EDITORIAL
Success or Failure, the Cause of This Summit Is What Is Important to the Future
June 11 (EIRNS)—It is becoming more and more clear—to the great pain of all denizens of the old, “liberal” Atlanticist order—that President Donald Trump is fully breaking from a Europe dominated by British geopolitics, to engage the United States with Asia.
Asia is being catalyzed by China’s Belt and Road Initiative to the forefront of the future—space and science breakthroughs, great projects of modern infrastructure, elimination of poverty. President Trump, who for two years has fought British intelligence’s campaign to get him out of office, is now rejecting every London-spawned scheme to line him up in confrontation with China and Russia, and is looking to great-power cooperation with Asia. This has brought him to the extremely difficult attempt to end Korea’s 70 years’ war.
Russian President Putin is not the only one to publicly notice that the failed Quebec G7 meeting was not broken up simply by a fight over tariffs. Trump at the very same time was reaching out for summits both to Prime Minister Shinzo Abe of Japan and to Prime Minister Giuseppe Conte of Italy’s euroskeptic new government. Both emphasize cooperation with Russia and China, and a focus on creating credit institutions to build new infrastructure throughout Eurasia. As does Trump for the United States.
Compared to the G7’s empty arrogance, the simultaneous summit this weekend of the Shanghai Cooperation Organization in Qingdao, China, representing 3.1 billion people, was more vital.
And that is not to mention the very crucial Korea summit for which Trump was leaving—and in which the “big European powers” showed no interest at all.
By contrast, even as the President was in the air, Prime Minister Abe, China’s President Xi Jinping, and Russian Foreign Minister Sergey Lavrov were all weighing in with offers to participate with the United States and South Korea, in consolidating denuclearization and peace through development on the Korean Peninsula. This is “the impossible” that Trump is trying to achieve.
Helga Zepp-LaRouche’s Schiller Institute was at the same time holding a major New York City conference with other leading figures pushing for a long-prevented summit of President Trump with President Putin, aiming at peace and development in Southwest Asia. The Institute will follow that with a broader conference in Germany later this month, on engaging Europe—at least all of it that is willing to trade stagnation for success—in the Belt and Road Initiative of China and in the development of Southwest Asia and Africa.
Mrs. LaRouche said today that the involvement of China (and now of Japan) in following through the Trump-Kim summit, is extremely hopeful for the New Paradigm of economic and cultural progress which the Schiller Institute is working for. If successful, she said, this Trump-Kim summit process will be a game-changer; if it fails, we will have to deal with that reality.
And she pointed to the warnings now coming from many expert sides, that the danger of a new financial crash, at least as bad as that of 2007-08, is looming over the trans-Atlantic and developing countries. That is the real threat to the prospect for great-power cooperation and rapid economic progress, which President Trump clearly sees when he turns toward Asia.
Lyndon LaRouche’s “Four Laws” proposal, beginning with Glass-Steagall breakup of the Wall Street and London banks, was drafted in 2014 to avoid that collapse and bring on new breakthroughs in productivity and productive employment.
THE NEW GLOBAL ECONOMIC ORDER
EIR’s William Jones Reports ‘The Steady Demise of the Group of Seven’ for CGTN
June 11 (EIRNS)—China Global Television Network (CGTN) published an op-ed under the above headline by EIR’s William Jones on June 7. Jones, in addition to being the weekly publication’s Washington Bureau chief, and is a Non-resident Senior Fellow of Chongyang Institute for Financial Studies, Renmin University of China. His column for CGTN’s “Opinions” is abridged here:
“Consisting of the major European nations, Canada, the U.S. and Japan, these countries represented the real powerhouse of the world economy in the 1980s when the G7 really took on its final shape. So the decisions they made became the rule of the world economy. And those decisions were not always beneficial for most of the world’s population. Indeed, many of them were downright disastrous.
“The rapid expansion of the world financial system in contrast to the stagnating physical economy, was creating a financial ‘bubble.’
“But, entranced by the faulty logic of ‘bankers’ arithmetic,’ the G7 saw as their chief goal that of maintaining the stability of that bubble, and steady payment on the interest and principal of the outstanding—and growing—debt.
“The failure of the G7 to resolve the 2008 financial blowout has given the lie to the ‘acumen’ of these seven countries in keeping the economy on an even keel. With the trillions of dollars that were spent to bail out those ‘too big to fail’ investment banks, the ‘bubble’ has simply gotten bigger….
“But the G7 no longer has the same weight it once had. The growing weight of the Asia-Pacific region, and particularly, China, has significantly reduced the clout of the G7 nations in world markets, and in world affairs….
“While the world is still operating largely in the old ‘geometry’ based on economic and political conditions prevalent during the 1980s, the underlying dynamics have radically changed. The activity of the G20 now attracts more attention than the Seven, and carries more weight.
“And other formations like the Shanghai Cooperation Organization and the BRICS are now playing a more prominent role in the economic and political development of the world.
“While the new geometry of a world financial system better reflects the changes in the underlying relations of the world economy … it has not yet taken its final form. The fate of mankind is no longer solely dependent on the often arbitrary, and self-interested, decisions of a small group of countries who felt themselves imbued with the power to rule the world.”
Abe Considers Integrating North Korea’s Economy Will Greatly Benefit World
June 11 (EIRNS)—Addressing the Tokyo dinner gathering of regional leaders attending the 24th “Future of Asia” Conference organized by Nikkei Inc., Japanese Prime Minister Shinzo Abe looked forward to the opening up of North Korea’s economy, which will greatly benefit the Asia-Pacific, reported Singapore’s Straits Times. Abe’s statement, made one day before the June 12 summit between U.S. President Donald Trump and North Korean Chairman Kim Jong-un in Singapore, was described by the Straits Times as “a marked departure from the hawkish ‘maximum pressure’ rhetoric championed by Japan.”
The daily quoted Abe as saying, “There can be no doubt that the effects of North Korea taking steps down the path towards peace, the rule of law, and stability will transcend Asia and extend to the global economy as a whole.”
At that gathering, Abe, who had just returned from the G7 summit in Quebec, also said Japan will set up a new $50 billion framework to help finance state-of-the-art infrastructure projects in the East Asia region. “We hope this will be of some help to building high-quality infrastructure in the Indo-Pacific region,” Abe said. Under the framework, the state-backed Japan Bank for International Cooperation will make investments and provide loans using public and private-sector funds over the next three years, according to the Straits Timescoverage.
Mahathir Promises Malaysia Will Remain Friends with China
June 11 (EIRNS)—Making Japan, the nation he has long-standing ties with, his first overseas visit since again becoming Prime Minister of Malaysia, Dr. Mahathir Mohamad told Japanese media at Tokyo’s National Press Club today: “Ever since the first visit to China by Malaysia’s second prime minister (Tun Abdul Razak), we have conducted good relations with China. It is a big and powerful country and our policy is to remain friendly with China.” His comments were reported by New Straits Times. Dr. Mahathir is currently on a three-day visit to Japan over June 10-12.
The media asked about his views on China’s One Belt, One Road initiative. Dr. Mahathir, who was also attending the “Future of Asia” conference in Tokyo, replied: “We will be friendly to China but we don’t want to be indebted to China. We are a small country. Whether we object or not, China will go ahead with its plans. What we have to do is make the best use of China’s policy. We will try to make sure that it is not exclusive, that other people can use the same route.”
Egypt and Ethiopia Leaders Meet in Cairo for Productive Talks on Nile Dam Project
June 11 (EIRNS)—The new Ethiopian Prime Minister Abiy Ahmed is on a two-day visit to Egypt which began on June 9, at which he came to very productive agreements with Egyptian President Abdel Fattah el-Sisi who warmly received him in Cairo. On the top of the list of issues was Ethiopia’s $4 billion Grand Renaissance Dam, the largest hydroelectric project in Africa, now being built on the Blue Nile tributary of the river, which has been of concern to the Egyptians.
“We have come a long way in building confidence and strengthening bilateral cooperation,” el-Sisi said at the press conference with Ahmed.
For his part Ahmed said, “We will take care of the Nile and we will preserve your share and we will work to increase this quota and President Sisi and I will work on this.”
They agreed to take steps to conclude an agreement which will also include Sudan. They also want to reach an agreement to set up a fund for investing in infrastructure in the three countries.
Towards the end of their news conference, Sisi asked Ahmed to swear to God before the Egyptian people that he will not hurt Egypt’s share of the Nile. “I swear to God, we will never harm you,” said Ahmed, repeated the words in Arabic after el-Sisi. The Egyptian President also pardoned and released 32 jailed Ethiopians who had been sentenced for crossing the border illegally.
U.S. POLITICAL AND ECONOMIC
James Jatras: America’s Enemies Are Pressed by Trump’s Gains
June 11 (EIRNS)—Former State Department official James George Jatras, who presented the importance of a Trump-Putin summit at the Manhattan conference of the Schiller Institute June 9, authored an article titled, “When, Where, and How Will the Empire Strike Back?” originally posted June 9 on the Online Journal of the Strategic Culture Foundation.
Jatras begins with a list of positive global turns.
- “President Trump has again indicated his interest in finally holding a summit with President Putin. Austria has offered Vienna as a venue.”
- The Trump-Kim summit is on, despite numerous efforts to torpedo it. “Might a Trans-Korean Railway connecting the South to Russia and China get built?”
- “Allegations of Trump’s and his team’s collusion with the Kremlin are increasingly exposed as what they are: a cover for an anti-constitutional conspiracy within the structures of the U.S. Deep State (CIA, NSA FBI, Department of Justice, etc.) in complicity with … their British sister agencies (MI6, GCHQ)…. [T]the Russia obsession is beginning to turn into a political liability for the DNC in the November Congressional elections.”
- “European populism marches on: Viva l’Italia!”
- Trump has made an initial “America First!” move imposing steel and aluminum tariffs, “signalling that the days of U.S. attachment to one-way free trade … are over.”
- “American pressure on Europe with respect to trade with Iran, added to Trump’s new tariffs, feeds resentment across Europe…. It may be too soon to guess how soon the EU will pull the plug on the anti-Russian sanctions, but there’s something in the Air… Italy’s voice will be key.”
- Trump’s actions at the Canada G7 summit and skipping “the climate portion of the summit … may produce a statement from the six other countries but not the U.S., effectively creating a G6+1. Meanwhile, Trump has exploded … the conspiracy-mongers with his suggestion that Russia should be readmitted to the club, bringing it back to a G8.”
In sum, Jatras writes, “None of the foregoing itemized developments is dispositive. But taken together, they point to a remarkable confluence of good omens, at least from the point of view of those who wanted to shake up, even shatter the cozy arrangements that have guided the so-called ‘liberal global order.’ ”
He cautions, “If past is prologue, the Empire will strike back—hard and dirty…. The question is not ‘if’ there will be a provocation, rather, it’s one of when, where and how.”
Nunes Gives Justice Dept. June 12 Deadline for Documents on FBI Informant against Trump
June 11 (EIRNS)—House Intelligence Committee Chair Devin Nunes (R-CA) notified Deputy Attorney General Rod Rosenstein in a letter June 8 that he has until Tuesday, June 12 to provide access to documents concerning the FBI’s alleged informant looking into any Russian ties to Trump’s 2016 campaign.
Nunes specified in his letter to Rosenstein that records should be provided to all committee members “and designated staff” rather than just the so-called “Gang of Eight,” which refers to Republican and Democratic leaders in both Houses of Congress as well as top lawmakers from the Intelligence panels in the House and Senate.
“DOJ continues to obfuscate and delay its production using an array of tactics, such as incorrectly categorizing the requested documents as Gang-of-Eight-level material in order to limit access,” Nunes wrote, referring to an April 30 subpoena for the documents. “Such conduct by DOJ is unacceptable because the Gang-of-Eight is a legal fiction that has no basis outside of the confines of Presidential approval and reporting of covert actions.”
Nunes’ letter was in response to an offer by the DOJ and FBI to brief the “Gang of Eight,” in an effort “to blunt criticism from the House conservatives who have repeatedly pressed for documents and questioned the Department’s conduct in the Russia investigation,” Associated Press reported today.
Obama Is Vetting Democrats’ 2020 Potential Presidential Candidates
June 11 (EIRNS)—Determined never to have another U.S. President independent of the British Empire, former President Barack Obama has been tasked with vetting potential 2020 Democratic Presidential candidates, from his third-floor office space provided by the World Wildlife Fund in its building in Northwest Washington. In recent months Obama has met with at least nine prospective 2020 Democratic Presidential candidates for “one-on-one” sessions,” Politico reports in a major article by Edward-Isaac Dovere today, titled “Inside Obama’s Secret Meetings with 2020 Contenders.” Dovere reports that all the meetings were arranged quietly, “without even some close advisers to the people involved being told of the conversations.” All were multiply confirmed to Politico.
Obama has met with Bernie Sanders, Elizabeth Warren (twice), Joe Biden, and former Massachusetts Gov. Deval Patrick for one-on-one sessions. Sanders requested his March meeting with Obama. Dovere says that Sanders “has more respect for Obama and the work of his administration than is often portrayed.”
The meeting with Warren was Obama’s second since leaving office. The first was in Spring 2017 after Warren was “troubled” about the $400,000 Obama was getting to speak at a Wall Street investment firm. Their second meeting was in April 2018, and ran 90 minutes, discussing Richard Cordray, former head of the Consumer Financial Protection Board—now the Democratic nominee for Governor of Ohio.
Obama and his former Vice-President, Joe Biden, “remain personally close,” Dovere says, speak by phone, and met in person in January. Biden is considering running in 2020.
Former Massachusetts Gov. Deval Patrick is a personal friend of Obama’s, whom Obama and others are “eager” to see get into the 2020 race. Patrick is also on the Board of the Obama Foundation.
No surprise that Obama has been “holding forth about how much Democrats should be heading into the midterms talking about the investigation into Russian interference in the 2016 election,” and not “kitchen table” issues.
Los Angeles Mayor Eric Garcetti, one of Obama’s early supporters in 2008 had his visit when Obama attended a dinner for the American Constitution Center in Los Angeles in May. The potential 2020 Presidential candidates who have not met Obama yet include Sen. Kirsten Gillibrand (NY), Sen. Kamala Harris (CA) (whom he knows well), and former Virginia Gov. and former DNC Chair Terry McAuliffe. Sen. Cory Booker (NJ) visited in 2017.
Nancy Pelosi has scheduled Obama raise funds at a June 29 event for the Democratic Congressional Campaign Committee in the San Francisco Bay area. DNC Chair Tom Perez also checks in with Obama, as do Sens. Michael Bennet (CO), Chris Coons (DE), and Doug Jones (AL).
STRATEGIC WAR DANGER
U.A.E. Expected To Attack Yemen Port Hodeidah While Trump and Kim Meet
June 11 (EIRNS)—According to reports posted by the New York Timesand Wall Street Journal, the Saudi/U.A.E.-led assault on the Yemeni Red Sea port city of Hodeidah is expected to begin on June 12, at about the same time that U.S. President Donald Trump will be meeting with North Korea Chairman Kim Jong-un in Singapore. The suggestion is that the timing on the part of the U.A.E. is not accidental. Diplomats familiar with the situation told the Times that they believe that the Emiratis are looking to launch their planned assault while Washington’s attention is focused this week on the Singapore summit.
Everybody is now scrambling after the U.A.E. told the British government on June 8 that humanitarian aid workers in Hodeidah have three days to evacuate the city. Unnamed diplomats told the Times that the United Nations was withdrawing its staff from the city today, after member countries were told that an attack by the U.A.E. forces was imminent. UN Special Envoy for Yemen Martins Griffiths was in the U.A.E. capital Abu Dhabi over the weekend, after securing an agreement with the Houthis to allow the UN to operate the port jointly, the Journal also reported, though it is doubtful that the leadership of the U.A.E. will accept the offer.
U.S. Secretary of State Mike Pompeo today warned the U.A.E. to hold back their planned assault on Hodeidah. He reported he had spoken with the leaders of the U.A.E. and that he expected all parties to the conflict to work with Griffiths’ office, to include supporting a political process to resolve the conflict.
COLLAPSING WESTERN FINANCIAL SYSTEM
Looming Financial Crash Becoming Clear to Analysts
June 11 (EIRNS)—Even as they abjure and deny that it will really happen now, more financial analysts are seeing clearly that there will soon be a financial crash like that of 2007-08, triggered by masses of unpayable corporate debt.
A long Friday piece by Washington Post economic columnist Steven Pearlstein, “Beware the Mother of All Credit Bubbles” pointed to the oncoming collapse. “Now, 12 years later it’s happening again,” Pearlstein wrote. “This time, however, it’s not households using cheap debt to take cash out of their overvalued homes. Rather, it is giant corporations using cheap debt—and a one-time tax windfall—to take cash from their balance sheets and send it to shareholders…. And once again, they are diverting capital from productive long-term investment to further inflate a financial bubble—this one in corporate stocks and bonds—that, when it bursts, will send the economy into another recession.”
Pearlstein cites a very broad study by a European business school, that the firms surveyed spent more than 100% of their profits on buybacks 2010-15. U.S. publicly traded companies, as a whole, are reducing their equity by some $3 trillion, while their debt was record-high 73% of GDP in mid-2017; corporate junk debt was 11% of GDP ($2.2 trillion in mid-2017, over $2.5 trillion now). Corporate bond ETFs have $300 billion assets, 20 times the level at the time of the crash.
Worst, corporate loans are being securitized into collateralized loan obligations (CLOs) at the rate of $150 billion year in U.S. markets, doubling every year. Pearlstein cites the Moody’s “particularly large wave of defaults coming” report from May, which also observed the low level of liquidity in corporate debt markets; and the Treasury’s Office of Financial Research’s new report on “corporate debt flashing red.” He states that the debt taken by investment funds to buy securities is also at an all-time high.
“ ‘This is the mother of all credit bubbles’ ” he quotes an investor as saying, and Pearlstein concludes: “It’s hard to say what will cause this giant credit bubble to pop. A Turkish lira crisis. Oil prices topping $100. A default on a large BBB bond. A rush to the exits by panicked ETF investors…. Pretending it won’t happen is folly.”
The Wall Street Journal’s front page Monday included “Emerging Market Rout Feeds Contagion Fear.” With the Fed expected to raise rates again this week, the Journal wrote, “turbulence could spread from distant corners of the world to the U.S. and elsewhere, fueling a cycle of accelerating risk aversion.”
On another trigger—Deutsche Bank—Tageszeitung on June 4 ran a column quoting extensively from bank analyst Dieter Hein, who “advised” Deutsche Bank for several years after the 2008 crash. Hein says he’s not sure it can be saved from bankruptcy now—the investment bank has enormous, partially unknown risks on its books, and more big losses are to be expected. Hein says DB is not bankrupt yet, but it is a warning sign that many so analysts are now considering its possible bankruptcy.
OTHER
Former Swiss President Finds China a Constantly Reliable Partner
June 11 (EIRNS)—Addressing the annual gathering of the Switzerland-China Society on June 9, former Swiss President Doris Leuthard, now in parliament’s Federal Council, said that in spite of all remaining problems with the Chinese, China has always been a reliable partner, unlike many other countries in Europe. Neue Zürcher Zeitung reported Leuthard said that once China commits itself to something, “it can be counted on for keeping its commitments. The New Silk Road after all offers a chance to Europe which it should make use of in a constructive way, instead of remaining absorbed in its own internal problems,” she urged. China’s Ambassador to Switzerland Geng Wenbing also attended.
