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E.I.R.STRATEGIC ALERT

WEEKLY NEWSLETTER

Volume 30, No. 15 - April 14, 2016

Federal Reserve President Favors

Breaking Up Wall Street Banks

Neel Kashkari knows from the inside how much the too big

to fail banks owe their survival to the taxpayer bailouts; he

is the one who ran the first federal bank bailout program in

2008 (TARP) as an assistant secretary of the Treasury. Recently

named President of the Federal Reserve of Minnesota, he has

been highly critical of the “financial reform” President Obama

pushed through in 2010, commonly known as the Dodd-Frank

Act, which Wall Street welcomed at the time.

In the context of the U.S. presidential campaign, Kashkari has

been speaking out about the danger of a new bank crash. In an

interview on April 6 on CNBC-TV, he repeated his assertion that

the Dodd-Frank Act had not done enough to prevent another

debacle and a huge bailout, and referenced the breaking up the

Wall Street banks as a potential solution.

The question is, Kashkari said, “in a stressed economic environment

like a crisis when multiple banks are running into trouble

at the same time, will we actually be able to haircut bond

holders and creditors? I say the answer is no. And the reason is

the contagion from one bank to another bank to another bank.

No one yet has figured out how to solve that contagion risk.

Dodd-Frank hasn’t done it. The [‘bail-in’ idea] hasn’t done it.

We see it in Europe.... Those ‘contingent conversion’ securities

haven’t added to stability. They’ve actually added to instability

and uncertainty.”

Asked why he hadn’t brought up breaking up Wall Street

banks in 2010, Kashkari said he had, but, that “a bunch of these

transformational solutions were taken off the table in 2010.”

That is in reference to the Dodd-Frank Act, pushed by Rep.

Barney Frank at the bidding of President Obama, on behalf of

Wall Street.

On April 4, Kashkari held a hearing at the Minneapolis Fed

Bank, on ending “too big to fail,” which featured Stanford economist

Dr. Anaan Admati. She called on the Fed to reject the Wall

Street banks’ latest “living will” proposals and to break these

banks up by ordering them to sell off divisions and subsidiaries

which threaten a crash. The “living will” is a provision under

Dodd-Frank which requires the major banks to submit a strategy

for “rapid and orderly resolution” in the event of bankruptcy,

without the need to be bailed out by the taxpayers.

The Fed can then determine that the internal controls are not

credible, and order the banks to change their structure and sell

off units.

Note that Federal Reserve chair Janet Yellen again rejected

on April 8 Kashkari’s recommendation to break up the too big

to fail banks.

The “Panama Papers” Lead

to London’s Dirty Money Ops

Western media were full of headlines last week on the so-called

“Panama Papers”, containing data from the Panama-based law

firm Mossack Fonseca, which had set up offshore shell companies

for tens of thousands of companies and individuals to allow

them to avoid paying taxes in their home countries.

While the information selected for release by the International

Consortium of Investigative Journalists may be subject

to suspicion, since the outfit is funded by George Soros and rife

with representatives of the CIA, the revelations certainly served

to confirm that the entire trans-Atlantic financial system is corrupt

through and through, and that no amount of small reforms

can change that fact.

Politically, the Papers were first used to launch wild accusations

of corruption against Russian President Vladimir Putin,

and his Chinese counterpart Xi Jinping, but those attempts

quickly fizzled out, given the total lack of substantiation.

Attention then turned, at it should, to the entire network of

offshore banking set up by and run from London, as EIR had

already documented back in 1978 in the book Dope, Inc.. In

fact, over half of the 215,000 companies identified in the documents

from Mossack Fonseca were incorporated in the British

Virgin Islands, as political writer Dan Glazebrook pointed out

in an article posted April 8 on RT. The real story behind the

Panama Papers, he wrote, “is the British government’s assiduous

cultivation of the offshore world”, which is “a den of money

laundering and tax evasion right at the heart of the global financial

system.”

Besides, the Virgin Islands, other British-controlled tax havens

include the Cayman Islands, Bermuda, the Isle of Man,

Jersey and Guernsey. “The entire U.K.-controlled web is home

to offshore deposits estimated in 2009 to be worth $3.2 trillion,

55% of the global total,” according to Glazebrook. “This

network is a conscious creation of the British state,” he notes,

adding that the Cameron government had recently negotiated

with the EU to protect this City of London operation from any

outside control or interference.

The full article is here: https://www.rt.com/op-edge/338961-

cameron-tax-haven-uk-evasion/

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2 WEEKLY NEWSLETTER n°15 / 2016

Cheminade Takes On Financial Oligarchy in

Bid for French Presidency in 2017

Jacques Cheminade, Chairman of the French Solidarité et Progrès

party, announced his bid for the 2017 French presidential

elections on April 4, during a ten-minute interview on the national

TV network France 2. Aired at 7:40, on prime time, the

approximate audience was 1.3 million viewers.

The main purpose of his campaign, he told interviewer Guillaume

Daret, is to put an end to the “occupation of France by

financial powers” and to the “collaboration” of the current insider

clique.

Cheminade noted that for the past 40 years, “there has been

a policy of financial takedown of the country. it is not a policy

of growth; it is a policy of submission to international financial

control -- and thus we now have social austerity.”

Commenting on his results in the previous presidential elections

(0.28% in 1995 and 0.25% in 2012), Cheminade noted

that the media had done everything to make sure he would be

eliminated. “My ideas frightened them, not my person as such –

the very idea that one can call into question the collaboration of

the French political caste, that oligarchy of the incapable, with

the international monetary and financial system.” During the interview,

Cheminade defined himself as a “left-leaning Gaullist,”

his references being “Jaurès, de Gaulle, and Mendès-France.”

The news was covered by virtually all the major media, as

well as many other outlets on the internet.

Cheminade declared his candidacy at a time when France is

in a full-fledged financial, economic, and social crisis. President

François Hollande is thoroughly discredited, and may not even

run for a second term. He had to drop his convoluted project

of stripping those who commit terrorist acts of their French

nationality, which was a transparent scheme to win voters on

the right and even in the extreme right-wing.

Moreover, on March 31, hundreds of thousands of trade

unionists and other “ordinary” citizens demonstrated against

the government bill for reforming the labor market, which

would increase precarious jobs and the unemployment rate, already

at a huge 8 million!

In addition, President Hollande has just managed to get a

bill passed (Urvoas law) with makes it much more difficult for

persons outside of the mainstream political establishment to

run for President, and to restrict the media coverage of those

candidates who do manage to overcome the new hurdles.

Italian Government Blocks Glass-Steagall

Amendments in Senate, But More Follow

A battle for Glass-Steagall was lost in the Italian Senate on April

5, when amendments to reintroduce banking separation were

rejected. However, the pressure has increased as two new draft

bills have been introduced in the House and in the Senate.

The two amendments to the government bill to reform Credit

Unions had been introduced into the Senate Finance Committee,

one by Gruppo Misto (mostly SEL and two M5S members) and

the other by Lega representatives. Both called for a strict separation

between commercial and investment banks. The former

was withdrawn, and the latter was voted down.

The issue was nonetheless brought up during the floor debate

on the bill, but the so-called “preliminary question” was

rejected by a majority of the Senate, which corresponds to the

government coalition. Sen. Francesco Molinari counterposed the

banking separation model to the government decision to create

another Too Big To Fail bank by forcing small Credit Unions to

merge into a large holding. The Credit Union model, he said,

“has been the only antidote to contain the excessive domination

of large financial conglomerates”, pending a return to a strict

separation of commercial and investment banks.

The preliminary question stated that contrary to what the

government says, “the stability of the banking and financial

system can be achieved through (…) the separation of investment

banks from commercial banks, and not through forcing

gigantism which, as past years’ experience and the situation of

European large banks show, in no way rules out that serious

problems of insolvency and share volatility emerge, given also

the aggravation of problems due to the overall exposure in derivatives.”

The behavior of the Senate is exemplary of the de facto suppression

of the legislative process in most EU member states

states. Indeed, national Parliaments have been reduced to ratifying

guidelines drawn up by the EU with little or no debate.

However, the battle fought on April 5 is a Pyrrus victory, as

the bankrupt system cannot be saved. And two new draft bills

on Glass-Steagall have been introduced in the House and in the

Senate, bringing the total to a dozen from almost all political

parties.

The draft bill in the House was sponsored by Dep. Giovanni

Paglia, of the SEL group, and was signed by Stefano Fassina, a

former undersecretary to the Finance Ministry who in July 2015

co-signed a telegram of support to U.S. Senate sponsors of Glass-

Steagall, together with economists Nino Galloni, Antonio Maria

Rinaldi, and EIR Strategic Alert co-editor Claudio Celani.

Time For “Fun” Is Here

in the U.S. Presidential Election

The focus of the U.S. Presidential campaign has shifted to the

April 19 New York State primary, as votes cast by New Yorkers

will have a significant impact on the eventual outcome for

both parties. While much of the campaigning up to this point

can be characterized as either depressing or disgusting, Lyndon

LaRouche quipped that now, “the fun is about to begin.”

He is referring to the fact that reality has finally broken

through, and the usual obfuscating games no longer function.

Despite the efforts of the candidates and the media to keep

reality out, and run the campaigns in a “business as usual” manner,

the mood of the electorate -- which is sullen and furiously

anti-establishment -- when combined with the accelerated collapse

of living standards, has forced into the open the matter

of whether Wall Street will be able to continue to control the

U.S. government, through operatives in both parties, through

bribes, and through blackmail.

On the Democratic side, Hillary Clinton’s status as a puppet

of Wall Street has become a real factor. It is not just that she

has received tremendous financial support from the big banks

and investment funds, which Bernie Sanders has made an issue.

She has also proven that she will continue the unpopular policy

direction of Obama (regime change, dangerous provocations of

Russia and China, total commitment to prevent Glass-Steagall

banking separation). Now, Sanders has now upped the pressure

against her, using the release of the “Panama Papers” to show

that her support for the Panama Free Trade bill, which rejected

any regulation to protect against money laundering and tax evasion,

typifies her willingness to give a free hand to speculative

swindlers, who have used free trade to make and protect large

fortunes, while decimating U.S. industry, businesses, wages,

and tax collection.

Sanders has won seven of the last eight primaries and caucuses.

If he can pull off an upset in New York, it could be the

beginning of the end for Hillary, despite her current lead in the

number of pledged delegates.

EIR STRATEGIC ALERT

n°15 / 2016 WEEKLY NEWSLETTER 3

As for Republicans, the Ted Cruz boomlet, which has been

backed and funded by the Republican establishment and supported

by the Bush machine, will likely be reversed by a big

defeat in New York. Trump, who has his own unsavory connections

with certain Wall Street interests, has nevertheless insisted

that Cruz, despite his claims to the contrary, is actually a “Trojan

horse” for the establishment. Cruz has proven it by appointing

Phil Gramm as his chief economic adviser. Gramm is the

senator who led the repeal of the Glass-Steagall Act, with his

Gramm-Leach-Bliley bill, which led to the October 2008 financial

meltdown. Then he went to UBS, a bank at the center of the

money-laundering exposed in the Panama Papers.

When Trump hinted that he might go after Cruz’s wife, Heidi,

Cruz had a near meltdown, knowing that his wife’s position as

an executive at Goldman Sachs, as well as her prior role as an

aide to trade negotiator Zoellick, in the drafting of the Trans-

Pacific Partnership and other free trade deals, would puncture

the myth of his “outsider” status.

Thus, the Wall Street connections of leading candidates will

be front-and-center in the New York primary, which could provide

a bit of fun in an otherwise dismal electoral contest.

U.S. Defense Secretary Blusters

Against Russia and China

Ashton Carter has done it again. In a speech at the CSIS in

Washington on April 5, he listed the most serious threats to his

country’s national security as: Russia, China, Iran, North Korea,

and international terrorism... in that order. That was to justify

the Pentagon’s plans for major military buildups in both Eastern

Europe and in the Pacific (cf. SAS 11, 14/16), while refraining

from seriously fighting ISIS and al Nusra in the Middle East.

Carter’s remarks at the Council on Foreign Relations on April

8 were aimed more specifically at China, on the eve of his visit

to Asia. He stated that “Countries across the Asia-Pacific are

voicing concern with militarization, and especially with China’s

actions, which stand out in size and scope.” That is why, he

claimed, “we are making enormous investments in our [military]

capabilities... and why we will continue to fly, sail and operate

wherever international law allows.”

Carter also said, contrary to Secretary of State Kerry (cf. SAS

9/16), that there was no doubt that the U.S. would install the

THAAD anti-missile system in South Korea, which is aimed at

both China and Russia.

Such blustering cannot hide the fact that the United States,

because of its mad intent to rule a unipolar world, has lost considerable

influence throughout the world over the past decades.

Indicating the shift in the strategic situation, NATO Secretary

General Jens Stoltenberg announced April 8 that a meeting of

the NATO-Russia Council would take place at the ambassadorial

level, for the first time since the Western alliance severed cooperation

on all projects in 2014, over Crimea.

Note that on the same day as Carter was raving at the CSIS,

President Obama stated in a press conference that degrading

and destroying ISIS was his top security priority. The world is

now waiting for deeds to follow those words.

Referendum in the Netherlands,

Another Humiliating Defeat for the EU

However Brussels spins it, the fact of the matter is that whenever

a referendum is allowed to take place in the European Union,

the EU loses. The citizens of the Netherlands showed that once

again on April 6, when they went to the polls to vote yes or no

to the EU-Ukrainian association agreement, considered as the

first step to Ukraine’s entry into the EU. The results will not be

officially announced until April 12, but the No vote is credited

with 61.1% and the Yes vote with only 38%.

European Commission head Jean-Claude Juncker was said to

be “saddened” by the outcome of the referendum. (For memory,

this is the same Juncker who, until moving to Brussels, was

for 12 years Prime Minister of one of Europe’s main tax havens,

i.e., Luxembourg.)

While the referendum results are not binding on the government,

the overwhelming No vote can hardly be completely

disregarded, although the Commission claimed it would have

no effect.

However, it might very well influence the upcoming referendum

in the UK on the Brexit. If the British vote to leave the EU,

that could start a chain reaction of others following suit. A not

so confident British Prime Minister David Cameron, who has

just been hit by the Panama Papers scandal, could only state: “I

hope it won’t affect the results of our referendum because it is

a very different issue.”

But in fact, the fundamental issue is the same. While the immediate

subject of the Dutch referendum was restricted to the

agreement with Ukraine -- a notoriously corrupt country used

by NATO to poison relations with Russia -- the population in the

Netherlands, just as elsewhere, is fed up with the supranational,

technocratic policies of Brussels on all fronts. That includes

the bank bailouts at the expense of the general welfare, the

“regime change” disasters, and the endless wars and conflicts in

the world imposed by the Anglo-American empire.

Increased Pressure from Austria

to End Sanctions against Russia

Austrian President Heinz Fischer carried out a two-day official

visit to Moscow last week, accompanied among others by

Christoph Leitl, the president of the Austrian Federal Economic

Chamber, and a business delegation. In a meeting April 6 with

Speaker of the Duma Sergei Naryshkin, whose name is on the

EU sanctions list, Fischer stressed that the sanctions are “disadvantageous

for both parties”, and that he hoped they would be

lifted soon.

Leitl, who is also a member of Parliament from the Austrian

People’s Party, has long been an outspoken opponent of the

sanctions against Russia. He was quoted in Sputnik (April 4)

saying of the sanctions: “If a doctor has been using a therapy

for two years, and it is not working, it is time to think about

it.” He regretted that some Europeans still think the “policy of

threats is the only option.”

President Fischer noted that the trade turnover between Russia

and Austria has decreased by about 25% because of the

sanctions. And the retaliatory sanctions against the EU taken by

Russia have resulted in a 50% decrease in Austrian food exports

to Russia.

The picture is hardly different in most EU countries, where

the economic actors are opposed to the sanctions, which are politically

as ineffective as they are harmful economically. German

exports to Russia have plunged by 42%, while Italian exports

are down by 24%, according to official figures.

Calls from Germany and Austria

for Serious Reconstruction of Syria

The candidate of the Austrian Social Democrats (SPOe) in the

April 24 presidential election, Rudolf Hundstorfer, issued a

statement on April 6, in which he brought up the only serious

solution to the refugee problem, which is the reconstruction

EIR STRATEGIC ALERT

4 WEEKLY NEWSLETTER n°15 / 2016

of Syria, once peace has been established. Just as Europe was

developed economically after the war, with the original Marshall

Plan, Syria could be helped today.

While Hundstorfer believes in “Europe” and opposes the closing

of national borders to keep refugees out, he is critical of the

EU-Turkey deal, because of the poor Turkish record on human

rights and freedom of the press. He proposed that the EU assist

Lebanon and Jordan in coping with the challenges posed by the

massive influx of refugees there, in addition to helping rebuild

Syria. If elected President, he pledged to push for a Marshall

Plan for Syria in the EU.

The same issue was addressed in some detail in Germany on

April 7, at an event in Reutlingen, with Ernst-Reinhard Beck, a

former senior Bundestag member of the CDU. In his view, the

the only solution to the refugee problem is economic reconstruction

in Syria and Iraq. He cited the example of the northern Iraqi

city of Tikrit, where the infrastructure has been largely restored

with direct aid from Germany, so that the population has again

reached 95% of the pre-war level. Ongoing reconstruction of

Sindjar, a center of the Yazidis current of the Kurdish population,

is another example Beck gave.

As for Syria, Beck proposed setting up training programs for

the refugees in key sectors, which will be needed for reconstruction.

Germany could grant loans to Syrians so that the returning

refugees can set up companies there, once peace prevails. To

make real progress in that direction, he added, Germany has to

talk to the Syrian government directly, including Assad himself.

“World Land-Bridge” Conference Promises

Breakthrough in New York City

The international conference hosted by the Schiller Institute in

New York City April 7 marks the potential for the United States

to break with its deadly geopolitical policies and economic collapse,

and, resume, instead, its traditional productive identity.

The 15-hour event brought together some 300 people, from

many states in addition to New York, and a dozen countries in

Asia, Africa and Europe.

The conference was opened by Helga Zepp-LaRouche with

a comprehensive, inspiring address, focussed on the need to

collaborate on actions for the common good of mankind. She

presented many specifics, especially on the refugee crisis in

Southwest Asia, North Africa and Europe, and the need for a

Silk Road “Marshall Plan”. See: http://schillerinstitute.org/conficlc/

2016/0407-ny/overview.html

Lyndon LaRouche, who has long led the campaign for such

a paradigm shift, sent a pre-taped opening address for the

afternoon deliberations, and engaged in a lively question-andanswer

exchange with the audience of that panel. He repeatedly

stressed the importance of the individual, unique human mind,

for making discoveries of principle, to advance humanity. And

he named Einstein as an ideal example of the kind of person in

society, who is capable of making such discoveries.

Other speakers on the first panel were former U.S. Attorney

General Ramsey Clark under President Johnson, who made a

strong plea against war, and Projessor Li Xiguang of Tsinghua

University, China, who gave an illustrated tour of vast stretches

of China’s One Belt-One Road, and Ambassador Ahmed Farouk,

Consul General of Egypt in New York.

The latter described with great fervor the building of the

new Suez Canal, which was accomplished in record time with

Egypt-only financing, as well the project for three new development

zones. An eerie awe swept the audience, as many

recalled past great projects in the U.S. -- the Hoover Dam, the

TVA, etc., all the while knowing that nothing is being built in

the U.S. today.

On Panel Two, Kesha Rogers of LaRouche PAC gave a call to

arms to change this, by restoring the science mission of NASA to

create an economic Renaissance. Rogers was joined by two former

NASA scientists -- Tom Wysmuller, on “Why Human Space

Flight;” and Dr. Feng Hsu, on the sun.

Panel III was a remarkable dialogue of great cultures. The

music included pieces from the Italian Bel Canto school, German

Lieder, the singing of a 1905 poem by the Bengali Rabindranath

Tagore and classical Chinese music on traditional stringed instruments.

Plus, two lectures: Prof. Ben Wang, of the China

Institute, on, “The Unity of Calligraphy, Poetry, Painting and

Music in Chinese Art;” and Carmela Altamura, master vocal instructor,

spoke on “Verdi’s Operas and Italy’s Risorgimento.”y

TASS Publishes Interview with Zepp-LaRouche

on New Monetary System, Bering Strait Tunnel

The Russian official news agency TASS published on April 8

highlights of its interview with Schiller Institute founder Helga

Zepp-LaRouche, conducted in conjunction with the SI conference

of the previous day in New York City. The dispatch has appeared

in several other major Russian media outlets, including

the website of the Russian Defense Ministry’s Zvezda-TV, Federal

News Agency, and on RT in Spanish. A number of Chinese

media also covered the event.

The TASS coverage focussed on Zepp-LaRouche’s endorsement

of the Bering Strait Tunnel project, linking Chukotka, in

Russia, and Alaska, which would “promote development of the

natural resources of both the Far East and Alaska.”

“‘It is entirely possible, that 20 years from now there will be a

high-speed maglev train, or some other type, running under the

Bering Strait, and that it will be possible to travel from Acapulco

to New Delhi more rapidly than by ship,’ she noted. ‘This project

will definitely be implemented in the future, and it will promote

the consolidation of peace between Russia and the USA.”

“Zepp-LaRouche stated that the Bering Strait tunnel is only

one element of the vast transportation system called the New

Silk Road, advocated by the Schiller Institute. Its specialists propose

a network of railways to link practically all continents.

“The institute’s specialists call for shifting from a monetarist

economy to the real economy. For this purpose, they believe,

governments should change the international monetary system,

including, in particular, establishing fixed exchange rates, wiping

out speculative instruments, and reducing and in some cases

writing off debts.

“After ‘the decks have been cleared,’ in Zepp-LaRouche’s

view, large state credits will be required to develop technology

and infrastructure projects, including for ‘the creation of a

Eurasian development corridor as the basis for rebuilding the

world economy.’ The United States, Russia, China, Brazil and

India should initiate the estαablishment of such a system, Zepp-

LaRouche believes.”

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Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani

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