EIR Daily Alert Service, TUESDAY, JULY 24, 2018

TUESDAY, JULY 24, 2018

Volume 5, Number 146

EIR Daily Alert Service

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


Trump Confounds the Nuclear Warmongers; Now for the Wall Street Free-Traders!

July 23 (EIRNS)—The European geopoliticians around London, and the American neo-cons and liberal imperialists, are so “deranged” by the continuing series of impossible summits which began in Singapore with President Donald Trump and Kim Jong-un of North Korea, that it is clear their policy can really be eradicated.

The substantive problems being discussed at these meetings, especially involving the United States and Russia, are very difficult to solve. But the threat of thermonuclear war these geopoliticians are all too willing to risk, is being driven down. And the new economic and diplomatic paradigm launched around China’s Belt and Road Initiative, is providing the means to replace it entirely, with great-power cooperation for the economic and scientific progress of mankind.

But geopolitics can’t be killed off while the menace of “free trade” runs rampant. As Lyndon LaRouche wrote 15 years ago “On the Subject of Tariffs and Trade,” the example of NAFTA is sufficient to illustrate that free trade ruined the United States, economically and socially. You don’t attack free trade without imposing Glass-Steagall separation on Wall Street banks, cutting off currency speculation, and issuing mutual credit for development to your trading partners, which increases your trade with them. Without that, tariffs are straws in the wind; they can’t be spun into the gold of “fair trade.”

President Trump’s tariff actions against China may have the well-intentioned motivation expressed in his Twitter messages—to force a better economic “deal” between America and China, with a more balanced trade. But even if so, they have no chance of bringing that about. Amid raging and unregulated, unrestrained global financial speculation centered in the City of London’s financial empire—and with a financial blowout of unpayable “high-yield” debt looming—tariffs between two leading global economic powers are impotent and futile. China is right on that point.

Let’s not forget NAFTA’s “first act”: Mexico’s devaluation in December 1994; the peso’s “Tequila crisis” of 1995, a $52 billion U.S. credit line to bail out Mexican banks so that they could all immediately be taken over by City of London and Wall Street banks. That was the launch of the process of impoverishment, drug traffic, migration, accelerated American deindustrialization, unemployment and social demoralization, derangement of American agriculture; the “ruin” LaRouche referred to.

Trump says he may tariff all Chinese products? More than $5 trillion/day in unregulated global currency speculation, in its City of London and Wall Street centers, will neuter that. It will successively devalue first the yuan, then the dollar, then the yuan again, and so on. It will wreak inflation and more depressed wages on America, cut China’s ability to issue credit, and threaten the great projects of the Belt and Road Initiative. That is until it triggers the threatening financial blowout, a worse collapse than that of 2007-08.

The President wants a new trade agreement with Mexico, and we can start by making that one really “fair trade”: Break up the Wall Street banks that own the Mexican banks; ban dollar/peso speculation; issue—as Mexico’s President-elect Andrés Manuel López Obrador has proposed—credit for rail, water supply, power development, desalination and new weather technologies, in Mexico and into Central America; export machine capital goods to Mexico.

The best, and probably indispensable, partner of the United States and Mexico in doing all this, will be China.


Mexico President-Elect Tells Trump, We Need a New NAFTA with Development Fund

July 23 (EIRNS)—A letter proposing rapid negotiation of a new NAFTA agreement focused on credit for fighting poverty and building infrastructure, was delivered from Mexico’s President-elect Andrés Manuel López Obrador (AMLO) to President Donald Trump July 13, via Secretary of State Mike Pompeo, and is now on the website of the Mexican political leader.

The letter was highlighted by being read aloud to media July 22 by AMLO’s designated Foreign Minister, Marcelo Ebrard. It said the American and Mexican administrations should work together on trade, migration, development and security. One particularly interesting aspect of the letter is AMLO’s emphasis at the end of the letter, that “both of us know how to keep our word and we have successfully faced adversity. We have placed our voters and citizens at the center, and displaced the establishment.”

AMLO proposed a new NAFTA—which Trump has also mooted could be agreed by the end of August. “Prolonging the uncertainty could slow down investments in the medium- and long-term. I propose to resume negotiations with the participation of representatives from Mexico, Canada and the United States,” López Obrador wrote. He also said that his representatives are joining the negotiating team of the current President of Mexico, Enrique Peña Nieto.

The letter also called on the U.S. to work with Mexico and Central American governments on a development plan to address the root causes of migration, proposing to tackle the poverty and violence that forces people to migrate in the first place, and create jobs while strengthening borders. He announced that Mexico would establish a free trade zone all along the Mexico-U.S. border, and in the rail corridor that will be built across the Tehuantepec Isthmus, as part of his job-creation strategy. With these and other rail and infrastructure projects, “jobs and factories established would create an important number of jobs, and thus prevent the region’s youth from emigrating north in search of work.” And, more broadly, he elaborated, “every government, from Panama to the Rio Bravo [Rio Grande], would work to make the migration of its citizens economically unnecessary….” He suggested a fund, that would foster development in the region.

Ebrard said a response from Trump is expected soon. The subject of a fund for major infrastructure projects south of the border, in part to fight poverty and slow emigration to the United States, was already discussed by Trump and AMLO in two phone calls immediately following Mexico’s election on July 1.


Trump May Escalate Against London’s ‘Russiagate’ Faction

July 23 (EIRNS)—President Trump is “looking into” revoking the security clearances of several top Obama-era intelligence and law enforcement officials, White House Press Secretary Sarah Sanders announced today. She accused the former officials of having “politicized” or “monetized” their public service, Fox News’ Brooke Singman reported today.

Sanders stated that Trump was considering revocation of security clearances for some former officials after Sen. Rand Paul (R-KY) urged on President Trump to specifically revoke former CIA Director John Brennan’s clearance. Today Sen. Rand Paul tweeted, “Today I will meet with the President and I will ask him to revoke John Brennan’s security clearance!”

John Brennan is notorious for fighting against the declassification of the final, 28-page chapter of the 2002 Congressional Joint Inquiry into 9/11, exposing the aid of various Saudis to the San Diego-based Saudi pilot/hijackers involved in 9/11.

U.S. House Judiciary Committee Chair Bob Goodlatte (R-VA) said that Congress has “lots of questions” for John Brennan. Brennan called Trump’s statements after the summit in Helsinki “treasonous.” Goodlatte suggested that Brennan could have been biased against Trump, and that this might have influenced his judgment during his service. “This is an extremely disturbing thing to see both he and [former FBI Director] James Comey—supposedly impartial government officials—carrying out their jobs in very important areas—express the kind of extreme bias that they’ve shown now, which I think reflects quite accurately what they were doing back in 2016,” Goodlatte said.

Former Director of National Intelligence Clapper Reveals Obama Started Russiagate

July 23 (EIRNS)—The full exposure of FBI investigator Peter Strzok and his controllers in the FBI, who had manufactured “Russiagate” out of thin air, occurred on July 13. His lover, then-FBI lawyer Lisa Page, told a joint committee of the House of Representatives that when Strzok texted her on May 19, 2017 saying there was “no big there there,” he meant there was no evidence of collusion between the Trump campaign and Russia; both of them had been leading the “Russiagate” investigation for 10 months at that point. This is reported today by VIPS leader Ray McGovern in Consortium News.

There’s more, still, being exposed. Speaking with CNN’s Anderson Cooper July 21, former Director of National Intelligence James Clapper let slip that it was President Barack Obama who started Russiagate. Clapper told Cooper: “If it weren’t for President Obama, we might not have done the intelligence community assessment that we did that set up a whole sequence of events which are still unfolding today, including Special Counsel Mueller’s investigation. President Obama is responsible for that. It was he who tasked us to do that intelligence community assessment in the first place.”

EIR has reported that in May 2017, Senate Judiciary Committee Chair Chuck Grassley fired off a letter to the Department of Justice demanding unredacted versions of text messages between FBI agent Peter Strzok and FBI lawyer Lisa Page. These messages took place after Strzok had returned from London as part of the recently launched “Operation Crossfire Hurricane,” which referred to a White House-run unknown investigation in 2016. Zero Hedge recapped today, that Strzok had been in London to interview Australian Ambassador Alexander Downer about a conversation he had with a drunken Trump campaign aide George Papadopoulos, who, after being fed information, claimed Russia had Hillary Clinton’s emails.

Zero Hedge comments, “And with Clapper’s admission—it looks like Strzok’s text stating ‘the White House is running this’ may have been right on the money.’

Pompeo Denounces Islamic Revolution in Iran in Reagan Library Speech

July 23 (EIRNS)—Last night Secretary of State Mike Pompeo delivered a speech at the Ronald Reagan Library in Simi Valley, California, which amounted to a severe attack on the ruling system in Iran. “To our Iranian American—and to our Iranian American friends, tonight I want to tell you that the Trump Administration dreams the same dreams for the people of Iran as you do, and through our labors and God’s providence that day will come true,” he said, to applause. Pompeo spoke of “Forty years of kleptocracy” since the 1979 Islamic Revolution. “Forty years of the people’s wealth squandered on supporting terrorism. Forty years of ordinary Iranians thrown in jail for peaceful expression of their rights. Why has the regime conducted itself in such an abhorrent way over the past 40 years and subjected its people to these conditions?”

The reason lies in the nature of the revolution itself, Pompeo maintained. “The ideologues who forcibly came to power in 1979 and remain in power today are driven by a desire to conform all of Iranian society to the tenets of the Islamic Revolution. The regime is also committed to spreading the revolution to other countries, by force if necessary. The total fulfillment of the revolution at home and abroad is the regime’s ultimate goal. It drives their behavior. Thus, the regime has spent four decades mobilizing all elements of the Iranian economy, foreign policy, and political life in service of that objective. To the regime, prosperity, security, and freedom for the Iranian people are acceptable casualties in the march to fulfill the revolution.” The Secretary described President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif as nothing more than “polished front men for the ayatollahs’ international con artistry.”

But as for U.S. policy towards Iran, Pompeo said this: “While it is ultimately up to the Iranian people to determine the direction of their country, the United States, in the spirit of our own freedoms, will support the long-ignored voice of the Iranian people. Our hope is that ultimately the regime will make meaningful changes in its behavior both inside of Iran and globally. As President Trump has said, we’re willing to talk with the regime in Iran, but relief from American pressure will come only when we see tangible, demonstrated, and sustained shifts in Tehran’s policies.”

Asked what it would take to change the relationship with Iran, Pompeo repeated that Iranian leaders have to change their behavior. “The President has said if we can get this change, if we can get the leadership to make a strategic decision about how to ensure its well-being and the well-being of its peoples, that we’re prepared to have a conversation and to discuss how that might proceed,” he said. “The President has stated at least once, perhaps more than once, that he is prepared to do that with the leadership in Iran, but not until such time as there are demonstrable, tangible, irreversible changes in the Iranian regime that I don’t see happening today. But I live in hope.”

The Iranian Foreign Ministry responded, this morning, by accusing Pompeo of interfering in the internal affairs of Iran. “These remarks are a clear example of the country’s (the U.S.) interference in Iran’s internal affairs and exactly in line with its long-term destabilizing and destructive policies in the region, which are in violation of its international obligations,” said spokesman Bahram Qassemi, reported Tasnim.

The recent escalation in U.S. rhetoric against Iran comes in the run-up to the reimposition of sanctions beginning on Aug. 6. Unnamed U.S. officials told Reuters that this is meant to foment unrest and help pressure Iran to end its nuclear program and its support of militant groups.

The administration’s aim appears to be the same as that carried out towards North Korea—savage denunciation followed by a summit with the leader. It’s an open question whether or not taking that approach with Iran will have the same effect, however. Not only is Iran not North Korea, but the mediating, supporting roles of South Korea and China with respect to North Korea are absent. Saudi Arabia and Israel both favor a much more confrontational approach to Iran.


Pompeo Indicates Rejoining Northeast Syria with the Rest of the Country

July 23 (EIRNS)—Yesterday, Secretary of State Mike Pompeo issued a statement that indicated a perspective for the reunification of northeastern Syria, currently controlled by the U.S.-backed Syrian Democratic Forces, with the rest of the country under Syrian government control.

The occasion of the statement was the announcement by U.S. Central Command on July 20 that the town of al-Dashisha, near the Iraqi border, had been freed from the control of the Islamic State. “The liberation of Iraq and ISIS’s losses in Syria are major achievements, but our mission is not complete,” Pompeo said. The destruction of ISIS continues to be a top priority of the Trump Administration, he affirmed, but in parallel with that “we will work with the United Nations and our partners to forge a lasting settlement of the Syrian conflict that includes full representation for all Syrians, including the people of northeast Syria now recovering from the ISIS occupation.”

U.S. Central Command head Gen. Joseph Votel, asked July 19 whether CENTCOM supports rapprochement between the People’s Protection Units/Kurdistan Workers Party and the Syrian government, answered, “Our policy is, we are not encouraging the Syrian Democratic Forces to engage with the regime. But, of course, we do recognize the pragmatic reality that plays out on the ground. That’s a fact of life in this particular area.”


Wall Street Journal Reports Liquidity Is Disappearing from Bond Markets

July 23 (EIRNS)—In a front-page warning piece today, the Wall Street Journal observed the broad drop in liquidity occurring in international bond markets, and in high-yield or “junk” bond markets in the United States economy. Central banks alone have been saving the financial system with liquidity for so long, that even the small beginnings to reverse quantitative easing—by the Federal Reserve and European Central Bank—are causing serious liquidity problems, making it harder and harder to buy and trade corporate and sovereign bonds.

One sign of this, the Journal reports, is that the spreads between the prices buyers bid for bonds, and those sellers ask for them, have gotten wider and wider in most world bond markets. “Hot spots” are emerging, and the biggest one by far was in Italian government and corporate debt in May and June. “It was hard to get bids or offers on trades of more than $10 million in size. Liquidity was bad, and it’s remained relatively bad,” one trading company executive is quoted.

The result is a big expansion in derivatives trading, making the situation more dangerous. As EIR has reported, in May and June, trading in Italian bond futures skyrocketed—while the buying of bonds dropped 18% over the first half of the year, according to the Journalreport. Trading volume in credit derivatives on so-called “emerging market” debt also zoomed, while trading in the bonds themselves dropped 32%.

But one bond fund executive reports big problems even in investment grade corporate debt in Switzerland, not known for such problems recently. Trying to sell part of the company portfolio, he told the Journal, “We were confronted with a market which was already deteriorating quite significantly” in liquidity.

The tentative raising of short-term interest rates and reduction of QE by the central banks, has only just begun.


NASA’s Bridenstine for Adding International Partners to U.S. Space Projects, Maybe Also China

July 23 (EIRNS)—A seminar titled, “Celebrating NASA’s 60th Anniversary with Administrator Jim Bridenstine,” was held today in Washington by the Center for International and Strategic Studies. Bridenstine’s presentation reviewed the history of NASA, in which he stressed that after Apollo and the race for a manned Moon landing, the U.S. relationship to the Soviet space program changed. The Apollo-Soyuz mission was a partnership, rather than a competition, a partnership which continued between the U.S. and Russia on the International Space Station.

Asked about the possibility for cooperation with China, Bridenstine repeated what he has said before, that international partnerships are vital for NASA’s space exploration plans, but in the case of China, that will be a policy decision above his pay grade, meaning the relationship between the two nations’ political leadership. But he thinks with an overall change in policy, space cooperation would be included, and he is sympathetic to making the change. In that regard, he said he has sent a letter to the Congress to be granted a waiver from the prohibition of talking to the leadership of the Chinese space program, whom he plans to meet with in the autumn at an international space conference.

Bridenstine was asked if the Wolf amendment, which prohibits cooperation with China, would have to be repealed. He said that it wouldn’t, because as an amendment, it is tacked onto the appropriations bill every year; if it were left out, it would be gone. On another panel, former NASA Administrator Charlie Bolden clarified that the prohibition applies only to manned space flight, and that China and the U.S. have numerous scientific exchanges. Bolden further affirmed that “engagement is essential.”

A major international issue that Bridenstine and NASA are now grappling with is the proposed retirement of the ISS in 2025. The Administrator indicated that NASA would consider the issue very carefully. He also reported that in a recent poll, 80% of the people said that the ISS is a good investment for the country.

China Announces Deal for Construction of Hyperloop Test Track

July 23 (EIRNS)—The Guiyang Technological Development Zone has announced its intent to build a test track for the still largely experimental “hyperloop” magnetically levitated evacuated tube transportation system. For this venture, China has partnered with Hyperloop Transportation Technologies, a “crowd-sourced” company, meaning that engineers and designers the world over will be contributing to the project.

To be built in the remote prefecture of Tongren, Guizhou Province, the small, 10 km route is clearly experimental, since it is not even long enough to reach the top speeds that the technology is theoretically capable of, and not connected to any urban areas. The location was reportedly chosen for its varied topology, thus allowing for all aspects of the technology to be developed.

HyperloopTT chairman Bibop Gresta told Railway Technology that, “China leads the world in the amount of high-speed rail constructed by far, and now they are looking for a more efficient high-speed solution in hyperloop. We have spent the past few years finding the right partners to work with in China, now with a strong base network of relationships in place, we are ready to begin work to create the system along with the proper legal framework for the nation.”

CEO Dirk Ahlborn was almost ecstatic, stating: “China spends over $300 billion annually on infrastructure to address their rapidly growing urban populations. We envision that Hyperloop will play into a bigger role of the Silk Road Economic Belt, connecting the region to the rest of the world.” HyperloopTT’s statement characterized Guizhou Province, where Tongren is located, saying: “Guizhou’s location is a crucial part of China’s ‘Silk Road Economic Belt’ initiative. More than $100 billion has been invested in transportation and financing in the past five years, which has result in 69 highway projects and more than 3,542 miles of new roads.”

The involvement of China in backing this technology means that it might actually get built, unlike the largely speculative ventures such as Hyperloop One, recently taken over by British operative Richard Branson.



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