EIR Daily Alert Service, TUESDAY, AUGUST 21, 2018

TUESDAY, AUGUST 21, 2018

Volume 5, Number 166

EIR Daily Alert Service

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

 

EDITORIAL

Stop the British Attack on the President, and End London’s Money System

Aug. 20 (EIRNS)—Just weeks from an important U.S. midterm election, we have so thoroughly exposed the American players in the “Russiagate” coup attempt against President Trump—at the FBI, the Justice Department, among the heads of the surveillance state such as John Brennan—that they may wind up prosecuted for the crimes of their “investigation.” Legal assassin Robert Mueller looks increasingly desperate in his maneuvers to pull off an entrapment of the President, and produce a report begging the new Congress to impeach him.

But the British intelligence drivers of this coup, except for the radioactive MI6 officer Christopher Steele, are still hidden to the overwhelming majority of Americans. These are the leaders of MI6 and of GCHQ—the British precursor to the NSA—who from the moment Donald Trump considered entering the Presidential race, told American intelligence and political circles to stop him, because he might engage in great-power cooperation with Russia and China.

London’s monetary system, which made it again the world’s preeminent financial center by destroying President Franklin Roosevelt’s Bretton Woods system, has produced nothing but deindustrialization and free trade in the United States and Europe, constant debt crises around the world. It is in crisis again now, disguised as an “emerging market currency crisis.”

We defend the Presidency until Mueller is finally defeated, because with President Trump, in the financial crisis now blowing up, an emergency return to Glass-Steagall bank organization is possible. Cooperation with other major powers and BRICS countries to put major credit into new infrastructure projects, is possible with President Trump. Even a serious attack on the British free trade system, by choking off currency speculation and returning to the principles of FDR’s Bretton Woods system, is possible if collaboration exists between President Trump and the leaders of China, India, Russia, and other major economies.

We defend President Trump against the British attack, to end the failing British monetary system, and implement Lyndon LaRouche’s “Four Laws” to recreate the credit system of Bretton Woods.

Schiller Institute President Helga Zepp-LaRouche said in an Aug. 17 webcast, “Over the years, my husband has repeatedly called for a reestablishment of the New Bretton Woods system, to go back to Hamiltonian economics, to go back to a credit system, to basically wipe out the casino economy, get rid of the derivatives bubble, and go to national banking; have credit generation of sovereign governments; and then, have an international credit system…. Later he specified that more, and said the only combination of countries which have the power to undo the British Imperial financial system, based on the City of London and Wall Street, would be a four-power combination of the United States, Russia, China, and India.

“So we have written this new petition, which calls actually on the leaders of these four countries, not to be exclusive, but to have these four countries the core group of nations which would form a New Bretton Woods system and then invite others, and all countries who would like to associate with that, would be welcomed to join.

“Now, this is urgent. There are many people who say the next financial storm will hit well before the midterm elections. There are many analysts who say the Federal Reserve ‘tapering,’ the so-called increase of interest rates, must urgently stop because it is about to blow out the debt bubble. The Institute of International Finance in Washington just published figures that the total indebtedness of world has become $247.2 trillion, and that represents an increase of 11.1% just for the last year.  So, we are sitting on a complete powder keg, and anything could trigger this collapse of the bubble, which if not remedied, the danger would be economic chaos with unforeseeable consequences….

“We want to have a worldwide mobilization of every country, every force, every person on the planet, to appeal to those leaders—namely, President Trump, President Putin, President Xi Jinping, and Prime Minister Modi—to take this action; and preferably to use the UN General Assembly which will start in September to put this on the agenda.”

COLLAPSING WESTERN FINANCIAL SYSTEM

Financial Crisis: Why All the Talk about the Fed Resuming QE?

Aug. 20 (EIRNS)—The reality of the trans-Atlantic corporate debt crisis looming behind the current so-called “emerging market currencies crisis” is causing various economists to forecast and/or to call for the end of “tightening” by the central banks and, in fact, the launch of new “quantitative easing (QE)” programs of money-printing. The idea is not that this could help stop the plunge of the many falling currencies, but rather that it will help large banks weather the debt shocks of the oncoming crisis.

Italian Cabinet Undersecretary Giancarlo Giorgetti of the Lega, in an interview today, joins the demand of Budget Committee Chairman Deputy Claudio Borghi for the European Central Bank to continue its QE beyond the end of this year, when has been tentatively announced to end. This is in order to keep buying Italian government bonds from the Italian and other large banks as the bonds are issued, which issuance will increase due to the infrastructure program necessary for Italy. Otherwise, rates on those bonds, which have doubled since April, will go sky-high—unless, there is a solution through new international monetary arrangements before then.

Financial analyst Steen Jakobson of Saxo Bank posted a note, saying “More and more investors believe we are on the verge of an ‘Asian Crisis 2.0’ or a liquidity crisis. My forecast would be:

“1. A 25% chance of a Turkish default within 12 months … and 2. A 25% chance of a strong reversal of quantitative tightening from the Federal Reserve, supported by the European Central Bank and major central banks.”

But Credit Suisse chief financial analyst (and former New York Fed official) Zoltan Pozsar gave the clearest explanation in a CNBC interview. Pozsar said that reserves at the major banks are still insufficient against coming financial shocks—this after $14 trillion in printing for bank reserves by the big four central banks! He says the Fed is running out of room to reduce its balance sheet any further, and “It may even begin QE4 in 2019.” “Every penny of reserves is bid. Balance sheet taper from here will cut right into the system’s liquidity bone.”

THE NEW GLOBAL ECONOMIC ORDER

China and Russia May Be Making Plans Regarding a New Financial System

Aug. 19 (EIRNS)—In the Johannesburg BRICS summit on July 25-27, the five nations’ leaders discussed efforts to expand lending by the BRICS New Development Bank, support each other against currency speculation, and switch to the use of national currencies, rather than the dollar, in commerce among BRICS nations.

Subsequently, on Aug. 1, Zavtra published an interview with Russian presidential economic advisor Sergey Glazyev, in which he said that a task force of Chinese and Russian economists has drafted a joint report on the prospects for further Chinese-Russian economic cooperation. Glazyev said that report contains a consensus on several areas for action: lowering Chinese barriers to Russian imports, including grain; stopping use of the dollar in bilateral trade, in favor of national currencies and payments systems; the creation of new, joint specialized banks to finance trade and investment projects; the establishment of international consortiums for infrastructure construction; cooperation on building development corridors; and the promotion of joint ventures in high-tech manufacturing.

Notably, Glazyev told Zavtra that the report had already been submitted to Chinese and Russian officials.

The Russian advisor then included his view, that for Russia and China to integrate their financial systems, Russian economic policy will need to change toward China’s. He said that Russian policy follows International Monetary Fund recommendations, whereas China has created the most progressive system in the world for directing economic development and raising the general welfare through an increased volume and efficiency of production. India and countries in Southeast Asia have adopted elements of this approach, Glazyev said, and similar approaches are used by Japan and South Korea.

It could be added that China’s financial system is also regulated on the Glass-Steagall bank separation principle, as Russia’s is not; and that the Chinese government’s primary tool for “directing economic development” is the issuance of credit, not the manipulation of interest rates.

Nonetheless the existence of the report prepared for high-level officials, shows a potential for the countries to make moves with other nations toward a new financial system.

Xinhua Cites Schiller Institute-Peru on Belt and Road Economics

Aug. 20 (EIRNS)—Xinhua’s Lima office published a Spanish-language wire on Aug. 17 interviewing Peru’s Foreign Commerce and Tourism Minister, a retired Foreign Minister, and the head of the Schiller Institute in Peru Luis Vásquez Medina, on the potential for Peru in the global Belt and Road initiative. China News subsequently published Xinhua’s wire, with minor changes, in English.

Headlined (in Spanish) “Peru Is Ideal Stage for Belt and Road Initiative, Peruvian Minister Says,” Xinhua’s wire leads with Commerce Minister Rogers Valencia’s statements to Xinhua emphasizing that because China is Peru’s leading trading partner, and Peru has free trade agreements with more than 50 countries as well as its “privileged geographic position” located on the Pacific in the center of South America, “that would allow us—through the Belt and Road Initiative—to take advantage of Peru’s strategic position to create trade routes that connect to other countries in the region.”

The wire concludes by citing Schiller Institute-Peru head Vásquez on the importance of the Belt and Road Initiative for all so-called emerging countries and for teaching economics generally, as well as for the nation of Peru:

“ ‘The spark of industrialization in Peru will only be lit by a new development platform that includes the latest breakthroughs in science and technology as well as great infrastructure in communication, energy and new cities,’ said Vásquez.

“He said that China has ample experience especially in communication technologies, a sector in which cooperation with China is key to overcoming Latin America’s deficiencies.

“Peru, and Latin America as a whole, has ‘unconnected regions that have not been able to generate an internal market that would let us take advantage of the opportunities China offers,’ Vásquez said.

“Vásquez, who also works at the Peruvian branch of Washington-headquartered Schiller Institute, encouraged economics students to study the Belt and Road Initiative.

“ ‘This initiative entails calls for returning to the real principles of economic science, which understands that the true wealth of nations does not lie in the mere accumulation of money, but in greater creative and cognitive capacities,’ the historian said.”

Mahathir Five-Day Visit to China Reasserts Strongest Ties

Aug. 20 (EIRNS)—The fact that Malaysia’s Prime Minister Dr. Mahathir Mohamad, re-elected this year after 15 years out of office, had campaigned against the corruption of former Prime Minister Najib Razak—including in his mega-deals with China—had set the anti-China mafia in the West all a-twitter about a supposed blow to China’s Belt and Road Initiative. That notion was duly dispensed with during Dr. Mahathir’s highly successful five-day visit to China, which concluded today. Following meetings with both Premier Li Keqiang and President Xi Jinping; the two nations’ leaders reaffirmed their close ties and mutual respect, while signing numerous new and renewed trade and currency agreements.

At the press conference with Li Keqiang, Dr. Mahathir said: “We’re here to assure the Chinese government and its people that there will be no change of policy…. We see China as a model for development.”

In regard to the rail and pipeline deals negotiated by Najib, Dr. Mahathir said, “I believe that China will look sympathetically towards the problems that we have to resolve and perhaps help us in resolving some of our internal fiscal problems.”

The Prime Minister visited Alibaba’s founder Jack Ma, rode on a high-speed train, and oversaw the signing of a cooperation agreement between Chinese auto firm Geely and Malaysian carmaker Proton. The delegation included Malaysia’s Ministers of Foreign Affairs, Primary Industries, International Trade and Industries, Agriculture and Agro-based Industries, and Entrepreneur Development, as well as other senior government officials, who met their counterparts.

The joint communiqué states that the two sides will speed up the implementation of the Memorandum of Understanding on Promoting Mutual Economic Development through China’s Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative.

China pledged to buy more Malaysian goods, including palm oil, durians and rubber, to improve the balance of trade (China is Malaysia’s leading trade partner, but it is imbalanced in China’s favor). Malaysia in turn wants to increase China’s support in advanced technologies.

U.S. POLITICAL AND ECONOMIC

New Afghan Cease-Fire Call Welcomed by United States

Aug. 20 (EIRNS) Secretary of State Mike Pompeo said Aug. 19: “The United States welcomes the announcement by the Afghan government of a cease-fire conditioned on Taliban participation. The United States supports President Ghani’s offer for comprehensive negotiations on a mutually agreed agenda.”

Ashraf Ghani announced plans yesterday for a cease-fire to start today in honor of the Muslim holiday Eid al-Adha, and to extend to the Prophet Muhammad’s birthday on Nov. 21, according to Al Jazeera. According to a Reuters report, the Taliban provisionally accepted an agreement for a truce of just four days, and pledged to release hundreds of prisoners in a show of goodwill.

Trump Compares Mueller’s ‘Rigged Witch Hunt’ To McCarthy Terror

Aug. 20 (EIRNS)—One tweet Trump made on Sunday is notable for its clarity: “Study the late Joseph McCarthy because we are now in a period with Mueller and his gang that makes Joseph McCarthy look like a baby! Rigged Witch Hunt!” The immediate context was a New York Times caper over Aug. 18-19 regarding White House counsel Donald McGahn’s cooperation with Robert Mueller’s investigators. The Times’ articles, straight from the McCarthy playbook, had the form of “your colleague X has already named you to our investigators,” etc. Trump tweeted yesterday: “The Failing New York Times wrote a story that made it seem like the White House Counsel had TURNED on the President, when in fact it is just the opposite—& the two Fake reporters knew this. This is why the Fake News Media has become the Enemy of the People. So bad for America!”

The Wall Street Journal’s lead editorial today comes close to calling the media fake news: “The bottom line is that readers should remain skeptical about what is reported about Mr. Mueller’s probe,” and pointing out that McGahn could not have met with Mueller without the President having first waived executive privilege, which he did. Both Nixon and Clinton “fought extensive legal battles with prosecutors over executive privilege,” they said, whereas Trump is being transparent.

Rubio, Pentagon, and Congress Again Attack Confucius Institutes

Aug. 20 (EIRNS)—Sen. Marco Rubio (R-FL), the Pentagon, and FBI again attacked research partnerships between the U.S. Defense Department and American universities which host Chinese government-funded Confucius Institutes, which the FBI cites as national security threats, Natalie Johnson reports in the Washington Free Beacon website today.

Last week the Pentagon awarded five grants to university-industry teams collaborating on U.S. defense-related research which was part of a DOD pilot program, the Enterprise Science Initiative. Three of the universities—Arizona State, Stanford, and the University of Washington, have Confucius Institute programs, which the Washington Free Beacon claims, “Teach Chinese language … while propagating communist viewpoints.”

Congress had already banned any U.S. university from using Pentagon funds to provide Chinese language courses through the Confucius Institutes, as part of the $716 billion 2019 National Defense Authorization Act signed into law Aug. 13. At the three universities above, the DOD grants appear to have no connection to the Chinese or Confucius Institutes, except that the latter are on the same campuses! Senator Rubio warned the schools that the Institutes are threats to “freedom” as well as “national security.”

The same FBI which has discredited itself in its attempts to impeach the President has warned that academic, Defense Department, and other agencies funding such sensitive research should “be mindful of this [China] threat,” Rubio said, and urged Florida’s universities to shut down their Confucius Institutes. More than 100 U.S. universities now have direct partnerships with the Chinese government through the Confucius Institutes, the FBI reported.

STRATEGIC WAR DANGER

Lavrov Charges That Western and UN Policy Is To Block Syrian Reconstruction

Aug. 20 (EIRNS)—Russian Foreign Minister Sergey Lavrov, during a joint press conference in Moscow with Lebanese Foreign Minister Gebran Bassil, charged that “the Political Department of the United Nations Secretariat has circulated a secret directive, prohibiting organizations participating in this system to take part in any projects to restore the Syrian economy. Only humanitarian relief work is allowed.” Lavrov charged that the United States is trying to artificially slow the return of refugees to Syria by refusing to participate in restoration of its infrastructure. “A few days ago, Washington hosted a meeting” between UN Special Envoy for Syria Staffan de Mistura and Secretary of State Mike Pompeo, “and the State Department used the phrase ‘It is premature to even discuss the restoration of Syria’ in the statement following their talks,” said Lavrov.

The subject of Lavrov’s meeting with Bassil was a Russian plan for the return to Syria of refugees living in Lebanon. When meeting in Berlin with Chancellor Angela Merkel Aug. 19, Russian President Vladimir Putin estimated that $400 billion in investments were needed for reconstruction in Syria after eight years of war, and said Russia could not possibly fund it alone.

According to a report from RT, Lavrov’s ministry is trying to contact UN Secretary General Antonio Guterres and has already sent a formal complaint about the secret directive. The existence of the secret directive was not confirmed or denied by UN Political Department officials to EIR. But Moscow has been complaining about the lack of action to return Syrian refugees and Syria reconstruction for months.

During a joint press conference in Moscow with the Jordanian Foreign Minister July 4, Lavrov stressed that Syria needs reconstruction aid without consideration of politics. “To create favorable conditions in the liberated areas for the refugees to return home, massive international assistance is required aimed at restoring the socioeconomic infrastructure and creating new jobs,” Lavrov said. “We are convinced that all international players who have such capabilities should assist in addressing these tasks in Syria without attempting to make the provision of such assistance dependent on some politicized conditions.”

On July 28, the Russians raised Syria reconstruction at the UN Security Council. French UN envoy François Delattre told the Council, “We will not take part in the rebuilding of Syria unless a political transition is effectively carried out,” basically meaning regime change in Syria. “No reason can justify France and the European Union’s financing of reconstruction efforts” without “stability,” he said.

On Aug. 9, Al-Monitor media site reported that while Russia has achieved some success working with regional countries that are hosting large numbers of Syrian refugees, particularly Lebanon and Jordan, getting international agencies onboard with Russian initiatives has proved much more challenging. “So far, we have seen no UN employees in the areas controlled by the government where assistance is needed to restore the destroyed life-support systems. I hope this is a false impression, this could be a mere coincidence,” Lavrov said.

On Aug. 13, UN High Commissioner for Refugees Filippo Grandi said it was too early to talk about a mass return of Syrian refugees to their homeland. “We think that it’s premature to promote returns,” he said.

On Aug. 15, as Lavrov noted, after Secretary of State Pompeo and UN Special Envoy de Mistura met in Washington, the State Department said they agreed “that any discussion of reconstruction was premature absent a political solution leading unalterably to both constitutional reform and free and fair elections as described in UN Security Council Resolution 2254.” The readout issued by de Mistura’s office, however, did not confirm that he agreed on this subject.

Russian Vostok 2018 Military Exercise To Be Largest Since 1981

Aug. 20 (EIRNS)—Russian Defense Minister Sergei Shoigu announced this morning that the Vostok 2018 exercise, set for Sept. 11-15, will be the largest such exercise since Zapad 81. “It will be unprecedented in terms of geographic scope and the strength of command and control centers and forces due to participate,” Shoigu said, reported TASS. “Involved in the exercise will be the Eastern and Central Military Districts, the Northern Fleet, Airborne Troops, and long-range and military transport aircraft, as well as command centers and forces of China’s and Mongolia’s armed forces.” According to a Chinese Defense Ministry statement, 3,200 Chinese troops, along with 30 aircraft, will be traveling to a Russian training range in the Trans-Baikal region. The drills, it said, are aimed at strengthening strategic military partnership between China and Russia and increasing the two countries’ ability to jointly respond to various security threats, ensure regional peace, stability and security.

The Central and Eastern Military Districts, in the runup to Vostok, kicked off a snap exercise, this morning. “Today, at 5:00 a.m. Moscow time [02:00 UTC), in accordance with the decision by Russia’s supreme commander-in-chief, the military command and the units and formations of the Eastern and Central Military Districts, the Airborne Force, long-range and military transport aviation have switched to implementing measures for going on high alert,” Shoigu said.

The Russian military kept last year’s Zapad (West) exercise very low key but apparently feel no such restraint for this year’s Vostok exercise.

 

 

 

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