EDITORIAL
U.S. Midterm Elections Carry Risk of Chaos, and Chance of a New Paradigm of Progress
Oct. 23 (EIRNS)—President Donald Trump on Monday night spoke to more than 30,000 Americans in Houston, according to the Texas Lieutenant Governor’s report—the President’s largest and most enthusiastic rally yet. Some 17,000 were packed in the Toyota Arena, with another 15,000 watching on large screens outside. Though filled with off-the-cuff remarks on many subjects, his remarks took on the most orderly succession when he discussed the real progress his Presidency has made with the United States economy. “600,000 new manufacturing jobs in two years” was an essentially correct claim, not considered at all likely when Trump took office. 7.14 million job openings (in September) was a remarkable record level.
But there lies the greatest risk facing the President and the country. The growing fears of a crash of the huge debt bubbles—U.S. and European corporate debt the worst—which have grown from central bank money-printing, are correct. As Independent Texas Congressional candidate Kesha Rogers warns in an interview this week, if the mid-term elections do not end—decisively—the attempted coup against the President by impeachment or other means, the onrush of a financial crash, perhaps worse than that of 2008, will produce chaos.
But the British intelligence-instigated coup plotters and Robert Mueller’s legal assassins could be decisively checked in the election. Then the prospect of dealing with the oncoming crisis means the possibility that Trump could actually adopt an “American System” policy. As a candidate, the President spoke of things—a Glass-Steagall Act, a $1 trillion initial national investment in new high-technology infrastructure, a revived and expanded NASA manned space exploration—which are made possible with EIR Founding Editor Lyndon LaRouche’s “Four Laws” to save the economy and nation, first put forward in 2014. That is what Rogers’ campaign, and the national LaRouche Political Action Committee are mobilizing Americans for, with China’s Belt and Road Initiative being a great example of such a new paradigm.
Trump also clearly had the intention of great power collaboration, not war confrontation, with both Russia and China. The mobilization which Rogers’ campaign is leading nationally, is the path to that breakthrough, and to successfully overcoming the financial crisis now threatening.
COLLAPSING WESTERN FINANCIAL SYSTEM
Denmark Bank Scandals Put Glass-Steagall on the Agenda
COPENHAGEN, Oct. 23 (EIRNS)—A succession of bank scandals has brought Glass-Steagall bank separation, that would segregate commercial banks from speculative investment banks, onto the agenda in Denmark. The Schiller Institute in Denmark is famous for calling for this measure since the 2011 parliamentary election campaign, when Schiller activists ran as independents with the slogan “Glass-Steagall—or Chaos.”
The first case was the Danish side of the dividend arbitrage/Cum-Ex scandal (see Background slug), when it was discovered a year ago that $1.95 billion (€1.7 billion) was looted from the Danish tax office, led by a Sanjay Shah, a British financial swindler based in Dubai. Then, about a month ago, the largest money laundering case in Europe was revealed, involving the Estonian branch of the systemic Danske Bank (Danish Bank). And now, the revelation that some of the biggest banks are involved in massive tax looting in all of Europe.
During a TV debate after the Danske Bank money-laundering case was exposed, a parliament member from the far-left Unity Party called for bank separation, and the vice chairman of the Socialist People’s Party called for the same in her blog. During the Parliament’s open house on Friday, Oct. 13, the Schiller Institute delegation spoke to many political party leaders and other parliamentarians about the need for Glass-Steagall and LaRouche’s Four Laws, as well as the New Silk Road.
But on Saturday, Oct. 20, the need for something like Roosevelt’s Glass-Steagall bank separation was explicitly the main discussion on “Deadline”, the widely watched evening news discussion program on Denmark Radio’s DR2, with the leading bank historian in Denmark, Prof. Per H. Hansen, from Copenhagen Business School, and the editor of the financial newspaper Børsen, Niels Lunde.
After an introduction about how the biggest banks have been involved in the dividend arbitrage scandal, Hansen said that it’s not a matter of one rotten apple, but is systemic. The interviewer said that Hansen had pointed to the takedown of Glass-Steagall as one of the most important events in the financial world, which had allowed these bank crises to occur. Video clips of President Clinton rescinding Glass-Steagall in 1999 were shown, in which he stated that it was no longer appropriate, since the country had ceased being industry-centered, and that now the antiquated national walls had to be torn down which inhibited the modernization of financial services. And later, the interviewer prefaced video clips of the Great Depression in the U.S., describing how Per H. Hansen has researched historical parallels, and what the response was at that time, especially to the 1929 crash. It is something we should think about today, she suggested.
Hansen said Franklin Roosevelt’s response, when he became president in 1933, was Glass-Steagall and other strict regulatory laws in 1933-34. In Denmark, the bank law of 1930 limited how much a depository bank could act as an investment bank, and similar regulations were implemented in the Western world. Rescinding Glass-Steagall was symbolically important because it replaced national regulation with the “free” financial markets as the driver of the economy, while industry was in crisis. It allowed the creation of financial super-markets, whereas before, each of the financial activities was regulated separately—savings and commercial banks, investment banks, mortgage banks, insurance, and pension funds. There was strict national regulation coming out of World War II, with no financial crises, until the 1970s. Then, they became bigger and bigger, and especially the investment banks became more speculative, and the goal became maximizing shareholder value, and nothing else—the heart of the problem. Allowing capital movement, with microsecond algorithm trades, increased the instability.
As to what else should be done, he said fines don’t work, the problem remains and it is systemic, based on deregulation and the Wall Street/City of London investment bank culture. We need something much bigger than minor regulation. Niels Lunde said that, initially, the main role of the banks was to only lend to those they knew, and of whom they could make a proper credit evaluation. Then, the goal of the banks, and the bankers, personally, became to make the most money, including through the creation of financial products they hardly understood, instead of taking responsibility for the financial well being of society. This ethical discussion is being raised only now, 10 years after the 2008 crash, which has allowed these scandals to occur.
The first thing that a Schiller Institute supporter said yesterday, was, “I was thinking about you, when I saw that program. This is what you have been telling me for years, and you were right.”
Brexit Derivatives Fear: What Is It About?
Oct. 23 (EIRNS)—An Oct. 19 Bloomberg article reported excitedly, “Some of the world’s biggest banks are selling their stakes in the largest clearinghouse for interest-rate swaps, a sign London’s global dominance in derivatives is ending.
“Deutsche Bank AG, Commerzbank AG and Nomura Holdings Inc. are among the firms selling out of London Stock Exchange Group Plc’s LCH clearing unit, while banks including JPMorgan Chase & Co., Société Générale SA and Barclays Plc are reducing their ownership, according to an LSE [London Stock Exchange] statement on Friday [Oct. 19]. In all, LSE is raising its stake in LCH to more than 80% from around 65% currently.” The presumption is that LSE is being forced to do this, to make up for big banks pulling out.
But is it London’s role declining, or is it fear of being part of the capitalization and liability of the LCH Group Holdings clearing house when a “hard Brexit” may hit the derivatives markets in March?
The derivatives clearing houses, new creations after the 2008 crash to “make derivatives safe,” are in fact additional centers of risk, and potential points of failure in a derivatives implosion, because they are not sufficiently capitalized. The clearing houses are partnerships of big systemic banks which create and deal in derivatives, and they would suffer the losses if a clearing house failed in a crisis.
Bloomberg reported, “LCH is at the center of a Brexit battleground, with trillions of derivatives contracts at stake. In the event of the U.K. leaving the EU without a deal on future trading arrangements, Europe’s banks may have to move many of their interest-rate swap contracts to rival Eurex, which is owned by Frankfurt-based Deutsche Börse AG.”
This move, is exactly what Bank of England Governor Mark Carney has repeatedly warned that dealers will not be able to do quickly; he has noted that in that case, these derivatives will become void, causing chain reaction losses. Bloomberg writes that three months’ notice is required for banks moving derivatives transactions off the LCH, and in fact, none of the big banks have given this notice with March just over four months away.
Conflict Between Italy and the EU Commission Escalates
Oct. 23 (EIRNS)—The Italian Finance Minister has replied to the EU Commission with a letter yesterday, stating that Italy won’t change its budget proposal. “We are aware of having chosen a budget policy approach not in line with the rules of the Stability and Growth Pact. It was a difficult decision but a necessary one, in view of the persistent delay in recovering pre-crisis growth levels and of the dramatic conditions of the most disadvantaged layers of society,” says the letter signed by Minister Giovanni Tria and approved by Prime Minister Giuseppe Conte.
The Commission is replied immediately and issued an ultimatum: Italy has three weeks’ time to rewrite the budget proposal, before the EU Commission asks the EU Council to open violation proceedings. The procedure will take months and at the end of the road, in the worst case, Italy will be demanded to pay a fine between 0.2% and 0.5% of GDP—which Italy will or will not pay.
If the confrontation escalates, the Lega and the M5S will use it to increase their voters support for the April elections of the European Parliament.
SCIENCE AND INFRASTRUCTURE
Adenovirus Kills Six Children in New Jersey Facility, as CDC Also Studies Flaccid Disease in Youth
Oct. 23 (EIRNS)—Six children have died at a New Jersey rehabilitation center in recent days, in an outbreak of adenovirus. Another 12 children are also affected at the long-term care facility in Haskell, Passaic County. In residence for treatment, the children were in frail condition, and badly affected. Fortunately not common, such deadly outbreaks can, however, easily occur, and are most often associated with transmissibility in close quarters. A recent outbreak in Michigan’s Upper Peninsula had a cluster of cases, and caused one death.
Meantime, a “mystery illness” of great concern has shown up in recent years, called acute flaccid myelitis (AFM), which causes muscle weakness and paralysis. It affects the spinal cord and nervous system. The Centers for Disease Control and Prevention (CDC) held a press conference on AFM last week, at which a spokesman reported, “Despite extensive laboratory testing, we have not determined what pathogen or immune response caused the arm or leg weakness and paralysis in most patients.” It is not known to be contagious. Over 90% of the cases thus far have been in children under 18 years old. There is a sudden onset of weakness, and the symptoms are dramatic. The CDC is advising physicians to inform parents to seek medical help immediately. Nearly 400 cases have been documented since 2014. Only one death occurred, in 2017. This year, 62 cases have been confirmed to date, in 22 states. There are cases now reported in Canada as well. (Admin: Sounds Very Similar to Guillain-Barre linked to Vaccines.)
U.S. POLITICAL AND ECONOMIC
Putin Speaks with Bolton in Moscow, Agrees to Nov. 11 Meeting with Trump in Paris
Oct. 23 (EIRNS)—Russian President Vladimir Putin told U.S. National Security Advisor John Bolton today in Moscow that he would like to hold new talks with U.S. President Donald Trump. The Nov. 11 celebrations for the centennial of the end of World War I in Paris, on Nov. 11, was suggested by Putin as an appropriate venue. Bolton replied that he believes Trump would look forward to such a meeting.
Later and more formally, Russian Presidential aide Yuri Ushakov told TASS, “The presidents will hold a bilateral meeting” planned for Nov. 11, with the length of the meeting to be decided by them. “This will be a normal bilateral meeting,” he said.
Nonetheless Putin told Bolton that Russia was puzzled by the America’s “unprovoked moves that are hard to call friendly.” According to U.S. News & World Report, he said he would like to discuss various arms control issues, including Trump’s declaration that he intends to pull the United States out of the 1987 Intermediate-Range Nuclear Forces (INF) Treaty. Putin then referred to America’s coat of arms showing an eagle holding a bundle of 13 arrows in one talon and an olive branch with 13 olives in another. Laughing, Putin asked Bolton if the eagle had eaten all the olives. Bolton noted that the olive branch was in the right talon—showing its priority—rather than the left as Putin had first thought.
On Oct. 22, Bolton met with Russian Security Council Secretary Nikolai Patrushev. Talks lasted for five hours. Topics included Russian-U.S. bilateral relations, strategic stability and global security, disarmament and arms control, acute regional crises. The press service of the Russian Security Council described the meeting as “business-like and constructive.”
Russian Foreign Minister Sergey Lavrov also held 90 minutes of talks with Bolton on Oct. 22 behind closed doors. The Russian Foreign Ministry said: “The sides exchanged views on topical international problems, including the situation around Syria and Afghanistan, the conditions in Ukraine and on the Korean Peninsula. They also discussed prospects for cooperation between our countries, including in the interests of finding solutions to regional conflicts, efficient fight against terrorism, and maintaining strategic stability.”
On the INF Treaty, Russia will “decide on our position based not on intentions, but on clearly expressed decisions,” Lavrov stressed.
Papadopoulos To Testify to Congress Next Week on Brits’ Setup
Oct. 23 (EIRNS)—George Papadopoulos and his wife were interviewed on Fox News’ “Watters’ World” on Oct. 20, recounting the story of how George Papadopoulos was targeted in the summer of 2016 by British spies calling themselves the London Center for International Law Practice/LINK campus, which he later learned was a sort of training school for Western spies. Papadopoulos was introduced to Joseph Mifsud, ostensibly a Russian super-spy who had the information on Hillary Clinton’s emails.
The London Center for International Law Practice set up meeting with Mifsud for Papadopoulos, who told Fox it is an “obscure, shady” front for Western intelligence. The British group brought Papadopoulos to Rome, where he met Joseph Mifsud, a professor, who claimed he had information on “thousands” of Hillary Clinton’s emails on April 26, 2016, and wanted to introduce him to “Putin’s niece,” who turned out to be just to be a student. Papadopoulos was then introduced to Australian High Commissioner to London Alexander Downer, who went over same information. He was then introduced Papadopoulos to Stefan Halper, who “lured me to London; it’s all linked into the U.K. I didn’t tell anyone in the Trump campaign about it. Then I told Alexander Downer about it, the head of the CIA equivalent in Australia for about 17 years,” in his earlier capacity for 11 years as Foreign Minister.
Papadopoulos told Fox, “I was set up by Western intelligence; the meeting was orchestrated by Western intelligence, by Halper, to sabotage Trump.” Papadopoulos has no recollection of talking to Downer about emails. “It’s all linked into the U.K.,” he repeated.
Papadopoulos said that next week he will testify before closed hearings of the House Oversight and Government Reform and House Judiciary Committees, where he will get out the story of the attempt to entrap him as a Trump campaign Russian intermediary who was trying to get out thousands of Hillary Clinton’s emails which he knew nothing about; a story invented by various agents of British intelligence. The Republicans intend to use these hearings to force out those responsible for inventing the faked “Russian” links of the Trump campaign.
THE NEW GLOBAL ECONOMIC ORDER
Hong-Kong-Zhuhai-Macao Bridge, World’s Longest Sea Crossing, Now Open
Oct. 23 (EIRNS)—Chinese President Xi Jinping officially opened the Hong Kong-Zhuhai-Macao Bridge (HZMB), the world’s longest sea-crossing today, nine years after its construction began, with the leaders of Macao, Zhuhai and Hong Kong present at the Zhuhai ceremony.
Including its access roads, the bridge spans 55 km (34 miles) connecting Macao and the mainland Chinese city of Zhuhai, Guangdong Province, to Hong Kong across the Pearl River Delta, BBC reported today.
The bridge was built to withstand earthquakes and the strongest of typhoons, with 400,000 tons of steel used. Its intended lifespan is 120 years.
The main bridge with a dual three-lane carriageway about 30 km long, spans the Pearl River Delta waterway, and to maintain the shipping lane, includes a 6.7 km section which dips into an undersea tunnel that runs between two artificial islands built for this purpose. The remaining sections are link roads, viaducts, and land tunnels connecting Macao, Zhuhai and Hong Kong to the main bridge. It cuts travel time between Macao and Zhuhai on the west side of the delta to Hong Kong on the east to less than an hour, from what used to be four hours; travel time between Zhuhai and Hong Kong International airport will now take 45 minutes.
The bridge is part of China’s plan to create a Greater Bay Area, including Hong Kong, Macao, and nine other cities in Guangdong Province. “In light of the development of the Greater Bay Area, the bridge will be instrumental in enhancing the flow of people, goods and capital, as well as technological collaboration within the region,” said Hong Kong Secretary for Transport and Housing Frank Chan Fan told a press conference on Oct. 19.
The bridge, which cost $20 billion, will open to traffic a 9 a.m. on Wednesday, Oct. 24.
Chinese Vice-Premier Han Zheng, who is in charge of China’s affairs with the Special Administrative Regions of Hong Kong and Macao, said, “As the first massive infrastructure project cooperation between the three cities, the opening of the bridge helps with the interaction between residents in the area, has economic benefits, helps push the Greater Bay Area vision forward and is beneficial to the combined competitiveness of Zhuhai, Hong Kong and Macao.”
Hong Kong Chief Executive Carrie Lam said the bridge will create an ideal living environment, where the three cities are within one hour’s reach from each other.
OTHER
The Lega Wins Elections in the Italy’s Trentino-Alto Adige Region
Oct. 23 (EIRNS)—The Lega scored 27% in the elections for the region of Trentino Alto-Adige, which includes the provinces of Trento and of Bolzano (Bozen)—the latter being predominantly German-speaking and also called South Tyrol—and will rule the regional administration in a center-right coalition now. The big loser is the Democratic Party, which lost half of its votes and got only 13.8%, losing one of the few regional administrations it has left in northern Italy.
In Bolzano, the provincial administration was run by a coalition between the Südtirolervolkspartei (SVP, South Tyrol People’s Party) and the Democratic Party, both of which lost votes and won’t be able to form a ruling coalition again. The SVP must choose between an alliance with the Lega (which ran alone and won over 11% in the province) or with the Köllensperger team; Paul Köllensperger is a former M5S member who formed his own slate and got 15.2%.
In the city of Bozen the Lega became the first party with 27.8%.
While it sounds complicated, it is not. Follow a map and everything gets clearer. The bottom line is that the Lega is now seen as a national party able to win votes from the right, the center and the left.
The M5S did not gain votes from the last regional elections and stays at 7%.
According to Maurizio Fugatti, the Lega slate’s lead candidate, the M5S lost because they campaigned against the infrastructure project for the Brenner base tunnel. This should be a lesson at national level, as well. Fugatti, who is undersecretary to the Health Ministry, will become the new chairman of the regional administration.
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