On Dec. 2, the final day of the conference, close to 1,000 business meetings took place, in which agreements were signed, projects discussed, exhibits presented, etc. Interviewed by the media, participants enthusiastically discussed specific projects they envisioned could be built—or are already underway—with China’s collaboration. The possibilities are endless, was the generalized sentiment.

Chilean Ambassador Enthusiastic, ‘You Get the Sense That Anything Is Possible’ in China

Dec. 4 (EIRNS)—In an interview with Global Times published Dec. 3, Chile’s outgoing ambassador to China Jorge Heine responded to a question about what experiences have had the greatest impression on him in his three-and-a-half years in Beijing.

“I will miss,” he said, “the electricity that I found in the air when I walked down the street in Chinese cities, which gives you a sense that anything is possible. I sensed purpose in a forward movement that I found very exciting. I will miss friends with whom I spent many evenings talking about the future of China.”

Heine, who will now take up a position at a Washington, D.C. think tank, also said that he was amazed at the 55-km Hong Kong-Zhuhai-Macao Bridge (HKZMB), “which shows China’s commitment to interconnect its vast territories and generate synergies and dynamics that are needed in Guangzhou, Shenzhen, Hong Kong and Macao.” Equally impressive are China’s bullet trains, he said. “It is quite extraordinary traveling about 300 kmh in great peace and quiet within the train.”

And lastly, he explained, there is China’s speed: “The ability to get things done quickly and efficiently, which is part of China’s success.”


U.S., China Satellite Navigation Systems To Be Interoperable, Available to Both Countries’ Users

Dec. 4 (EIRNS)—The U.S. Department of State announced today that China and the U.S. have reached agreement on compatibility and interoperability of their two satellite navigation systems—the U.S. Global Positioning System (GPS) and China’s BeiDou Navigation Satellite System (BDS). Negotiations have been ongoing since 2014, when a joint U.S.-China Civil GNSS Cooperation Dialogue was established. Making the service from one government’s system available to the other required a lot of negotiations, as there are complex technical issues, and trust is needed on both sides, since the operation of the systems in a high-precision mode is used by the militaries of both countries.

The compatibility agreement is to make sure that the frequency of the signals from one system does not interfere with the other’s. Interoperability is the agreement that a receiver from either system can receive signals from both constellations of satellites. The State Department explains, somewhat dryly, that “users can receive better service by jointly using these civil signals without a significant increase in receiver cost or complexity.”

China’s BeiDou system is already interoperable with Russia’s GLONASS satellite navigation system.

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