WEDNESDAY, MARCH 11, 2020

Volume 7, Number 50

EIR Daily Alert Service

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

• No More Cover-Up–To Fight the Virus, Change the System
• Nothing Works Without Glass-Steagall
• Mnuchin Talks Resilience as Markets Implode
• Eurogroup Considers Bank Bailout, Not Saving Lives From Pandemic, Is Its’ Priority
• Russian Ambassador and U.S. Treasury Secretary Meet To Assess Future Russia–U.S. Relations
• Massive Chinese Help to Italy Shows ‘Friendship Is Paying Off’
• Italy Extends COVID-19 Limitations Nationally, But Experts Insist Total Lockdown Is Needed
• COVID-19 International Spread: Ten U.S. States Declare Emergency, Virus Recedes in China
• CDC’s Redfield Details Urgency of Rebuilding Entire U.S. Public Health System
• U.S. Begins Troop Drawdown From Afghanistan
• Erdogan in Brussels To Discuss Migration Treaty With EU Leadership
• Pentagon Awards Contracts for Design Phase of Micro Nuclear Reactors
• China Space Program Continues Its Progress in Spite of COVID-19

EDITORIAL

No More Cover-Up—To Fight the Virus, Change the System

March 10 (EIRNS)—Consider the speed at which the view of COVID-19 has changed in the trans-Atlantic sector, from being the subject for all kinds of opinionating, scapegoating—for the failed financial system or blaming China—to now being undeniably a challenge as a global pandemic. Never mind that World Health Organization Director Dr. Tedros Adhanom Ghebreyesus said again March 9, that it is “near pandemic.” The novel coronavirus has shown up in some 100 countries, including all the nations of Europe. All of Italy is now under a “stay home decree” (nationwide partial lockdown) until April 3, in an attempt to slow the contagion among its 60 million people.

In the United States, COVID-19 is in 35 states as of today, with official emergency declarations in ten of them, and more pending. There are four hot-spot states of community transmission: New York, Washington, California, Florida; and Massachusetts may soon join that list. This afternoon, New York Gov. Andrew Cuomo deployed the National Guard to cordon off a square mile of the town of New Rochelle, a suburb of New York City, for all except food deliveries. From March 6-10, the number of COVID-19 cases in the tri-state area of New Jersey, New York, and Connecticut, tripled. In Washington, D.C. today, for the first time, the Federal government ordered a unit of workers, in the Securities and Exchange Commission, to stay home, because of a COVID-19 case found in their ranks.

In Africa, the spread of the virus comes atop such mass underlying conditions as, for example, Lassa fever in Nigeria.

All this poses the question: What is the remedy? What must be done? Only a global solution will function at this time, Helga Zepp-LaRouche stated today, centered on Lyndon LaRouche’s Four Laws. This is the centerpiece of the international call issued by Zepp-LaRouche, President of the Schiller Institute, “Urgent Appeal to President Trump, President XI, President Putin, Prime Minister Modi and Leaders of Other Countries for the Emergency Implementation of the Four Laws of Lyndon LaRouche,” (updated March 8) circulating as a petition. A short programmatic statement addressing specific measures to be adopted on the COVID-19 crisis is now under preparation as well, which will be released as an addendum to her call.

Today, Zepp-LaRouche stressed that what is required is a shift to a new paradigm in the world economic system. Speaking with associates, she said that what must come first in the economic system is “not money and profits, but the condition of people comes first”—the health delivery sector, food security and all the rest, which means each nation must have a sovereign economy. We need maximum outreach to get this across to people: that the whole failing monetary system is the problem. It must be replaced.

Acting in this direction is the high road for President Donald Trump. Otherwise, he is seen alongside such as Treasury Secretary Steven Mnuchin, who recited wild cover-up talk at the White House yesterday extolling the “resilience” of the U.S. economy thanks to “tax cuts, regulatory relief, and trade.” Then, within hours, the overnight demand for emergency liquidity by financial entities, from the Federal Reserve, hit a whopping $216 billion.

Instead of this downward spiral to catastrophe, President Trump can use his executive initiative. Call his good friend President Xi Jinping and arrange to get some Chinese experts here to confer on the COVID-19 response. Initiate other great power deliberation, to confer on a new world credit system, and real security.

Lyndon LaRouche forewarned of today’s crises decades ago, spellingout the policies to be implemented to avert what we now see. This stands as an “impeccable record,” Zepp-LaRouche said today, which is the authority to now go outward and enlist the actions to change the system, defeat the virus, and end the cover-up.

COLLAPSING WESTERN FINANCIAL SYSTEM

Nothing Works without Glass-Steagall

March 10 (EIRNS)—The extraordinary Tuesday morning demand upon the Federal Reserve for $216 billion in emergency liquidity loans, coming from primary dealer banks and more so from hedge funds and other shadow banks, showed that masses of bets in the bond markets and in interest rate derivatives have gone wrong and reverse leverage is now taking charge in the financial system.

A Washington Post column this morning by the experienced economic journalist Steven Pearlstein demonstrates that the “no alternative but to bail out Wall Street again” line has already resurfaced. Pearlstein starts out angrily blaming the central banks themselves for the huge masses of debt which are now turning up unpayable and choking the system. That is correct. He says they should not be feeding still more toxic debt into the system—don’t buy stocks or similar securities from the banks. In fact, the Federal Reserve should, he says, be selling from its vast mass of Treasuries to withdraw liquidity.

Only one catch in Pearlstein’s detailed prescription. First, just this once again, he says, the Fed will have to bail out Wall Street: “And you can bet that in the coming days, the Fed will follow up by making even more credit available to financial market participants—lowering short-term interest rates, widening the circle of institutions that are able to borrow from its ‘discount’ window, and accepting as collateral those loans stocks and bonds and other securities that nobody is willing to buy.” Then, he says, it must completely reverse policy over the long term.

This is the exact justification offered, along with threats of street riots and martial law, by the Treasury and Fed to Congress in the October 2008 crash to demand the bailout of Wall Street—which they were already carrying out in other ways. It leaves out the only action which would, at this point, prevent a disorderly meltdown: That is restoring the Glass-Steagall Act and making its rules effective within a very short period. The Wall Street banks are, even now, lending from their deposit base and using their capital reserves to save their speculative investment units, their captive or client hedge funds, etc. which are demanding the masses of additional liquidity from the New York Federal Reserve. The holding companies are thereby spreading the contagion into their commercial bank divisions, and exposing them to the corporate debt and derivatives collapse.

There is no action which prevents this, except Glass-Steagall.

Mnuchin Talks Resilience as Markets Implode

March 10 (EIRNS)—At the March 9 daily White House COVID-19 briefing, Black Monday for the stock markets, Secretary of Treasury Steven Mnuchin was asked to respond to a question regarding the possibility of a recession given the spread of the novel coronavirus and the collapse of the stock market in the last few days.

Blaming the market chaos on the drastic fall in oil prices, Mnuchin said, “We couldn’t be more pleased that coming into the situation with the coronavirus, the U.S. has the most resilient economy in the world.” He also assured his audience that the President has at his disposal all the tools he needs to deal with the crisis. The tools he mentions are tax cuts, regulatory relief and trade, “which have put the economy in a very good position,” he says.

Mnuchin admitted that, obviously people will get hurt from the crisis, namely the workers. For those, he promised a program to help those who were laid off or quarantined and money would be made available for small businesses. “This is not like the financial crisis where we don’t know the end in sight,” Mnuchin insists. “This is about providing proper tools and liquidity to get through the next few months.” Just a slight glitch in an otherwise perfect system.

Eurogroup Considers Bank Bailout, Not Saving Lives from Pandemic, Is Its Priority

March 10 (EIRNS)—The agenda of the informal, but powerful group of 19 Eurozone finance ministers, known as the Eurogroup, proves that in the midst of the largest pandemic of modern times this supranational body cares more about saving the rotten financial system, and not human lives. Such is the agenda for the March 16 Eurogroup meeting, listing the topics in order of priority:

1. “ESM Treaty—Political endorsement of the package”

2. “Early introduction of the common backstop—Political endorsement of the Draft Amending Agreement to the IGA and next steps”

3. “COVID 19—Economic policy challenges”

4. “Miscellaneous”

The ESM is the European Stability Mechanism, that should become a bank bailout scheme with a backstop function if the bail-in is not sufficient (which is always the case). “Early introduction” means that the backstop function should be operational earlier than planned, so that it can be activated in the expected financial collapse. Once EU member countries undersign the Treaty, European citizens have a rope around their neck. Putting the urgent issue of resources to face the coronavirus pandemic as third means that decisions to release emergency money to countries (e.g., Italy) will be conditioned on approval of the first two items.

Russian Ambassador and U.S. Treasury Secretary Meet To Assess Future Russia-U.S. Relations

March 10 (EIRNS)—Russian Ambassador to the United States Anatoly Antonov and U.S. Treasury Secretary Steven Mnuchin met on March 9: “The discussion focussed on the current state and prospects for further development of the Russian-U.S. ties, the implementation of the agreements reached by Presidents Vladimir Putin and Donald Trump at their summit in Helsinki in 2018 and a meeting in Osaka in 2019,” according to the Russian embassy statement, quoted by TASS. “The Russian side reiterated its commitment to joint efforts towards stabilization of bilateral relations and expressed interest in maintaining regular direct dialogue between the embassy and the U.S. administration.”

The U.S. Treasury Department statement said: “They discussed compliance with sanctions programs, Venezuelan economic conditions, and the potential for trade and investment. Secretary Mnuchin emphasized the importance of orderly energy markets.”

Also on Monday, President Donald Trump spoke with Saudi Crown Prince Mohammed bin Salman. Given the low oil prices, the U.S. is considering delaying a planned sale of crude oil from the Strategic Petroleum Reserve.

THE NEW GLOBAL ECONOMIC ORDER

Massive Chinese Help to Italy Shows ‘Friendship Is Paying Off’

March 10 (EIRNS)—The Chinese government will donate 100,000 high-protection masks, 20,000 protective suits, and 50,000 test kits to the Italian government. Furthermore, Italy is going to purchase 100 ventilators for intensive care treatment from China. Such devices were produced for the emergency in China, but have not been used because the emergency came to an end there. Italian Foreign Minister Luigi Di Maio and Chinese Foreign Minister Wang Yi finalized the deal in a telephone call today.  Di Maio told the press today, “Friendship and mutual solidarity are paying off.”  At the beginning of the year, Italy had sent protective masks to China in the P.R.C.’s moment of need.

Italy Extends COVID-19 Limitations Nationally, but Experts Insist Total Lockdown Is Needed

March 10 (EIRNS)—On the evening of Monday, March 9, the Italian government extended to the entire national territory the restrictive measures which had been introduced less than 48 hours before for Northern Italian regions. The measures, which will last until April 3, have been described as a “lockdown,” but a “half-lockdown” would be a more proper definition.

The purpose of the new decree, which is named “stay home decree,” is to slow down and reduce contagion which has hit northern Italy, but which is slowly expanding to central and southern Italian regions. The rate of daily new positive cases in Lombardy, the northern epicenter of the crisis is 25%. The Lombardy region has increased capacities for intensive care treatment beyond the 50% demanded by the government, but the upgrading is slower than the spread of contagion. Authorities warn that the situation is going to be unsustainable and demand even more drastic containment measures.

The current “stay home” decree is only a partial answer to that demand. It allows people to go to work and for commercial business to go on. It allows shops and supermarkets to stay open. Furthermore, a “self-declaration” is sufficient to be allowed to go through checkpoints at train stations or motorway booths. The result is that, while part of the population are following guidelines (the central stations in Milan and Rome today were significantly empty), another part are ignoring them altogether. Thus, over the March 7-8 weekend, ski resorts saw the most massive inflow of people in many years.

The presidents of the Lombardy, Piedmont and Friuli-Venezia Giulia regions are demanding a “Red Zone” regime nationally. They report that the business community agrees with a more radical regime, which includes shutting down shops, public transportation, and production sites even if it means an economic loss to them, because they are aware of the seriousness of the situation.

Those demands were conveyed by opposition leaders to the government this morning, but Lega leader Matteo Salvini reported that the government has rejected them.

Former government official Michele Geraci, who is also a well-known China expert, has given many media interviews in the past days in the effort to conveying the need to adopt such measures. In his interview with Adnkronos yesterday, Geraci chastised the arrogance of Western leaders who refuse to accept that China is doing better than they are. “When Xi Jinping puts 60 million people in quarantine and restricts transport and travel for the remaining 1.3 billion people, there was a reason,” Geraci said. The Italian government “tends to chase after the problem instead of anticipatingit, like when, as kids, we all played soccer by running after the ball. And when you act in this way, credibility and competence are challenged by the population.

“We have a certain arrogance or delusion of knowing things among us, which increases when you speak about China because of widespread ignorance. Then it is psychologically difficult to accept that they are doing better, and therefore, to emulate them. Thus, precious time is lost.”

Geraci recalls that he had repeatedly insisted for the government to look at how China was using artificial intelligence and Big Data to track all citizens and have a real-time estimate of contagion probabilities. Rome did “Nothing. We use self-certification, which is insane, whereas by using technology it takes one second and nobody can cheat.”

U.S. POLITICAL AND ECONOMIC

COVID-19 International Spread: Ten U.S. States Declare Emergency, Virus Recedes in China

March 10 (EIRNS)—Officially confirmed cases of COVID-19 are now reported in nearly 100 countries. All nations of Europe have cases.

In the United States, COVID-19 is present now in 35 states. The top four hotspot areas for community transmission are New York, Washington, California and Florida. Massachusetts may be next in line. Ten states have made emergency declarations: New York, Washington, California, Florida, Oregon, Utah, Missouri, Kentucky, New Jersey, and the latest, Massachusetts, whose Gov. Charlie Baker made the designation today. In New York Gov. Andrew Cuomo deployed the National Guard today to a health department facility in New Rochelle, a suburb of New York City, where 108 cases have been reported.

In China, with the number of new cases in decline, the amazing temporary logistics can now be scaled back. Today, the last of the 14 temporary hospitals in Wuhan was closed. President Xi Jinping personally visited various sites in the city this morning. The view of Zhou Jing, cardiologist at Tongji Hospital, is that this outbreak of the epidemic in China will have abated within a month, according to his remarks on CGTN today. His institution is part of the Huazhong University of Science and Technology.

CDC’s Redfield Details Urgency of Rebuilding Entire U.S. Public Health System

March 10 (EIRNS)—Centers for Disease Control and Prevention (CDC) Director Dr. Robert Redfield told the House Appropriations Committee today that the entire U.S. public health system, encompassing not just the CDC but the healthcare capabilities of states and localities, needs to be rebuilt, to overcome the effects of years of underinvestment, if not just the novel coronavirus, but the others diseases that follow are to be fought.

The hearing discussed the budget drawn up by monetarist bean counters within the administration, which proposes to cut the CDC budget, on the grounds that the recent Congressional supplemental covers the current emergency. There was bipartisan agreement from the committee that Congress will not cut the CDC budget.

Dr. Redfield’s arguments made clear the urgency of full funding towards the future. He emphasized that when it comes to public health, “we have to be overprepared to respond to these outbreaks. Not try to catch up. Time matters in infectious disease … if you are a week late, as some of you have criticized about the testing or whatever, it matters.”

That requires building up core capabilities of modern laboratories, real-time data capabilities, a larger public health workforce, rapid response capabilities, and a global network, Dr. Redfield insisted. We need “redundancy” in our laboratories and workforce, so that we have the surge capacity we currently lack. Not just in some states, but in every community and all states, because if any state us unprepared, we are all unprepared.

Because of underinvestment, there is “not enough equipment, not enough people, not enough internal capacity,” he bluntly told the committee. The CDC, which allocates 70% of its budget to state, local and tribal health departments, provides the funding for the backbone of public health across the nation. He pointed out that Seattle, Washington “is probably one of the best, if not the best, public health [department] in the nation, and they’re struggling right now. That’s not what we need. We need to be prepared.” The report from an Illinois congresswoman that in a rural county she represents, there is 1 doctor for every 7,000 people. What happens if even one of those doctors is exposed?

Redfield reported that CDC laboratory equipment needs to be modernized so the CDC can run tests through the high-throughput platforms used by such companies as Labcore and Quest, which can produce thousands of results a day; today, public labs can only process around 300 a day!

One of greatest vulnerabilities in this nation is infectious disease control, he also warned. He referenced the 600 health professionals in California now in self-isolation after exposure, and his shock that King County, Washington’s fire department is almost dysfunctional, because so many firefighters are in isolation. He emphasized, that in his view, the number-one vulnerability in the U.S. right now are the nursing homes, including assisted living homes.

Dr. Redfield stressed several times, as well, that the CDC should be taking the point in creating a global health monitoring network of 8-12 regional monitoring centers, so that the world can move quickly, as a whole, against emerging diseases.

STRATEGIC WAR DANGER

U.S. Begins Troop Drawdown from Afghanistan

March 10 (EIRNS)—U.S. Forces Afghanistan (USFOR-A) announced in a statement issued yesterday that it “has begun its conditions-based reduction of forces to 8,600 over 135 days,” as called for in the U.S.-Taliban peace agreement signed on February 29. At the same time, it’s maintaining “all the military means and authorities to accomplish our objectives—including conducting counterterrorism operations against al-Qaeda and ISIS-K and providing support to the Afghan National Defense and Security Forces.”

AP reported yesterday that the troops that are leaving were already scheduled to leave as part of planned rotations, but the difference now is that they won’t be replaced as they would have been without the peace agreement.

In a followup report this morning, AP says that the troop movements have begun but against the background of a political feud in Kabul between Afghan President Ashraf Ghani and his chief political rival Abdullah Abdullah. Ghani has also been slow about the release of 5,000 Taliban prisoners as called for in the agreement though he promised to announce a decree to free the prisoners, after the U.S. and a number of foreign dignitaries appeared to back his claim to the Presidency by sending their representatives to his inauguration as President. (Abdullah also staged an inauguration for himself as President as well.)

Erdogan in Brussels To Discuss Migration Treaty with EU Leadership

March 10 (EIRNS)—Turkish President Recep Tayyip Erdogan was in Brussels March 9 where he met European Council President Charles Michel and European Commission President Ursula von der Leyen to discuss the implementation and possible revision of the migration treaty signed in 2016. Michel said teams headed by the EU foreign policy chief Josep Borrell and Turkey’s foreign minister Mevlut Cavusoglu would work “in the next days to clarify the implementation of the deal between Turkey and the EU to be certain that we are on the same page,” reported AP. Von der Leyen said that during the talks with Erdogan “there was a clear focus on, ‘Let’s discuss what is fact. Let’s sort out how both sides see the past and how we evaluate the EU-Turkey statement.’ ”

Erdogan left the meetings without speaking to media, as officials from his office described the talks as “productive.” Asked whether Erdogan promised to restart Turkey’s efforts to prevent migrants from leaving the country, Michel said, “What’s in the statement, and what’s in the camp of Turkey has to be fulfilled.”

Turkey has stopped dispatching refugee boats from the Turkish coast, while the situation on the Greek-Turkish border appears to have calmed down.

Erdogan also met for an hour with NATO Secretary-General Jens Stoltenberg, urging fellow NATO members to show their alliance with Turkey “at this critical time.” Stoltenberg made very pleasant comments, such as “no other NATO ally suffered more from terror attacks than Turkey” and called Turkey an “important” ally, and criticized Russia and Syria, he said not much else new, except to offer hope that the ceasefire in Idlib, Syria, will grow into a standing peace. One presumes Erdogan briefed Stoltenberg on his March 5 agreements with Russian President Vladimir Putin in Moscow.

After his return from Brussels, Erdogan announced that he will host a summit in Istanbul on March 17 with German Chancellor Angela Merkel and French President Emmanuel Macron to discuss migrant crises. British Prime Minister Boris Johnson might also attend the summit, Erdogan said. However, he said, Turkey is not considering closing its gates to Europe for now.

Meanwhile Russia-1 TV released a rather humiliating video showing Erdogan and his entire delegation being kept waiting in the antechamber of Russian President Vladimir Putin’s office for two minutes (displaying a stopwatch measuring the time). In the video, widely posted on international and social media, the Turkish delegation, including the foreign, defense and finance ministers, Erdogan’s official spokesman, and a dozen other high officials, are waiting and looking very disconcerted.

The leader of the opposition IYI (Good) Party Meral Aksener, while arguing for a permanent ceasefire, said that the deal reveals that neither Russia nor Syria withdrew as much as a meter. She then mentioned the video, saying, “We Turks have lost many wars in our history, but we have not left our dignity at any door. We lost our 600-year-old state, but we did not lose our dignity. You went. You assented to wait at the doors, and you thanked for being accepted….”

SCIENCE AND INFRASTRUCTURE

Pentagon Awards Contracts for Design Phase of Micro Nuclear Reactors

March 10 (EIRNS)—The Pentagon sent out a press release yesterday reporting that the Defense Department had awarded contracts to three companies—BWX Technologies, Inc. of Lynchburg, Virginia, Westinghouse Government Services of Washington, D.C. and X-energy, LLC of Greenbelt, Maryland—to “begin design work on a mobile nuclear reactor prototype under a Strategic Capabilities Office (SCO) initiative called Project Pele.”

“Project Pele involves the development of a safe, mobile and advanced nuclear microreactor to support a variety of Department of Defense missions, such as generating power for remote operating bases,” the release says. “After a two-year design-maturation period, one of the three companies may be selected to build and demonstrate a prototype.” According to the release, SCO, in partnership with the Department of Energy Office of Nuclear Energy, has reviewed modern design concepts and cutting-edge technology which it believes enable American industry to meet the challenges required.

“The Pele Program’s uniqueness lies in the reactor’s mobility and safety,” said Dr. Jeff Waksman, Project Pele program manager. “We will leverage our industry partners to develop a system that can be safely and rapidly moved by road, rail, sea or air and for quick set up and shut down, with a design which is inherently safe.”

Aside from the military utility of such small reactors in the 1-5 megawatt range, the release notes that “In civilian applications, they could be easily relocated to support disaster response work and provide temporary or long-term support to critical infrastructure like hospitals, as well as remote civilian locations where delivery of electricity and power is difficult.”

China Space Program Continues Its Progress in Spite of COVID-19

March 10 (EIRNS)—In spite of the devastation of the novel coronavirus in China, the Chinese program space seems to have kept its steady march forward. Yesterday China launched the next-to-last satellite comprising the BeiDou guidance system. When in full operation with its 35 satellites, the BeiDou-3 system will be a global guidance system, as effective as the U.S. GPS system, perhaps more so, with a positioning accuracy of 10 meters, timing accuracy within 50 nanoseconds, and velocity accuracy within 0.2 meters per second. The last of the satellites is supposed to be launched in May. The BeiDou-3 system played a helpful role in the fight against the novel coronavirus outbreak in China, reported China Satellite Navigation Office (CSNO).

Work has also been continuing on the Chinese Mars rover, scheduled to be launched at the end of 2020. This week scientists announced that they have completed testing on the wireless communications system they will be using to communicate with the Mars rover.

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