Financial System in Crisis: Coming Weeks Can See Big Changes
Aug. 13 (EIRNS)—The immediate weeks ahead can see very dramatic changes if there is an all-out push to defend Donald Trump’s presidency from the three years’ British intelligence attack, and to push the United States into the Belt and Road Initiative and its great projects of infrastructure. This can succeed. It means a battle to disable the Democratic National Committee’s impeachment plan—demanded in the London media since the day Trump was inaugurated—before it can be launched. And it means defeating the British dogmas of superpower confrontation and free trade, still infecting the whole Congress and circles around the President.
First, between now and Aug. 28, when former Justice Department number-four Bruce Ohr is subpoenaed to testify before two House committees—Justice and Government and Oversight—the scandal of “Muellergate” can fully explode. This is the scandal proclaimed by the President’s lawyer Rudy Giuliani, the scandal of the McCarthyite “investigation … worse than the no crime” of wanting U.S. relations with Russia. As information comes out about Ohr’s central role in the scandal, the potential of what a full declassification would expose, comes into view. Senior British MI6 officer Christopher Steele, in constant collaboration with the DOJ through Ohr long after the FBI supposedly broke contact with Steele, is now revealed to have warned of “disastrous consequences” for British intelligence’s anti-Trump campaign if Ohr had been fired when his superior Sally Yates was.
As Congressional Committees hone in on the Ohr-Steele collaboration and the role of the MI6-Brennan CIA collaboration already stands exposed, the American public can be roused to stop the obvious British drive to eliminate yet another American President feared by London.
EIR’s new attack on the British smell of this scandal, author Barbara Boyd’s article “Fish Stinks from the Head Down,” has to be massively circulated through internet and social media, as well as to the Congress, between now and the 28th.
At the same time, the trans-Atlantic financial system is threatened with exploding in the immediate future. Against the backdrop of an immense bubble of corporate debt, most of it officially ranked junk or just one rung above junk, a number of major currencies are suddenly plunging dramatically, pushing large chunks of that debt into default in coming months and immediately threatening London-centered megabanks. Sanctions and punitive tariffs are contributing to the crisis. Among the falling currencies is the Russian ruble.
There is no preventing this general financial crisis by expecting those countries to raise interest rates beyond usury, or decimate their government services, or go to the failed IMF.
The solution was fully described by EIR Founding Editor Lyndon LaRouche for years before the last global financial crash. It means an immediate agreement among, today, the BRICS nations and the United States for a new Bretton Woods monetary system with fixed exchange rates and joint credit agreements to foster capital goods exports and infrastructure projects.
Helga Zepp-LaRouche noted today that the international order as it used to be is disintegrating, and the “high ground” is Lyndon LaRouche’s long record of specifying a New Bretton Woods system to foster productive credit issuance, and “Four Laws” for economic recovery, starting with Glass-Steagall.
Third, a wide path for the Trump Presidency into collaboration with the Belt and Road Initiative of China, has been opened by Texas Congressional candidate Kesha Rogers’ proposal of a “North American Belt and Road Initiative” (NABRI) of the United States and Mexico collaborating with China, which is already amidst new infrastructure projects all over Ibero-America.
Trump is in good discussions with Mexico’s President-elect Andrés Manuel López Obrador, who has made his own proposals to Trump for collaboration on rail and power infrastructure projects across the border and into Central America. Trump is still predicting good U.S. economic relations with China, right up to his Aug. 7 Bedminster dinner with American businessmen. His comments on China appear to have been directly misreported in an inflammatory manner by the leading capital newspaper The Hill, indicating desperation to prevent Trump’s collaboration with his good friend, President Xi Jinping.
But candidate Kesha Rogers’ “NABRI” proposal can make it happen if it gets national support.
Fourth, the Democratic Party leadership is watching uncomfortably as sections of the reviving labor movement give qualified political support to the President. Some of its primaries around the country are being won by candidates of the left wing of the party, for whom the DNC’s impeachment drive against President Trump is not a priority. They want to defeat free trade and Wall Street speculation.
LaRouche’s “Four Laws,” a Belt and Road initiative and a New Bretton Woods monetary system, are the only means to do that.
COLLAPSING WESTERN FINANCIAL SYSTEM
Money Crisis Deepens—Only LaRouche New Bretton Woods Stops It
Aug. 13 (EIRNS)—As the spreading international “currency crisis” threatened growing numbers of banks, Russian Finance Minister Anton Siluanov yesterday announced on Rossiya 1 TV that Russia will continue decreasing its holdings of U.S. Treasury securities and use rubles and other currencies for trade settlements, reported RIA. Turkish President Recep Tayyip Erdogan and Finance Minister Berat Albayrak have also announced the intention to settle in currencies other than the dollar.
The ruble and Turkish lira are among important currencies now plunging against the background of an immense and shaky global bubble of low-quality corporate debt generated by a decade of misguided central bank money printing. Of the portion of $75 trillion in corporate debt worldwide which is rated, more than half is rated junk or one notch above junk. The currency plunges are now rendering some shorter-term chunks of that low-quality debt completely unpayable. It has been clear for the past year that rising interest rates in the United States and Europe would push masses of this debt into waves of defaults.
In the case of Turkey, $180 billion of $337 billion in corporate debt denominated in dollars is short term, with less than one-year maturity—and there is more denominated in euros. The Turkish economy and industry are growing rapidly and the sovereign debt is low, but the speculative attack on the currency following U.S. tariff announcements is overwhelming that.
Not only are major European banks, particularly French and Spanish, heavily exposed to this now-toxic corporate debt, so are major state banks in the Gulf sheikhdoms. And there are other so-called “emerging country” currencies, and perhaps even some European ones, already in the tank or headed there against the strengthening dollar.
Turkey today imposed partial capital controls on its banks while also reducing their reserve requirement on loans by 0.25%. It also banned stock short-selling. These actions only held the fall of the lira to about 7.15/dollar, from 6.9/dollar Friday, Aug. 10; below the level where Turkish banks are likely to fail.
The Russian and Turkish announcements actually raise the question of immediate action to launch a New Bretton Woods monetary system, as described and proposed by EIR Founding Editor Lyndon LaRouche over many years.
The U.S. dollar—actually long since the “London dollar,” since most dollars have been issued in the London eurodollar markets—has been the world’s reserve currency, without gold reserve, since the 1970s. The move to use other currencies for trade settlements can be done by agreements among other major powers—i.e., the BRICS, which Turkey publicly wishes to join. But, without agreements to take steps to a new gold-reserve system of fixed exchange rates, these settlement “side agreements” will not stop the financial crisis. In fact, they can lead to further chaotic currency fluctuations and speculative attacks.
Need for New System Raised in Italy, Against Speculators’ Attack
Aug. 13, 2018 (EIRNS)—Giancarlo Giorgetti (Lega), undersecretary to the Prime Minister’s Office, granted an interview to the daily Libero saying he expects a speculative attack against Italian bonds in September.
“I expect the attack,” Giorgetti said. “The markets are populated by hungry speculative funds that choose their victims and act. We saw what happened at the end of August 1992 and seven years ago with Berlusconi. In summertime there is little movement in the markets and that makes it a favorable period for aggressive initiative against states. Look at Turkey. If the storm comes, we will open the umbrella. Italy is a large country and has the means to stand [the attack], including due to its large private savings. What I am worried about is that, in the general silence, a major part of Italian savings has been carried abroad and therefore the management of our bonds is not a domestic one.”
Giorgetti does not give indications on how Italy will eventually defend against speculation. But Lega Deputy Claudio Borghi, who is chair of the Chamber of Deputies Budget Committee, did so in very definite terms.
In Twitter posts, Borghi stressed that “not only is Italy’s spread with German bonds widening, but also the ones of other nations like Spain are doing so. Either the ECB will provide a guarantee [to buy Italian bonds as lender of last resort] or the euro will be dismantled. There is no third option.” Then in an interview, Borghi put the fault on the monetary system: “There cannot be a system at the mercy of market movements without any shields by the central bank…. It is significant that an external event like Turkey, that has nothing to do with Italy, unleashes such an effect.”
It has also been reported that Paolo Savona had a meeting with ECB President Mario Draghi in Frankfurt at the end of July, in which Savona presented his ideas on how to reform the ECB and how to stimulate growth. The ECB should be a lender of last resort, able to defend sovereign bonds of each and every member of the Eurozone, Savona says. Italy should be allowed to spend EU50 billion in productive investments. This figure corresponds to Italy’s annual trade surplus, and should not be counted in the deficit under the EU’s austerity rules.
U.S. POLITICAL AND ECONOMIC
New Layer of Muellergate Scandal: Steele, Ohr, and ‘Our Guy’
Aug. 13 (EIRNS)—New disclosures this weekend concerning what Rudy Giuliani has called “the investigation … worse than the no crime,” showed that British MI6 “ex” agent Christopher Steele and then-Justice Department Associate Deputy Attorney General Bruce Ohr were in regular correspondence for all of 2016 and beyond, including on matters not yet known about “Russiagate.”
The correspondence of Steele and Ohr (and/or other DOJ officials) was requested months ago by letter of Chairmen Sen. Chuck Grassley and Rep. Bob Goodlatte of the Senate and House Judiciary Committees. Leaks of this particular British intelligence intervention are now showing its duration—from at least January 2016, long before any supposedly “American” investigation of Trump’s campaign started, to at least the end of January 2017, long after Steele had become “decommissioned,” or fired, as an informant by the FBI.
One exchange took place in late Jan. 31, 2017 immediately upon the President’s dismissal of Ohr’s superior, Sally Yates, as Deputy Attorney General. Steele asked if Ohr was “OK” and if he, Steele, were still able to “help locally as discussed….” Ohr replied, “I’m still here and able to help as discussed. I’ll let you know if that changes.” Steele texted back: “If you end up out though, I really need another (bureau?) contact point/number who is briefed. We can’t allow our guy to be forced to go back home. It would be disastrous.”
Who or what “our guy” is, can’t yet be determined, adding another layer to the demand for full declassification. But what is clear, is that Steele, and presumably MI6 mentor Sir Richard Dearlove and others, considered Bruce Ohr crucial to avoid “disastrous” consequences for the British “Get Trump” drive.
British operative Steele, now thoroughly on the hot seat, is suddenly being described as a “well-respected spy” or “well-respected former spy” by a lot of worried U.S. Tories against Trump. On Sunday, Aug. 12 alone, the Washington Post’s lead editorial said that “Mr. Steele, a well-regarded ex-spy, was acting as a compensated researcher with a specialty in Russia”; Fox News commentator Juan Williams spoke of “Steele, a well-respected former intelligence agent”; and NBC anchor Chuck Todd said, “Steele was a well-respected former intelligence professional.” It all recalled another British spy who was “highly respected” by American Tories after being caught: Major André, whom President Washington hanged during the American War of Independence. Ohr lacks Benedict Arnold’s military prowess, but Congressional investigators are focusing on him now.
House Intelligence Chair Nunes Wants Trump To Declassify All Russiagate Material
Aug. 13 (EIRNS)—U.S. House Intelligence Chair Devin Nunes told Fox News’ Maria Bartiromo yesterday that President Trump must declassify all information on Russian alleged interference in the 2016 election.
Nunes pointed out that though British spy Christopher Steele was “fired” as an informant by the FBI, then-Associate Deputy Attorney General Bruce Ohr continued providing information from Steele to the FBI, while Ohr’s wife Nellie worked for Fusion GPS—Steele’s U.S. employer—and the Clinton campaign. Nunes said Steele’s information was fed into top levels of the FBI and the Department of Justice to open up a counterintelligence operation into a political campaign “that has now polluted nearly every top official at the Department of Justice and FBI in the last couple of years.”
Bartiromo pointed to Trump’s statement that he might declassify this material. “Will he?” she asked Nunes. “I think he really has no choice,” Nunes said. “You’re going to end up with a situation with half of America, including many, almost nearly every Republican member of Congress, who will have zero confidence in the Department of Justice and FBI [if he does not]…. We have to have a strong Department of Justice and a strong FBI that stays out of politics….”
Nunes insisted, “We’re going to have to have all this information declassified, and really we need an investigation into these top-level people as to how somebody concocted the idea that it’s okay to take information from one political campaign and use it to open up an investigation on somebody else’s opposing political party.”
Nunes continued, “Will we see prosecution? Only with full and complete transparency of documents. Our committee sent a letter to the President. They [the documents] do not jeopardize national security. People will be shocked what went into the FISA [Foreign Intelligence Surveillance Act] warrant for Carter Page, and what did not go into the FISA warrant for Carter Page,” Nunes said (emphasis in original).
THE NEW GLOBAL ECONOMIC ORDER
North Korea and South Korea Decide on September Summit for Pyongyang
Aug. 13 (EIRNS)—The Republic of Korea and the Democratic People’s Republic of Korea held high-level talks in Panmunjom today at which they stated jointly: “We agreed to hold an inter-Korean summit within September in Pyongyang,” the North Korean capital, reported Yonhap News Agency. “We also reviewed the implementation of the Panmunjom Declaration’s conditions and held consultations in a sincere manner on matters related to its more active enforcement.” The particular date in September was not released.
This follows the April 27 summit between South Korean President Moon Jae-in and North Korean leader Kim Jong-un in Panmunjom, and a second in May.
Caspian Sea Agreement Enhances Belt and Road Initiative
Aug. 13 (EIRNS)—The Caspian Sea agreement signed this weekend by Presidents of the five countries on its border—Russia, Kazakhstan, Iran, Azerbaijan and Turkmenistan—will enhance the region’s role in the Belt and Road Initiative. Along with the convention, which also bans military presence of any outside power, effectively ruling out leasing a military base to a foreign power, several other documents include protocols on cooperation in the fight against terrorism, a cooperation in the fight against organized crime, and an agreement to avoid incidents in the Caspian Sea. The five Presidents also signed agreements on trade and economic cooperation, and an agreement on cooperation in transportation.
Underscoring the need to develop transportation, Russian President Vladimir Putin said in his address, “Transport interconnection is one of the key factors for securing sustainable growth and strengthening our countries’ cooperation,” explaining that Russia is implementing a strategy for the development of seaports in the Caspian Basin till 2030, including the building of a deep-water port near Kaspiysk by 2025. The port will be capable of handling heavy-duty vessels with a payload of 15,000-25,000 tons.
Kaspiysk is the port directly across the sea from Kuryk port in Kazakhstan. Its development as a deep-sea port implies the development of an east-west corridor in the context of the Belt and Road Initiative. Developing a port for ships of 15,000 to 25,000 tons is also significant since the largest ships currently are no more than 10,000 tons and conform to the river-sea class capable of entering the Volga River and the broader Russian river and canal network.
SCIENCE AND INFRASTRUCTURE
Building More Nuclear Plants Lowers Electricity Prices; Closing Them Will Raise Prices
Aug. 13 (EIRNS)—A week ago, the Sierra Club and the Environmental Defense Fund sued the Department of Energy for failure to turn over documents they requested under the Freedom of Information Act. These concern the “reported” Trump Administration plan, they say, “to force taxpayers and electricity customers to pay billions of dollars to bail out uneconomic coal and nuclear plants.” This “secretive plan” would “upend America’s electricity markets, and spike electricity prices,” they claim, all to “prop up failing coal and nuclear plants that are ready to be replaced with newer, cheaper competitors like solar, wind, and energy efficiency resources.” Common sense, right?
Forbes printed an article on July 31 by Michael Shellenberger, head of Environmental Progress, and climate-change promoter James Hansen, reporting on a letter they sent to President Trump and Iowa politicians, who are considering what to do about the threatened closure of the Duane Arnold nuclear plant. The authors analyzed the issue and found: The amount of “clean” non-carbon-producing electricity that would be lost by closing the 10 most vulnerable nuclear plants in the country would be 23% more than all the electricity generated by solar in 2017—a big net loss for the Sierra Club’s campaign for cutting carbon emissions.
On the accusation that nuclear energy has garnered unconscionable federal subsidies, the authors write that the most recent study by the Congressional Budget Office found that so-called renewables received 94 times more in federal subsidies in 2016 than nuclear, per unit of electricity generated.
Since producing reliable baseload power to replace the lost nuclear generation will require mostly natural gas with perhaps some clean coal, closing the Duane Arnold plant would actually raise electricity prices, depending upon what replaces it. And if consumers would like to see what the future could look like, they just need to go to Germany, which is shutting down its nuclear plants. As Reuters described it last fall: “The runaway expansion of wind turbines and solar panels has made German prices the highest in Europe since 2013, not just because of [government] surcharges but because more volatile green power capacity also necessitates new transmission grids and higher costs to manage them.” They also require reliable duplicated backup generating stations for times when nature doesn’t cooperate.
Historically, Hansen and Shellenberger report, adding a new nuclear reactor to a site with an existing reactor is “often the lowest cost way of replacing fossil fuels.” Seven of the ten plants potentially slated for shutdown, are single-unit plants, which power can cost one-third more than those at multi-unit sites, which can share infrastructure. With few exceptions, utilities had planned to build clusters of plants at sites, until the sabotage of nuclear power starting in the mid-1970s.
In the early 2000s, when a “nuclear renaissance” was on the table, EIR printed a map of 17 sites in the U.S. with single nuclear plants, that were originally designed for multiple units (see EIR, June 17, 2005 “Start Now Building 28 U.S. Nuclear Plants!”). In addition to “saving” the operating plants under threat of “free market” closure, these “brownfield” sites should see the immediate construction of the “missing” 28 nuclear reactors.
STRATEGIC WAR DANGER
Russia, Turkey, Germany and France Plan Summit on Syria
Aug. 13 (EIRNS)—Preparations for a summit among the leaders of Russia, Turkey, Germany and France on the Syrian settlement will be held in Turkey by Russian Foreign Minister Sergey Lavrov and Turkish Foreign Minister Mevlut Cavusoglu. Lavrov is now in Turkey for a two-day visit, Aug. 13-14.
“The Russian side proceeds from the fact that Russia and Turkey bear special responsibility for peace, security and stability in Syria and in the entire region,” the Russian Foreign Ministry said. “The ministers will discuss preparations for a four-lateral summit of the Russian, Turkish, German and French leaders on the Syrian settlement that is planned to be held soon,” TASS quoted the ministry statement.