FRIDAY, MARCH 6, 2020

Volume 7, Number 47

EIR Daily Alert Service

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

• Angst on Wall Street, Another Bank Failure in India, as ‘Floating-Rate’ Monetary System Sinks
• Putin and Erdogan Agree for a New Ceasefire in Idlib
• Talk of Syria No-Fly Zone Underscores Urgency for Trump and Putin to Hold Summit
• Italy Will Lose 2.1% GDP in 2020, in Analysis of Economist Geraci
• IMF Announces Funds to Combat COVID-19 Epidemic, Low Global Economy
• Restored ExIm Bank Can Be Step Toward National Credit Facility
• The State of Play Following Super Tuesday: A Briefing From Barbara Boyd to ‘Fireside Chat’
• 13-Year-Old Wins Contest To Aptly Name Mars 2020 Rover ‘Perseverance’
• Virginia Clean Economy Act 2020 Blows an Ill Wind To Foul the Sea

EDITORIAL

Angst on Wall Street, Another Bank Failure in India, as ‘Floating- Rate’ Monetary System Sinks

March 5 (EIRNS)—Now is the time for the leading spacefaring, technologically powerful nations—particularly the United States, China, Russia and India—to create a new international system of credit for scientific and industrial development. The Bretton Woods system launched by Franklin Roosevelt’s Administration in 1944 was such a system, and gave many nations rapid growth and rising living standards until the City of London banks succeeded in destroying it in the early 1970s. The “floating exchange rate” system they put in power on Wall Street is finally, after decades of financial crashes, destroying itself.

Fifty years of currency floats, casino speculation, deindustrialization and globalization have crippled the “developed” nations of the United States and Europe and their allies. They don’t have the hospitals to meet a serious global epidemic of a novel coronavirus. They don’t offer help to stop unusually large swarms of locusts devouring food in Africa, West Asia and South America, let alone think of exporting modern capital goods to those countries in the way that FDR thought of exporting the revolutionary Tennessee Valley Authority to the world.

Now “fears arising from the coronavirus epidemic” are allegedly triggering 1,000-point plunges on Wall Street, a headlong global rush into U.S. Treasury securities driving their interest rates down toward zero, and yet at the same time an aggravated shortage of liquidity (to speculate with!) on U.S. interbank lending markets. And, today, for the third time recently, a significant Indian lending institution has failed and had to be nationalized, the $50 billion Yes Bank Limited in Mumbai.

It is not “virus fears” shaking the City of London’s rotten “floating-rate” monetary system after 50 years. It is tens of trillions of unpayable, speculative, securitized debt in an “everything bubble” of corporate speculation and households’ underpaid overextension. There are hundreds of trillions of derivative bets trembling on top of it.

And underneath that, worn-out real economies in a worldwide manufacturing recession, now rapidly being worsened by the impacts of the COVID-19 epidemic and its quarantines. There are now beginning large losses by airlines (200,000 flights have been cancelled so far worldwide); in hospitality and retail businesses of every kind; in auto production and sales (China auto sales were down 80% year on year in February); in dropping aircraft orders. Oil producers are trying to cut world oil production by 1.5 million barrels/day. A leading Italian economist estimates his country is losing 2.1% of its GDP. The IMF is lowering its world economic estimates virtually every other month.

In her Feb. 27 statement released by the Schiller Institute, its President Helga Zepp-LaRouche called for a summit of the leading economic and technological powers to implement Lyndon LaRouche’s “Four Laws,” including to put the “floating-rate” monetary system out of its misery (see EIR Daily Alert, Feb. 28).  President Donald Trump now has to take a leading role, with at least China, Russia and India, in replacing it with an improved New Bretton Woods system. They must first restore Glass-Steagall bank separation—allow the immense bubbles of speculative, unpayable debt to be rapidly written off without destroying lending banks which are the channel of credit. They will accelerate great space exploration missions by cooperation, and use space science and nuclear science and technology to raise human productivity and combat disease. They will replace unpayable debt with new joint credits for great projects of infrastructure in developing countries and at home.

That new Bretton Woods credit system has been waiting since Lyndon LaRouche first outlined it more than 35 years ago.

STRATEGIC WAR DANGER

Putin and Erdogan Agree for a New Ceasefire in Idlib

March 5 (EIRNS)—The Moscow summit meeting of Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan ended with an agreement for a new ceasefire in Syria, taking effect for Turkish and Syrian forces at midnight tonight. According to Sputnik International, Erdogan said Turkey will send additional forces to Idlib province under the new agreement, but the status of Turkey’s “Operation Spring Shield” will be “changed.” He said that the Turkish army reserves the right to respond to any hostile actions of the Syrian forces, but assured that otherwise Turkish troops will simply monitor compliance with the ceasefire regime.

Putin, for his part, characterized the talks as “difficult” but said they nonetheless yielded a positive outcome. “Our close personal ties help to resolve various issues of bilateral cooperation and develop common approaches to regulation of key international issues,” he said. The talks lasted for six hours, the first three-and-a-half between Putin and Erdogan, followed by a two-and-a-half-hour session that also involved foreign and defense ministers, as well as other officials of both sides.

Putin set the tone for the talks at Erdogan’s arrival with a diplomatic but firm rebuke of Turkey’s military operation in Syria’s Idlib province. “The situation in the Idlib zone in Syria has deteriorated so much that we need to have a direct and personal discussion,” he said, according to the Kremlin transcript. “First of all, I would like to express our sincere condolences over the death of your military personnel in Syria. Loss of life is always a big tragedy. Regrettably, as I have told you by telephone, nobody, including the Syrian military, was aware of your troops’ location. At the same time, there were casualties among Syrian servicemen as well. The Syrian army reported major losses.”

“Therefore,” Putin concluded, “we need to discuss everything and analyze the current developments so that, first, this does not happen again and, second, that this does not damage Russian-Turkish relations, which I know that you value as well.”

Erdogan apparently replied with uncharacteristic humility. Instead of stressing Turkish claims in Idlib, he emphasized not letting the Idlib situation damage Russian-Turkish relations. “I know that the entire world is watching us today, and I think that the action and decisions we take today will definitely have a mitigating effect,” he said. “This is a time when the relations between our countries have indeed reached a peak. Of course, this concerns the defense industry, trade, and other areas; they continue developing. We … say that we need to make progress in this area. In fact, this is our biggest task, to move forward and develop our relations. I believe we will succeed.”

Talk of Syria No-Fly Zone Underscores Urgency for Trump and Putin To Hold Summit

March 5 (EIRNS)—Talk of deploying U.S. Patriot air defense batteries to the Turkish border with Syria’s Idlib province and of imposing a no-fly zone over Idlib, as Turkey had proposed a week ago, underscores the necessity of a summit of U.S. President Donald Trump and Russian President Vladimir Putin, with others. News reports of the past several days have placed James Jeffrey, the State Department’s special envoy for Syria engagement, at the center of efforts to deploy Patriots to Turkey to enforce an Idlib no-fly zone. A Feb. 28 article in Politico reported that the Pentagon is opposed to such a deployment because of the global implications of possibly getting into a shooting match with Russian warplanes in Syria.

Sen. Lindsey Graham (R-SC), frequently described in the press as a friend of President Trump’s, nonetheless called for this hyper-dangerous action on Feb. 27.

The call for a no-fly zone was also raised in Zagreb at the press conference following an informal meeting today of the European Union defense ministers, chaired by EU Commission Vice President and High Representative for Foreign Affairs and Security Josep Borrell, and joined by NATO Secretary General Jens Stoltenberg. Responding to a reporter’s question, Borrell said there was no official EU policy, because it has not yet been discussed among the 27 member states. But, he continued, “I can say that for me, as High Representative it is for sure a good initiative. Some member states have been proposing it. I agree that it should be supported by the European Union member states.”

All of these are, in effect, demands for a shooting war between the U.S. and Russia in Syria, a shooting war that would inevitably devolve into a global war with the risk that it would go nuclear. To avoid such a war, a summit between Trump and Putin is needed.

COLLAPSING WESTERN FINANCIAL SYSTEM

Italy Will Lose 2.1% GDP in 2020, in Analysis of Economist Geraci

March 5 (EIRNS)—Former Italian government official, economist Michele Geraci released his assessment on March 2 on his website, of the impact of the slowdown of the Chinese economy and of the coronavirus epidemic in Italy, combining direct and third-country effects, reaching the conclusion that, in 2020, Italian GDP will lose €37 billion, or 2.1%. On one side, there are the effects of the global value-chain into which Italy is locked; on the other side, Italy has lost credibility because of the government’s inadequate response to the crisis.

As for Italian exports to China, the official data of €13 billion are an underestimation, because they do not consider exports through third countries and intermediate (semi-finished) goods exported to countries such as Germany, which are used to produce final goods to export to China. If all these are taken into account, the overall export at risk is €26 billion. As Chinese imports are projected to fall by 20%, it means €5.2 billion for Italy.

Additionally, the economic loss due to the failure of supplies of intermediate goods from China will cost €4 billion. And the loss of exports to other EU countries and the U.S.A. due to the fall in their domestic demand because of a reduced demand from China, will be €5 billion. Last but not least, the impact on tourism, fashion, and “image damage” produced by the coronavirus epidemics could reach €11 billion for tourism and €7 billion for the fashion sector.

Despite the seriousness of the crisis, Geraci says the economy could recover if several measures are adopted, including “the creation of a task force of experts in international relations to hold relations with China in a more appropriate way than we have seen so far.” Furthermore, an extraordinary commissioner for foreign trade—currently, six months after the birth of the Conte-2 government, the foreign trade portfolio has not yet been assigned!

“We must exploit the crisis to implement a serious development plan, from R&D to infrastructure and transport, but it must be drafted in a few weeks, otherwise we will miss the train. Countries such as China do it in a few months, and they will rise stronger than before.”

IMF Announces Funds To Combat COVID-19 Epidemic, Low Global Economy

March 5 (EIRNS)—IMF Managing Director Kristalina Georgieva, in an interview with CNBC today, announced that the Fund is making $50 billion in aid (loans) available to developing countries for public health protection against the coronavirus. Some $10 billion of it, Georgieva said, along with $12 billion from the World Bank, is supposed to be concessionary and interest free, and for nations with the least-developed economies.

“The $40 billion is for countries that are middle income, and they can approach us and receive the funding immediately,” she said.

Georgieva said the IMF will focus on “Whatare the financial needs, and engaging with these countries to make sure that they are aware of this resource, and we can immediately respond to them…. We will attack very quickly as requests come. What the countries would use the money for: We would like very much to see them prioritizing, first and foremost, urgently beefing up their health service capacity…. And secondly, to use it for fiscal measures that are well targeted to households, businesses that are most directly impacted by the crisis.”

Georgieva’s long statement about “benign scenarios” and “adverse scenarios” for the world economy at this point, allowed the possibility for a long, relatively deep economic decline and a slow recovery, internationally. She said the IMF is reassessing (for a second time already) its 2020 global growth forecast. That China’s economic activity is now up to 60% of normal, she considered good news; and better, that People’s Bank of China Governor Yi Gang estimates that it will reach 90% of last year’s levels by the end of March. But China’s GDP growth will be lowered for the entire year.

The only action the IMF is recommending to developed countries is to establish new credit lines for their small and medium-sized enterprises, Georgieva said. This is now a common position among Atlanticist financial officials and economists: It holds that the global debt burden of $250 trillion-plus, 340% of world GDP, is far too high to allow for any large infrastructure-building “stimulus” by leading governments. Hung Tran, the former executive managing director of the Institute of International Finance (big bank lobby), took the same position in a March 2 commentary on the website of Atlantic Council, where he is non-resident senior fellow.

Lastly, Georgieva claimed, “The financial system is holding. We are not seeing major risk.” EIR is seeing it.

THE NEW GLOBAL ECONOMIC ORDER

Restored ExIm Bank Can Be Step Toward National Credit Facility

March 5 (EIRNS)—The seven-year reauthorization of the Export-Import Bank which was part of the budget authorization President Donald Trump signed Dec. 20, is playing a role in U.S. space cooperation with developing countries. In the past the ExIm Bank, founded by President Franklin Roosevelt’s executive order of 1934, has provided the credit for major multinational infrastructure projects such as the Pan-American Highway and, after its lending capacity expansion in 1946, for aiding Marshall Plan reconstruction. It could be used again in that role. The seven-year authorization is the longest one the Bank has ever had.

In its past, the ExIm Bank’s activity has demonstrated the major role of foreign infrastructure “great projects” and joint third-country projects as the use of U.S. federal credit to develop other national economies and foster its own capital exports at the same time. In its present condition, it will need to be greatly expanded to do that again.

The bank’s capital goods export credit outstanding has gone as high as $35 billion, in 2012, but at that point more than 80% of its loans and insurance were funding Boeing aircraft orders, and it had a loan to the ill-fated Solyndra solar power company. That, in part, led to its de-chartering, and lack of board members, from 2015 until December 2019. Now rechartered, there are currently few Boeing orders for it to consider; its first large credit was $5 billion to Indonesia for an LNG project. It could quickly get back up to $40 billion in loans from projects in its pipeline.

Moreimportant, at this capacity level, than the project loans to foreign country importers, are the ExIm Bank’s working capital loans, made or guaranteed, to U.S. manufacturers of export products. According to American Banker magazine in March, it will either participate in regional banks’ long-term manufacturing loans, or guarantee working capital lines of credit.

Space satellite exports could become an important credit target, according to a Space News report on its reauthorization. The satellite industry—Aerospace Industries Association—strongly pushed for ExIm reauthorization in order to export large and complex U.S.-made satellites to countries such as Indonesia and Singapore.

U.S. POLITICAL AND ECONOMIC

The State of Play Following Super Tuesday: A Briefing from Barbara Boyd to ‘Fireside Chat’

March 5 (EIRNS)—The following is taken from remarks by Barbara Boyd on the LaRouche PAC “Fireside Chat” online dialogue this evening.  The full discussion, “COVID-19 and the World’s Economy: Now Is the Time for LaRouche,” included Boyd, Dennis Small, and moderator Dennis Speed, and is posted to the LaRouche PAC website.

What we just saw on Super Tuesday, the Biden miracle so-called, requires a certain degree of madness to decipher. In other words, you have to put yourself in the shoes of those who have not fled the hair-on-fire insanity of the Democratic Party and explore their thinking. Yes, there was a huge mobilization of the apparatus Bloomberg had built in the Southern states, coupled with a mobilization of the extant Clinton and Obama and Bush machinery there, to suddenly get behind Biden; and yes, the media provided the Biden miracle narrative as cover; but that was only part of the picture.

The overriding dynamic is the hatred and fear against this President, created from the coup, exacerbated at this point by the uncertainty surrounding the coronavirus. Think about how crazy they are—Chuck Schumer going to the steps of the Supreme Court and directly threatening two justices. Some think, in a delusion, that they can somehow hide Joe Biden’s dementia and get him a vice president who will reassure the public, while continuing to inflame broad sectors of the public with the notion that anything, anyone is better than Trump. Should Biden win, it will be a fascist government of national unity, in which dopey Joe plays only a minimalist ceremonial role. More likely, the continued fragmentation of the party—because the delegate counts right now are very close between the Biden establishment and the Sanders forces—will result in a brokered convention in which a new candidate emerges or, prior to that, a new candidate may actually enter the race.

What comes through most clearly, however, in the coverage and the narrative formation in the United States over the past week, is one very clear conception:  And that’s that this President has been trapped by the necessity of holding together Republicans in his coalition for purposes of winning re-election, and that is a constraint upon him taking the very bold steps which will be necessary to solve this crisis, as Dennis Small just outlined to you.

This is where we come in to the picture. So far, what we have done against the coup, we have successfully educated large sections of the Trump base, independents, and people on what is nominally called the left, about the nature of the national security state, and how it arose. Again, through our direct experience of that national security state in the LaRouche case; and theTrump case, the actions against the President, are simply a magnification of scale, as to what happened in the LaRouche case.

The difference right now is that there are mass strike occurring worldwide, within populations worldwide, against the system which has existed in its present form, since the fall of the Berlin Wall in 1989. What we’re finding is that most of the people we have educated, in all of these constituencies, are absolutely ignorant about the actual Lyndon LaRouche and his economic discoveries and programs, and absolutely ignorant about the economic and scientific solutions which can get us out of this mess, solutions which are readily available, and just sitting there in front of their very eyes, if they would avail themselves. They continue to react and revolt, but lack the ability to articulate the solutions. The fake narrative being sold in the American election, particularly in the last month, is that this election is a contest between something called “socialism” and something called “capitalism.” And that fake narrative is just as bad, or worse, than the claim that the Russians hacked the DNC.

There are unique characteristics, as Dennis referenced in the beginning of this call, to the American System of political economy: It’s the real invention, improving upon the best of European philosophical parts, those provided by Gottfried Leibniz. It is completely different from British neo-liberalism, which is the actual content of Bernie Sanders’ democratic socialism, as he keeps saying, or the predatory rentier-finance capitalism of Adam Smith, David Ricardo, Ayn Rand, and Milton Friedman, and most Republican Senators. And this population whom we have worked with so hard, need be educated, very, very fast, about the concrete features of the American System and the methods of thinking employed by Lyndon LaRouche. One of our leading organizers in the Midwest region, Susan Kokinda, recently pointed out to me that most people we talk to have no idea that they are living in a perverse economic system deliberately created roughly on Aug. 15, 1971, with the destruction of the Bretton Woods system, a monetary system brought into being by Franklin Roosevelt; and which allowed for what most people refer to as “Make America Great,” that period in America and the world when there was a stable international financial system which allowed for credit to be created and used for long-term development. People don’t know this who are in revolt, who are in this mass strike; they just know that somehow, they got screwed. But LaRouche understood, immediately, when the Bretton Woods system was taken down in August 1971, what the consequences of that destruction would be:  He understood that if you deliberately devolve populations, you will get mass pandemics, you will situations in which the ability of the human race itself to survive, is called into question.

Now, what Dennis referenced, is I’m writing right now a series for EIR, to make this much more urgently concrete for people. Michael Bloomberg’s New York City is my laboratory for demonstrating to people what happened post-9/11 to the United States: in education, healthcare, city building and housing, the environment, and culture. Once you look at these areas—not as the single issues, which is the way they are paraded to people, “it’s a healthcare issue, it’s an economic issue, it’s an education issue”—if you look at what’s happened in each of these areas of the economy as a whole, under this oligarch who ran New York City for three terms, you begin to be able to map the actual apparatus that brought this horrible condition into being and to peg the people responsible.

Now, Mike Bloomberg is the protégé of a character named Felix Rohatyn. He, in turn, was afigure in the international grouping called the Synarchy, which actually brought about fascism in Europe, during the period prior to World War II. Rohatyn was a financier at Lazard Frères, and became the sort of proconsul of New York City, during its financial crisis in 1974-75. What happened is that Lyndon LaRouche’s movement, which was then largely centered in New York, went to war against those policies, before the financial crisis, and in its aftermath. We were first-hand observers, and documented who was doing it, and their policies.

To cite but one example in the continuity of this, under Bloomberg’s administration: 20 hospitals were closed in New York City.  Dennis Small was talking about the capacity of our hospitals deal with this crisis; but under these policies we’ve been closing hospitals right and left in the United States, over this period, taking down the capacity that had been built up through World War II.

The closing of these hospitals in New York City were partly the result, as the hospital closures in the country recently have been, of Obamacare, and Barack Obama and Ezekiel Emanuel’s huge cuts in Medicare and Medicaid reimbursement rates. These reimbursements are the lifeblood of how hospitals continue to function, if they are able to serve the poor. Obamacare cut those reimbursements by billions. The hospital shutdowns was also the result of two commissions chaired by Stephen Berger; he chaired commissions under Governors Pataki and Cuomo, which recommended the dismantling of these 20 hospitals. Who is Stephen Berger? It turns out that he was the former executive of the Emergency Financial Control Board, run by Felix Rohatyn, and a veteran of Nelson Rockefeller’s Commission on Critical Choices, which LaRouche confronted in New York City back then.  That was the first commission to figure out how to take down the living standards of an entire city under conditions of financial austerity which they intended to implement as a result of the destruction of the Bretton Woods system.  Berger has been the activists in two key periods in taking down New York City: The first, immediately after Aug. 15, 1971, and the second, post-9/11.

The same group of people are involved in takedown of the city’s education, where Bloomberg took over the schools and instituted the drill-and-grill testing regimes of George Bush’s “No Child Left Behind” and Obama’s version of the same program, but called, “Race to the Top.” Under that program an entire generation were denied any form of real education.  I was shocked when I went back and looked at this: Instead of having any type of full curriculum emphasizing developing character and intellect, and creativity, as Lyndon LaRouche would have it, instead the children were put into a system preoccupied with only math and science and there only to pass tests to prove proficiency in those two areas; an intense program which ended with school administrator cheating their way to proficiency, amidst major scandals, and stripping an entire generation of education.

Like most things involved here, the origins of this program were in Britain, and Bloomberg actually brought in Tony Blair’s education czar, Sir Michael Barber, as an advisor.

Right now, we not only have the constituencies which we know are in motion and fully understand a great deal about the nature of the coup, but there are also revolts already ongoing, which are going to be exacerbated, in the healthcare sector and in the education sector against these policies, which have left the population temporarily unable to take the rational steps, which Dennis referenced, to be able to survive.  You’re going to find teachers, doctors and nurses, patients, parents and students, who have been subjected to these genocidal policies. But now, all of these things are coming together as an issue of fundamental survival in terms of the country. By inserting LaRouche’s policies for actual economic growth and science into these revolts, which are just beneath the surface, I think we’re in a good position to meet the criteria for change and to turn the tide in this battle.

SCIENCE AND INFRASTRUCTURE

13-Year-Old Wins Contest To Aptly Name Mars 2020 Rover ‘Perseverance’

March 5 (EIRNS)—Alex Mather, a 13-year-old seventh grade student at Lake Braddock Secondary School in Virginia, submitted the essay motivating his choice of Perseverance as the name for NASA’s next rover to Mars, that made him the winner of the nationwide contest to name the rover.

In comments today in front of a packed, cheering school auditorium, Mather said that the previous Mars rovers—Curiosity, InSight, Spirit, and Opportunity—“are qualities we possess as humans. But, if rovers are to be the qualities of us as a race, we missed the most important thing. Perseverance.”

“We are a species of explorers,” Mather wrote in his essay, “and we will meet many obstacles on the way to Mars. However, we can persevere. We, not as a nation, but as humans.”

Virginia Clean Economy Act 2020 Blows an Ill Wind To Foul the Sea

March 5 (EIRNS)—In an op-ed, “Virginia’s Clean Economy Act Will Have Dirty Results,” for Heartland Institute’s website on March 4, Paul Driessen laid bare the insanity of the bill that is going to replace reliable, affordable electricity with expensive, unreliable, wasteful “renewables.” The bill, ostensibly to fix a climate crisis based on fraudulent, imaginary or faulty computer models, was passed Feb. 14.

Driessen wrote: “Virginia’s ‘carbon-free’ bill would shut down some 6,200 megawatts of coal-based electricity and ban construction of new gas-fired units. To replace them, Virginia energy companies are to install 5,200 MW of offshore wind turbines—apparently GE 12 MW Haliade-X turbines…. That would require 433 of these behemoths, each one rising 850 feet above the waves some 27 miles off the Norfolk-Virginia Beach coastline, in 50-70 feet of water. (For comparison, the Washington Monument is ‘only’ 555 feet tall.) Constant saltwater and frequent storms will corrode the turbines, causing them to perform worse every year. Actually getting 5,200 MW of electricity would require that the 433 turbines operate at 100% of rated capacity 24/7/365….

“Climate activists and Big Wind developers expect up to 30,000 MW of offshore wind along the East Coast by 2030. At 100% capacity, that’s 2,500 gargantuan Heliade-X turbines! The impacts on radar, aviation, submarines, surface ships and fishing would be enormous. Turbine blades would kill countless birds. Vibration and infrasound noise would impair whale and dolphin sonar navigation systems for miles….

Driessen continues: “The Clean Economy Act also proposes replacing another 16,100 MW of fossil fuel power by using photovoltaic solar panels. Arizona conditions don’t exist in Virginia. Clouds, nighttime, and sub-optimal sunshine …  make it likely that these millions of panels will actually generate little more than 3,200 MW unpredictably and unreliably. To get the full, legislated 16,100 MW of electricity, Virginia would have to cover up to 18 times the land area of Washington, D.C. with panels. That’s 700,000 acres.”

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