MONDAY, OCTOBER 21, 2019

Volume 6, Number 208

EIR Daily Alert Service

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

• The Congress Running To Impeachment and War Is Running Away From Wall Street’s Big Problem
• IMF Report Also Sees Threatening Bond Market Liquidity Shortage
• Yanis Varoufakis Exhorts IMF To Take Over the Libra
• Dimon Wants Fed To Handle Coming ‘Big Liquidity Thing,’ and Fewer Bank Regulations
• McConnell Likes His Wars Won, or Lost-But Not Ended
• Schiff and His Criminal Press Go at It Again With Mulvaney
• Retired Officers Criticize Trump Over Syria, Need To Read John Quincy Adams on Statecraft
• Russian Government Responds to Industrialists, Opts Out of Climate Protocol
• Economic Crisis Caused by No Productivity, the Solution Is High-Technology Public Works
• Bridenstine Filed Lengthy Report on Artemis I-III to House Sub-Committee Hearing
• ‘European Climate Declaration: There Is No Climate Emergency’ Signed by 700 Scientists

EDITORIAL

The Congress Running To Impeachment and War Is Running Away from Wall Street’s Big Problem

Oct. 20 (EIRNS)—The U.S. Senate is now a theater of endless-war warriors demanding more Middle East wars and punishment of President Donald Trump with the absurd claim of genocide against the Kurds. The House of Representatives now boasts impeachers of both parties who pretend to believe that Vladimir Putin (or Xi Jinping) controls Trump, and who are supporting a secretive group of CIA operatives to overthrow the President. Many of the major national media organizations have abandoned the thin surface veneer of reporting the news, and simply issue and spin public relations bulletins from the managers of the coup, who originated with senior figures of Britishintelligence.

If this is the situation, the American people are justified, if they are willing to act for themselves, in throwing out most of this Congress of fakers with their faked views and fake news. But something else underlies this crazy behavior.

These elected officials are hiding from themselves—and from you—the unmistakable reports that a new financial crisis is coming at us from Wall Street, already in its early stages, while the industrial economies of the United States and Europe are sinking. The new global financial report of the International Monetary Fund is full of very serious warnings of debt crisis and financial crash. The Federal Reserve has been pumping $50-$100 billion of liquidity loans into the Wall Street banks and funds every day since it discovered a liquidity crisis in the interbank loan market on Sept. 16. The central banks of the United States, Europe and Japan are coordinating their expanded bank-subsidy programs to try to print enough liquidity to keep stock and bond values from plunging.

But there is no mention of any of these erupting financial emergencies in the Congress and parliaments, nor reference to them in popular media. No hearings are held. Competent economists and bankers urge that these banks must be broken up on Glass-Steagall principles, and large-scale programs of public investment in high-technology economic infrastructure must be launched, and quickly. But these imperatives are not even discussed.

Why? All the American officials who have bought into this British intelligence coup, want Trump gone before “the economy” is discussed. They fear that in a crisis, in a financial crash, he may take charge of it by acting together with the other national leaders in space exploration, nuclear technology, infrastructure building—meaning China, Russia, India and others. Those are our potential partners in international development, but the war party insists they are our adversaries, our enemies.

The figure of Lyndon LaRouche and the current actions of his movement haunt this war party, because his policies are right there as solutions to this crisis. This is most true of his “Four-Power agreement” idea (United States, China, Russia, India) to construct the international framework for implementing Glass-Steagall principles, critical new infrastructure projects and capital goods investments, far-reaching space missions and advanced nuclear technologies.

A U.S. President who wants to solve this incoming crisis, as President Trump will, can simply grab what LaRouche has already proposed and begun, and follow his leads. That, the party of impeachment and war wants to rule out, by forcing Trump out. But the American people will need those LaRouche solutions, and they should act for themselves now.

COLLAPSING WESTERN FINANCIAL SYSTEM

IMF Report Also Sees Threatening Bond Market Liquidity Shortage

Oct. 20 (EIRNS)—Other aspects of the IMF’s new “Global Financial Stability Report 2019,” not yet reported by EIR, indicate the seriousness of the oncoming financial crisis, which the IMF staff report as directly linked to an industrial recession and falling capital investment.

The Financial Times Oct. 20 raises a different and more immediately serious issue in the IMF report, in light of the Federal Reserve’s sudden, severe, continuing problems with liquidity in the U.S. interbank loan market since Sept. 16. The Fund warned that “Bond fundsholding assets worth about $1.7 trillion could face difficulties in repaying investors”—just what set off panic among mutual funds, their investors, the Treasury, and Members of Congress in late summer 2008. To say, as the Financial Times does, that this “could potentially destabilize the global financial system,” is an understatement.

Put simply, what the Fund is warning about is that zero and negative yields on—at the moment—$15 trillion in bonds, mean that large institutional investors must trade their bond holdings and speculate to make income; and the bond funds they invest in are not making money on bonds, with which to cash these investors out as they decide to. Trying to overcome this—“hunting for yield”—the funds go into more illiquid speculations, and much “lower quality” assets, and lack cash. Bonds are core holdings for institutions worldwide.

The IMF examined a sample of 1,760 bond funds (about 60% of fixed-income assets worldwide). It found that one-sixth of them (one-half of the high-yield funds that invest in low-quality corporate debt) can’t meet redemption demands they have already experienced. “The total shortfall across the fixed-income sector is estimated to have reached $160 billion,” if all funds were experiencing simultaneous liquidity demands.

The IMF’s “extreme case” is easy to see coming: Fire sales of “good” assets to meet redemption demands on illiquid, bad ones, and a repeat of the 2008 mutual fund debacle. The “repo” market may be experiencing early stages now.

Yanis Varoufakis Exhorts IMF To Take Over the Libra

Oct. 18 (EIRNS)—Yanis Varoufakis, the former incompetent finance minister of Greece, who has demanded a “Green New Deal,” today went one better in revealing his controllers. It is a good thing, he said in an article in Project Syndicate, that the Libra Association is falling apart, as Visa, Mastercard, PayPal, Stripe, Mercado Pago, and eBay “have abandoned the Facebook-led corporate alliance underpinning Libra, the asset-backed cryptocurrency meant to revolutionize international money.”

But please don’t give up on cryptocurrency, he pleads: “The trick is to entrust implementation of the idea to the IMF, on behalf of its member states, with a view to reinventing the international monetary system in a manner reflecting John Maynard Keynes’ rejected proposal at the 1944 Bretton Woods Conference for an International Clearing Union.”

As EIR has exposed, Keynes’ “bancor” global currency idea, as opposed to FDR’s system of sovereign currencies, would have placed control of the world economy in the hands of the British bankers.

Varoufakis continues: “To bring about this new Bretton Woods, the IMF would issue a blockchain-based, Libra-like token—let’s call it the Kosmos—whose exchange rate with domestic currencies floats freely”—i.e., is under the control of the speculators in the City of London.

Recall that Bank of England Governor Mark Carney, who is running the green finance scam Varoufakis is in love with, has demanded a cryptocurrency to replace the dollar.

Dimon Wants Fed To Handle Coming ‘Big Liquidity Thing,’ and Fewer Bank Regulations

Oct. 19 (EIRNS)—JPMorgan Chase & Co. CEO Jamie Dimon spoke yesterday in Washington at the Institute for International Finance, about how the liquidity crisis in overnight interbank lending in recent weeks, could be the precursor of turmoil at large—“the big liquidity thing”—which the Federal Reserve better be smart about handling.

Dimon spun out a line that the only reason JP Morgan couldn’t step in and help buy up Treasury debt and help otherwise is because they are overregulated. This is high comedy coming from the executive of a mega-bank with an outstanding record of having violated any regulations that still exist after Glass-Steagall’s elimination in 1999.

Dimon said that the Fed should change the overregulation, so that banks’ extra cash parked at the Fed is not so “tied up.” He said, as reported by MarketWatch, “We’ve spoken to the regulators and I think they’re quite bright and they’ll look at this. And they should do it before the crisis happens, because it will happen.”

By crisis, Dimon is referring what he described as “the same issue [of overnight lending] lurking in the broader markets.” He said that the total liquidity in the financial system is $4 trillion—referring to Treasury paper, repo auctions, and other assets—and said it could seize up for borrowers in a leveraged position.

U.S. POLITICAL AND ECONOMIC

McConnell Likes His Wars Won, or Lost—But Not Ended

Oct. 20 (EIRNS)—If any one Member of Congress gets the “Colonel Blimp” award for liberal imperial war-blundering this week, when so many of them are competing for it, it must be Mitch McConnell (KY), the Senate Majority Leader. Veterans of all of America’s wars since Korea and Vietnam will find McConnell’s demands in his op-ed from oct. 18 depressingly familiar. They, or their children and grandchildren, must go on fighting, go on “re-upping,” in endless attempts to install around the world just exactly the governments, or the ungovernable divisions, which the military-industrial complex wants. Withdrawing any U.S. force is betrayal, pure and simple, of some “local fighting force.”

The Washington Post headlined the op-ed, “Mitch McConnell: Withdrawing from Syria Is a Grave Mistake.” The Senator says “retreat” will invite the “brutal Assad regime in Syria” to expand its influence—over Syria, mind you! And “Russia will leverage its increasingly dominant position in Syria”—which has been a formal ally of Russia for decades. He avers that northern Syria should, by rights, be controlled by “Turkey, our NATO ally”; and who could believe it to be better that Syria and Russia should control it? Once Turkey is fairly in there, writes the senior Senator, “we should create conditions for the reintroduction of U.S. troops and move Turkey away from Russia.” A fantasy, but otherwise a wonderful formula for American soldiers, endlessly in harm’s way enforcing the division of Syria into multiple warring parts. “We should retain a limited military presence in Syria and maintain our presence in Iraq and elsewhere in the region.” A great war-word, “limited.”

And on and on in Afghanistan. “Whatever happens in Syria, this situation must chasten the United States from withdrawing from Afghanistan before the job is done. We must recommit to our Afghan partners….” Another decade, or two?

Finally the Senator states the endless war doctrine outright. “As neo-isolationism rears its head … we can expect to hear more talk of ‘endless wars.’ But rhetoric cannot change the fact that wars do not just end; wars are won or lost.”

To the Senator, then, referring to the United States’ last 28 years of continuous regime-change military deployments in the Middle East, North Africa, South Asia, the Balkans, etc. as “endless war,” is just so much “rhetoric.”

Schiff and His Criminal Press Go at It Again with Mulvaney

Oct. 18 (EIRNS)—The British intelligence operation known as the U.S. corporate press did it again today, wildly misreporting a statement by President Donald Trump’s Acting Chief of Staff Mick Mulvaney. The headlines say “Mick Mulvaney Admits to Trump’s Corruption” (Washington Post), while House Intelligence Committee Chair Adam Schiff screamed that Mulvaney had admitted to Trump’s crimes and impeachment is now a slam dunk.

Here’s the truth, straight from the transcript of Mulvaney’s Oct. 17 press briefing. Asked about Ukraine, Mulvaney replied, including what President Trump had told him: “ ‘Look, this is a corrupt place. I don’t want to send them a bunch of money and have them waste it, have them spend it, have them use it to line their own pockets. Plus, I’m not sure that the other European countries are helping them out either.’

“So we actually looked at that, during that time, before—when we cut the money off, before the money actually flowed, because the money flowed by the end of the fiscal year….  So those were the driving factors. Did he also mention to me in pass the corruption related to the DNC server?  Absolutely.  No question about that.  But that’s it.  And that’s why we held up the money.”

The evening news played, over and over, the last paragraph, without what came beforehand. “Gotcha!” they all screamed.

Nor did they play the exchange just afterward, in which a reporter asked: “So the demand for an investigation into the Democrats was part of the reason that he ordered to withhold funding to Ukraine?” Mulvaney answered clearly: “No. The DNC—the DNC server…. I was involved with the process by which the money was held up temporarily, okay? Three issues for that: the corruption of the country; whether or not other countries were participating in the support of the Ukraine; and whether or not they were cooperating in an ongoing investigation with our Department of Justice.  That’s completely legitimate.”

This, of course is not about the pathetic role of Joe Biden, but the role of the previous neo-Nazi regime in Ukraine’s participation with British intelligence to interfere in the 2016 election to destroy Donald Trump, not to help him.

STRATEGIC WAR DANGER

Retired Officers Criticize Trump over Syria, Need To Read John Quincy Adams on Statecraft

Oct. 19 (EIRNS)—A gaggle of retired military officers have come up blasting Trump’s Syria policy as a betrayal of both the Syrian Kurds and the U.S. military. For the most part, these are people who built their flag officer careers in the post-9/11 regime change wars and who clothe the war crimes committed by Trump’s two predecessors in the language of freedom, courage and democracy. The gaggle includes former Secretary of Defense Gen. James Mattis; former U.S. commander in Afghanistan Gen. John Allen; former commander of both U.S. Central Command and U.S. Special Operations Command Gen. Joseph Votel; and former Army Vice Chief of Staff Gen. Jack Keane.

Leading the pack, however, is Adm. William McRaven, another former commander of U.S. Special Operations Command. McRaven, in an Oct. 17 op-ed in the New York Times went to the extreme of insisting on the replacement of President Donald Trump for failing to understand “the virtues that have sustained this nation for the past 243 years.”

Further, McRaven threatened Trump’s ouster, saying, “And if this President doesn’t understand their importance, if this President doesn’t demonstrate the leadership that America needs, both domestically and abroad, then it is time for a new person in the Oval Office—Republican, Democrat or independent—the sooner, the better. The fate of our Republic depends on it.”

McRaven and the other retired flag officers, as well as those still serving who think like them, need a lesson in statecraft from then-Secretary of State John Quincy Adams, who on July 4, 1821, the 45th anniversary of the signing of the American Declaration of Independence, delivered an historic address on American foreign policy in which he, among other things, contrasted the American republic with the bloody empires of Europe. “Wherever the standard of freedom and independence has been or shall be unfurled, there will [America’s] heart, her benedictions and her prayers be. But she goes not abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own. She will recommend the general cause, by the countenance of her voice, and the benignant sympathy of her example.

“She well knows that by once enlisting under other banners than her own, were they even the banners of foreign independence, she would involve herself, beyond the power of extrication, in all the wars of interest and intrigue, of individual avarice, envy, and ambition, which assume the colors and usurp the standard of freedom. The fundamental maxims of her policy would insensibly change from liberty to force. The frontlet upon her brows would no longer beam with the ineffable splendor of freedom and independence; but in its stead would soon be substituted an imperial diadem, flashing in false and tarnished lustre the murky radiance of dominion and power. She might become the dictatress of the world: she would be no longer the ruler of her own spirit.”

SCIENCE AND INFRASTRUCTURE

Russian Government Responds to Industrialists, Opts Out of Climate Protocol

Oct. 18 (EIRNS)—The Russian government has drastically watered down its new package of climate change legislation after push-back from the country’s leading businesses, Kommersant business daily reported yesterday, according to Moscow Times.

Plans for quotas on carbon emissions at Russia’s largest companies, a new national carbon trading system and penalties for the biggest so-called “polluters” have now been scrapped. Instead, Russia will only go ahead with proposals to measure and collect data on emissions as part of a five-year green audit.

The campaign against a stricter package of measures was led by the influential Russian Union of Industrialists and Entrepreneurs (RSPP), one of the main lobbying groups for Russia’s largest businesses. The new laws were set to be introduced as part of Russia’s ratification of the Paris Climate Agreement. RSPP has successfully killed off the entire second phase, including plans to set individual company quotas or targets, arguing that the government should await the results of the climate audit before introducing new laws and regulations to hold firms accountable for their emissions.

Economic Crisis Caused by No Productivity, the Solution Is High-Technology Public Works

Oct. 20 (EIRNS)—A report on the United States economy published on Oct. 11 by S&P Global emphasizes that the American economy has essentially become a no-productivity-growth zone in the 21st century, and particularly under the zero-interest rate regime since the 2008 financial crash. The same could be said in spades for the European economies foundering in near-constant recession since 2011, though this report is dealing with the U.S. economy only.

This is the fundamental problem, attacking which can save the economy from another, worse, financial crisis now in its opening stages—provided, that Wall Street banks are also put through Glass-Steagall reorganization to save the commercial banking system for economic lending.

During the last decade, even simple non-farm productivity in the American economy—output divided by hours worked—has been well below 1%/year, whereas the report shows it grew at 2.5%/year from 1956-75—and in fact, more rapidly than that from 1935-50. These were periods of great public works projects involving breakthroughs in technology, culminating in the Apollo Program Moon mission of 1962-72.

Now new infrastructure investment, which was 2.5% of GDP in the mid-1960s, is 1.3% of GDP. And the Moody’s report notes that while the total investment went up to 1.6% of GDP right after the 2008 crash, productivity did not grow. The reason is not guessed at; but obviously, the extra $90-100 billion investments in the Obama “Stimulus Act” of 2009 were in “green” infrastructure only.

A senior Asian banking official emphasized to EIR that unless governments—especially the U.S. government—launch large-scale high-technology public works programs, and government takes on the “risk” of creating demand for productivity growth in this way, nothing will work. Without creating such new demand, the major economies are going to sink, he said. Quantitative easing and similar actions will solve nothing; shifting to green financing and green infrastructure is “really crazy, without any meaning.” The U.S. industrial “upswing” is over, having been based on large foreign investments in real estate after the 2018 tax cuts. U.S. manufacturing is now going down.

The most urgent task, the official concluded, is to move the Congress to launch such large-scale works of public infrastructure.

Bridenstine Filed Lengthy Report on Artemis I-III to House Sub-Committee Hearing

Oct. 19 (EIRNS)—James Bridenstine, NASA Administrator, prepared a thorough report on NASA’s progress and plans for success in its Moon-Mars program, for an Oct. 16 hearing by the House Appropriations Sub-Committee on Commerce, Justice, Science and Related Agencies, despite knowing—it is public knowledge—that its Chairman José Serrano (D-NY) and others were on record as wanting to thwart Bridenstine’s intent, which is to obtain “the President’s amended FY 2020 budget request for NASA and progress on the Artemis mission.”

Bridenstine’s advance document is a 10-page, single-spaced paper, reviewing the Moon-Mars program in detail, as the sub-sections are titled: the Space Launch System, the Orion Spacecraft, Exploration Ground Systems, Human Landing System, Gateway, Artemis I, Artemis II, and Artemis III.

The Conclusion states in part, “NASA is going forward to the Moon and Mars. With our U.S. industry and international partners, we are returning humanity to our nearest neighbor and building a sustainable, open architecture that will prepare us to establish a long-term human presence on the Moon before embarking on human missions toMars. We are moving fast; we are incentivizing speed to land humans on the Moon within five years. We are using new acquisition strategies to engage the best of U.S. industry to meet our ambitious goals.”

The advance testimony is posted on the Sub-Committee’s website.

‘European Climate Declaration: There Is No Climate Emergency’ Signed by 700 Scientists

Oct. 18 (EIRNS)—Professor Guus Berkhout, co-founder of the Dutch Climate Intelligence Foundation (Clintel) and initiator and coordinator of the “European Climate Declaration: There Is No Climate Emergency,” opened the Oct. 18-19 Natural Variability and Tolerance conference in Oslo today, officially releasing the Declaration, which now has 700 signers of leading international scientists. Berkhout planned to announce that “the network of experts continues as a global knowledge organization with the mission to tell the complete climate story and to propose climate policies that respect scientific and economic realities,” according to a press release announcing the event, and posted to his Clintel website.

The release says in part: “There is no climate emergency, say 700 experts. A new, high-level global network of 700 prominent climate scientists and professionals has submitted a declaration that there is no climate emergency. The group has sent the Declaration with a registered letter to António Guterres, Secretary-General of the United Nations. This action has received overwhelming response from all over the world.”

The 24-page “European Climate Declaration: There Is No Climate Emergency,” is available on the Clintel website.

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