TUESDAY, FEBRUARY 4, 2020

Volume 7, Number 24

EIR Daily Alert Service

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

• New International Credit System or Bust: Trump Should Initiate It
• Shanghai Institute Analyzes the Effect of Coronavirus Epidemic on China’s Economy
• German Industry Official Denounces Biased, Anti-China Media Coverage of Coronavirus
• NASA Will Present Five-Year Plan Feb. 10: Who’s Sabotaging Congress?
• Space Scientists Oppose House Bill That Eliminates Moon Colonization Program
• Coronavirus Must Not Be Allowed To Stop Belt and Road Development Projects
• NATO’s Stoltenberg Claims Defender-Europe Exercise Not Aimed at Russia
• Pelosi Runs a New ‘Infrastructure’ Ploy Against Trump

EDITORIAL

New International Credit System or Bust: Trump Should Initiate It

Feb. 3 (EIRNS)—The trade and production impacts of the novel coronavirus epidemic in China hit a global economy which is already in a manufacturing, industry and trade recession, and is threatened at any moment with a blowout of unpayable corporate debt and derivatives contracts bringing down banking systems. In the fourth quarter, 40 central banks cut interest rates 71 times and increased their bond-buying schemes, in a desperate campaign to support stock and bond markets. The Federal Reserve cannot escape “quantitative easing” and daily huge liquidity injections into the interbank lending markets. This morning, China’s central bank had to do the same, $170 billion worth. Any serious shock now can bring down the whole financial system very quickly.

Only the leaders of a few great powers today believe firmly in the roots of real, physical-economic growth—scientific and technological progress and resulting rising human productivity. The leaders of the United States, Russia, China and India show this by rejecting all Malthusian “green new deals,” by aggressively pursuing space exploration, advances in nuclear power, by Russian President Vladimir Putin’s call for an international fast-track program for breakthroughs in fusion power.

These four must act fast; President Donald Trump should call them to a summit to launch a new credit and money system, and do it urgently.

China’s necessary two-week (at least) shutdown of business and work in 24 provinces could be compared to a two-week or longer “strike” shutting down 70-80% of its economy. That is a shock. It means that now all four of those leading powers face declining manufacturing production and employment. This emphatically includes India; the U.S. manufacturing recovery stopped in mid-2019. These countries also have serious corporate debt bubbles; only China’s banks are partially protected by Glass-Steagall bank separation.

The severe problem of the coronavirus epidemic only brings front and center the absolute urgency of ending the international “floating exchange rate” monetary system’s 45-year imperium of financial speculation, and austerity against industries and households. That system was spawned by City of London finance when its banks succeeded in 1971-73 in killing off Franklin Roosevelt’s pro-industrial, pro-progress Bretton Woods system. Now it spawns “green new deals,” and Davos billionaires and British royals plan outright shutdowns of whole industries and farm sectors, threatening outright depopulation by disease and malnourishment.

Facing the necessity of U.S. of a four-power summit to reverse this crisis, most favorably initiated by the United States, it is interesting that a Jan. 30 RAND Corporation commentary on an August 2018 RAND Europe study published reversed RAND’s recent position on China’s Belt and Road Initiative (BRI) of great projects of rail, port and power infrastructure across Eurasia. Noting the developing countries need tens of trillions of dollars in new infrastructure investments, commentary by Hui Lu, who also headed the 2018 study, said: “[T]he proposed BRI investment not only increases trade in the BRI region but also in areas outside of the initiative, such as the EU. Overall, the total trade volumes increase by $329 billion for the BRI region and $133 billion for the EU. Improving infrastructure in the region would appear to then present a win-win scenario in terms of the impact on trade among many countries.

“China’s true motivations for the BRI may still be unclear, but the West could also consider the initiative’s potential to deliver sustained economic, social and environmental benefits for all, and find ways to support infrastructure improvements in the countries involved.” (See “Economic Gain Is Possible for All Involved If Infrastructure Is Improved in Countries Encompassed by the China BRI,” by Hui Lu, a commentary in the RAND Blog.)

This was the purpose of FDR’s original Bretton Woods system idea. The way to make it happen now, begins with an urgent meeting of leaders to head off a financial breakdown worse than 2008—by creating a new Bretton Woods.

ECONOMY

Shanghai Institute Analyzes the Effect of Coronavirus Epidemic on China’s Economy

Feb. 3 (EIRNS)—Despite flagrant panic-mongering by major national media in other countries, and dangerous blends of geopolitical schadenfreude and outright racism coming from those media, China continues to be a nation defending the world—so far, effectively—from the attack of the novel coronavirus (2019-nCoV) epidemic there. The World Health Organization has stated this. During Sunday, Feb. 2 WHO said there were no new cases confirmed outside China, despite 2,900 new cases within it. Some 99.3% of cases known are in China, and 63% of them in one province, Hubei, whose leading cities are under complete quarantine. Medical observation there involves 137,000 people. Within China, the number of new infections confirmed each day continues to increase, and the global total reached 17,206 as of Monday morning Beijing time; 361 had died, all but one in China.

An intensive study of the epidemic was published by the Shanghai Institute of International Studies (SIIS) Jan. 31, and also presented a sober picture of what China’s economy is experiencing. Writing on China-U.S. Focus website, SIIS President Chen Dongxiao reports: “[I]t is believed that at a critical moment for international political and economic dynamics and China’s economic transformation, the 2019-nCoV epidemic will have much negative impact on China’s economy (especially in the short run), as well as on world economy in many ways. However, in the mid- and long term, China’s economy will manifest strong surprising resilience; with the support of the international community, the Chinese government and people will ultimately conquer the epidemic and China’s economy will remain robust.”

It is reported separately that 24 provinces accounting for the vast majority of China’s GDP will shut businesses and work again this week.

SIIS’s Chen also states: “It is worth noting, however, that the potential impact of the 2019-nCoV epidemic can be different from all the previous epidemics and other incidents. For one thing, it occurs when China’s economy, in the midst of a transition from high-speed growth to high-quality development, faces three daunting tasks domestically, i.e., guarding against systemic financial risks, control of pollution, and poverty eradication; externally, with globalization under unprecedented challenges and China-U.S. trade frictions only starting to ease, China’s economy will be further hit if the country is labeled as an ‘epidemic area.’ ”

The study considers that the epidemic may affect implementation of the U.S.-China phase-one trade deal, but only in the short term. It also states that China must increase its imports of medical supplies and medical/diagnostic devices in that short term, and the United States may be able to supply them.

German Industry Official Denounces Biased, Anti-China Media Coverage of Coronavirus

Feb. 3 (EIRNS)—In a press statement, Michael Schumann, president of the Federal Association for Economic Development and Foreign Trade (BWA), said with a special focus on the mainstream media role, that it seemed that “the entire world has lost its marbles” to spread panic instead of providing support for China in its fight against the novel coronavirus. The German government, he said, should not only fly German nationals out of China, but also concretely help the Chinese in their struggle. German industry, and especially the Mittelstand—Germany’s vital high-technology small and medium-size industry—owe much to China, therefore the Mittelstand will be active in assisting the Chinese in this situation. There is no need for a panic, but rather for confidence that this virus can be fought like the influenza virus before, Schumann insisted.

Schumann singled out Germany’s Der Spiegel among German media, whose cover this week featured a man wearing a red hoody, protective mask, goggles and earphones, with a banner headline “Coronavirus Made in China.”

The website of the Chinese embassy in Berlin similarly denounced media panic-mongering: “Releasing such a picture does nothing to the outbreak, but only causes panic, mutual blaming and even radical discrimination. We despise such a move,” the embassy said, and stressing that global challenges need to be addressed, for which German media share the same responsibility as everyone else.

The embassy further affirmed that China is making every effort to control the novel coronavirus, and has taken firm measures to resolutely fight the epidemic, and that “China thanks the international community, including Germany, for its support and assistance in fighting the epidemic.”

SCIENCE AND INFRASTRUCTURE

NASA Will Present Five-Year Plan Feb. 10; Who’s Sabotaging Congress?

Feb. 3 (EIRNS)—NASA Administrator James Bridenstine will release the agency’s five-year (Fiscal Year 2020-24) plan and budget for Artemis, the “Moon-Mars mission,” on Feb. 10 and present it to Congressional committees shortly after. Supporters of the mission, the subject of a LaRouche Political Action Committee mass pamphlet in 2019, also look forward to what President Donald Trump may say about space exploration in his State of the Union message Feb. 4.

The House Science Committee’s NASA authorization bill H.R.5666, marked up last week, clearly does not support the mission as the President and Bridenstine have put it forth; it shuts down the crucial aspect of industrialization and development of the Moon, in favor of a supposedly direct human trip to Mars in 2033. An open letter released today by many “Concerned Scientists” in the space field, takes the House to task for this, as we detail in a separate report.

According to a Jan. 27 article by Eric Berger for “Ars Technica” website (“House Legislators Want To Hand NASA’s Human Spaceflight Program over to Boeing”), H.R.5666 should be called a Boeing bill. It reserves the next decade’s future of NASA space travel to Boeing and/or the United Launch Alliance (Boeing plus Lockheed) exclusively, for major cost-plus contracts, and requires that all the product thereof become NASA-owned. The immediate big cost-plus is an “Exploration Upper Stage-enhanced Space Launch System,” combining the Alliance’s Space Launch System (SLS) with an upper stage being built by Boeing, incompatible with the Artemis Gateway system planned by NASA.

Boeing is, in effect, lobbying successfully against NASA Administrator James Bridenstine with Congress. Berger writes, “There is only one company—Boeing—that has proposed building an integrated lunar lander, has the contract for the Exploration Upper Stage [not wanted by Bridenstine for Artemis], and is building core stages for the [SLS] rocket. Boeing has also tried to minimize use of the [lunar] Gateway. With the House bill, legislators seem to be trying to take NASA’s human exploration program and give it over to Boeing Company, going back to an era of cost-plus contracting.”

Boeing meanwhile has reported a 37% drop in revenue from 2018 to 2019, a yearly loss of about $650 million with a sharp rise in indebtedness to $27 billion; it will still be taking additional writeoffs of up to $4 billion for its aircraft business and more than $400 million for its Starliner program bidding to take astronauts to the International Space Station.

Space Scientists Oppose House Bill That Eliminates Moon Colonization Program

Feb. 3 (EIRNS)—On Jan. 31 an open letter by more than a dozen prominent space scientists was sent to the House Science, Space Technology Committee leadership, opposing the misguided H.R.5666 National Aeronautics and Space Administration Authorization Act of 2020 that virtually eliminates the lunar program, calling for a focus only on Mars.

The open letter from “Concerned Scientists” states that a Mars program without the lunar missions greatly increases the physical risk to Mars flight, and that the bill’s limiting the lunar program to “a small number of sortie missions … has been written with the false perspective that the Moon has no inherent value as a destination.” It continues, “the Moon is an enabling asset,” that will “expand the economic sphere of the United States and our international partners.”

While on the mark in terms of the stupidity of the bill, on various levels, there is a misunderstanding and misdirection in terms of what the authors propose. This is indicated by their statement that, “As was shown by the Apollo program, a wholly taxpayer-funded human spaceflight program is not sustainable.” In fact, the only aspect of Apollo that was not “sustainable” was that it did not win the political fight against the British-led forces determined to end the manned space program. The scientists propose that the lunar program be conducted, instead of by federal funding—and hence government policymaking—by the private sector.

Much of the hardware, including the stages of the massive Saturn V rocket, was built by private industry in the 1960s. But NASA paid for the vehicle, and the American people owned it. The $10-14 estimated “return on investment” for each dollar spent on the Apollo program, is a measure of the increase in productivity in the American economy from technology “spin-offs” from Apollo, spin-offs that we continue to enjoy. By and large, private companies with some “skin in the game, investing some of their own funds, through the public-private partnerships, are not obliged to share technological innovations.

Both physical economist Lyndon LaRouche and space visionary Krafft Ehricke put forward models for a national human exploration/colonization program for the Moon and Mars, in which the government would take responsibility for infrastructure. Then, smaller, innovative, younger space firms would have the platform from which breakthroughs could be made.

The full text of the Concerned Scientists’ letter is available on SpaceRef.

THE NEW GLOBAL ECONOMIC ORDER

Coronavirus Must Not Be Allowed To Stop Belt and Road Development Projects

Feb. 3 (EIRNS)—Global Times Wang Jiamei yesterday covered the pressure the novel coronavirus epidemic is placing on China’s overseas investment and engineering projects, but “efforts from both home and abroad are essential to strengthen cooperation and communication to pull through these difficult times.” He gives the example of Greece, where China’s COSCO Shipping has a 51% ownership in the port of Piraeus, which could become a major conveyor belt between China and continental Europe, via the Mediterranean. He cites the help offered by Greece-based “Belt and Road Associates Ltd.,” to aid Chinese companies having difficulty in Greece at this time.

Although such companies do specialize in facilitating business, and its offer is “kind and much appreciated,” Wang writes, “the undeniable fact that the coronavirus outbreak is certain to have a negative impact on China’s overseas projects in the short term. And China’s massive infrastructure investments under the Belt and Road Initiative (BRI) are expected to bear the brunt of that impact.”

Wang points out that a few projects on the Belt and Road’s centerpiece China-Pakistan Economic Corridor “have already been delayed due to the epidemic outbreak, even though there has beenno confirmed case in the country yet, according to a Pakistani newspaper. Considering that confirmed cases of the novel coronavirus were already reported in countries like Nepal, Sri Lanka and Cambodia, concerns over the virus are understandable among neighboring countries.”

Wang argues that despite this, it is still essential for companies that undertake BRI projects to bring them online, because they all involve huge investments, and delays mean more risks and even bigger financial losses. “While the epidemic may disrupt the projects in the short term, it does not in any way change the mutually beneficial nature of the BRI projects.  And at these difficult times, it is more necessary than ever for China and relevant countries to strengthen cooperation to overcome the obstacles.”  And he stressed, “In the meantime, Chinese companies need to prepare contingency plans as to how to strengthen communication with officials and businesses in countries along the BRI routes to solve any problem as quickly as possible.” If needed, the Chinese government should offer support to help Chinese businesses reassure their foreign partners so the projects can proceed with minimal impact.

STRATEGIC WAR DANGER

NATO’s Stoltenberg Claims Defender-Europe Exercise Not Aimed at Russia

Feb. 3 (EIRNS)—NATO Secretary General Jens Stoltenberg is reported to have claimed this morning that the giant Defender-Europe 2020 exercise, scheduled for this Spring and to be centered in Poland, is not aimed at Russia. The exercise “shows the strong U.S. commitment to NATO and to the freedom and security of Europe,” he said according to AFP. “Defender-Europe is not directed against any particular country. This defensive exercise demonstrates the ability to rapidly move a large force from the United States to Europe to help protect other NATO Allies, if needed.”

Stoltenberg underlined that NATO members Lithuania, Estonia, and Latvia celebrated their 30th anniversary of independence this year, referring to the three Baltic states’ split from the Soviet Union. “Russia has every right to feel safe within its borders, but so do our member states,” said Stoltenberg. A NATO official said there was nothing to be read into the fact that the exercise was taking place during the Moscow celebrations for the 75th anniversary of the Soviets’ victory over Nazi Germany on May 9. “The exercise will take place from February to June,” an official said. “This is the time when many military exercises are held each year.”

The Russians, meanwhile, are continuing work to meet the threat they see coming from NATO. Russian Deputy Defense Minister Aleksey Krivoruchko, writing in the January edition of the magazine Radio-Electronic Technologies issued by the KRET Group, reported that the new RS-28 Sarmat ICBM will go into service in 2021, reported TASS. The Sarmat has a range of 18,000 km and is said to be able to approach its target from different directions, complicating interception.

In terms of exercises, a Russian naval task force will be conducting a missile defense exercise in the Norwegian Sea. The Barents Observer, citing Norwegian sources, reports that the large missile cruiser Admiral Ustinov and the destroyer Vice-Admiral Kulakov will participate in the exercise and that the Russian Defense Ministry has issued NOTAMs (Notice to Airmen) warning civilian aviation operators of possible live-fire missile launches over Feb. 5-7. The two Russian ships recently passed the English Channel after exercises in the Bay of Biscay and earlier in the Mediterranean.

U.S. POLITICAL AND ECONOMIC

Pelosi Runs a New ‘Infrastructure’ Ploy against Trump

Feb. 3 (EIRNS)—House Speaker Nancy Pelosi, Ways and Means Chair Richard Neal (D-MA), and other House Democrats had a press conference Jan. 29 and put forward another “infrastructure” ploy—it must be called that, at least for now. Not a bill, their proposal has a “price tag,” $760 billion over five years, but not a word about funding; and it is a press statement, not a legislative draft or even a promise of one. “We’ll go to the floor when we’re ready,” said Pelosi.

The Democratic leadership’s move repeats—now in an election year—the ploy of demanding that President Donald Trump take the lead on determining how to fund infrastructure, while the Democrats say what infrastructure to build! For this purpose they make this “infrastructure framework” a light shade of green only, and make it essentially a new five-year SAFETEA-LU (“highway bill”) with somewhat less of highways and somewhat more of rail construction ($55 billion/5 years) than usual.

Predictably, the Republican members of the Transportation and Infrastructure Committee immediately issued their own “principles” which did not include any inclination to fund anything federally, only regulatory reform.

Thus, the Democrats’ intent is to get Trump to propose a substantial gas tax increase and fight for it against both Democratic and Republican Parties running for re-election, and while the Democrats respond by demanding reversal of the 2018 corporate tax cuts.

Held up to economic reality and the demands of the immediate future, this “proposal” is a farce—it suggests nothing for aeronautics and space, nothing for a fusion crash program, nothing for electrifying rail, nothing for development of small modular reactors or other advanced fission reactors, nothing for sea-gates and other major storm/flood protection, nothing for more water for the West.

The futility of Trump’s negotiating “infrastructure” with Congress, rather than with Presidents Vladimir Putin and Xi Jinping, and Prime Minister Narendra Modi, among other heads of state and government, is evident.

Reach us at eirdailyalert@larouchepub.com or call 1-571-293-0935