E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER Volume 32, No. 7 - February 15, 2018

E.I.R.STRATEGIC ALERT WEEKLY NEWSLETTER
Volume 32, No. 7 - February 15, 2018

Mario Draghi,  or Whom the Gods Would Destroy... The stock market crash of Monday, Feb. 5 -- the largest intraday drop in history in terms of points, at more than 6.0% of the Dow Jones – sent shock waves around the  world. But it did not surprise those, such as our readers, who know that the system is doomed and have expected the financial bubble to pop sooner or later. Of course, it is not known when the system will collapse, but it is inevitable, and it will be worse than in 2008, if the right measures are not taken now. That reality should be included in the strategic perspective of every policy-maker, including Donald Trump, who is unfortunately relying on the rhetoric of the so-called stock market boom to boost support for his program. However, since the Feb. 5 turmoil was just a warning, and not the big one, the swindlers are able to claim that it was a “flashcrash” episode, that the market soon recovered again, etc. Among the leading swindlers is ECB chairman Mario Draghi, who bears a growing resemblance with the infamous captain of the Costa Concordia ship who, when the ship was already sinking, was telling port authorities that it was a simple blackout. In the same way, just as a precursor of the coming systemic collapse was shaking global stock markets, Mr. Draghi stated in front of the European Parliament that he sees no systemic risk. In Strasbourg to present the ECB Annual Report for 2016, he criticized the Parliament’s own draft resolution that warned of the risks stemming from asset bubbles building in Europe. “We are closely monitoring developments in some market segments, such as prime commercial real estate and housing markets in some countries, and corporate bond markets for lowerrated issuers,” he said. “As we explain in our Financial Stability Review , asset price increases in euro area markets have so far not been accompanied by excessive credit growth. Although credit flows have been recovering, growth rates are still far below anything we saw before the crisis and on the low side of the range of growth rates historically seen during recoveries. So there is no evidence of systemic credit-fueled bubbles.” Draghi repeated his denial statement during the question and answer discussion: “I have already addressed, in my introductory remarks, the issue of possible asset bubbles currently being formed in the euro area. For the time being, we have little indication that generalized financial imbalances are emerging. There are no signs of general asset-price misalignments in the
euro area but some segments do need close monitoring and one of them is the prime commercial real-estate market, where we actually see stretched valuations. Also, in some large cities and in some countries real-estate prices have increased at a faster pace than household incomes. This certainly requires monitoring.” For a financial authority to deny the existence of a bubble in the current situation amounts to criminal behavior. In contrast, the German Banking Association issued a statement Feb. 8 in which they warned against bubbles in asset prices (U.S.A.) and in the real estate sector (Eurozone). However, they did whitewash the banking sector from any risk to the system. This despite the fact that former BIS chief economist William White, when warning about “fracture points” in the system, correctly pointed to a liability in the German banking sector: the so-called Schuldscheine, i.e., the titles which German saving banks and regional banks used to loan money to subprime customers (cf. SAS 5/18). Bad Two Weeks for Russiagate Promoters, As British Role Takes Center Stage No matter how one tries to spin it, the last two weeks have not brought a lot of good news for those committed to removing President Donald Trump from office. Special counsel Robert Mueller, who was appointed to investigate Russian meddling in the U.S. elections and possible “collusion” of Donald Trump‘s team with Russians, has still failed to turn up any evidence. And on top of that, revelations centering on the fraudulent dossier produced by ex-British spy Christopher Steele have brought attention to London‘s key role in concocting the whole “Russiagate” story, which was designed to prevent Trump from reversing the dangerous geopolitical policies of his predecessors, George Bush and Barack Obama. A memo from Rep. Devin Nunes, released Feb. 2, highlights the possibly felonious actions by FBI and Department of Justice (DOJ) officials, who used Steele‘s dirty dossier to obtain a surveillance warrant from the secret FISA court, to spy on one-time Trump adviser Carter Page (cf. SAS 6/18).  A second memo followed, from Senators Grassley and Graham, which reports how Steele‘s dossier, and that of another Clinton campaign operative, Cody Shearer, were circulated and used by the FBI, but also within the State Department. But the efforts of British intelligence agencies, via Christopher Steele, to poison U.S. relations with Russia predate the
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Trump candidacy. Steele‘s friend in the U.S. State Departement, Jonathan Winer, had circulated among his colleagues over 100 reports from Steele on Ukraine and Russia. These went to Victoria Nuland, the official who oversaw the regime change coup in Ukraine in 2014. It gets worse. Steele was sued by a Russian who claims he was defamed by Steele‘s accusation in the famous dossier that he hacked the Clinton campaign emails on orders from Vladimir Putin, When Steele was due to appear in a London Court for a deposition in that case, he failed to show, and his lawyer argued that forcing him to answer questions could endanger „U.K. national security.“ Also present was a high-ranking attorney from the Foreign Office, to make sure that no testimony which „threatened to reveal state secrets“ occurred. Why would the Foreign Office, which oversees MI6, protect an ex-spy who had officially retired in 2009? On Feb. 6, the Washington Post ran a story which inadvertently exposed again the British hand. The article (“Hero or hired gun?”),  portrays Steele as an honest investigator, who was “rattled” by what he allegedly discovered in preparing his smear dossier against Trump. For guidance on what to do with his findings, he turned to his former boss at MI6, Sir Richard Dearlove, who sent him to report what he found to the FBI. Dearlove was not unaccustomed to working with “dodgy dossiers” -- in 2003, he had presented the “intelligence finding” to Tony Blair, that Saddam Hussein had weapons of mass destruction, which was later shown to be a lie. But it bolstered the case for the second Iraq war, which led to the destruction of Iraq, and the emergence of ISIS.   “Did British Intelligence Try to Destroy  the Trump Presidency?” That is the question posed in the headline of a Feb. 7 article on Pat Lang’s respected weblog “Sic Semper Tyrannis”, by a regular contributor who calls himself Publius Tacitus. He references the memo released the day before by Senators Grassley and Graham asking the Department of Justice to open a criminal investigation of former MI6 official Christopher Steele (cf. above). That memo confirms that the latter was an “official intelligence asset” of the FBI. “But, there is growing circumstantial evidence that Steele was acting on behalf of Britain‘s version of the CIA -- aka MI-6. If true, we are now faced with actual evidence of a foreign country trying to meddle in a direct and significant way in our national election. Only it was not the Russians. It was our British cousins.” After reviewing the contents of the memo, Publius Tacitus recalls that the British equivalent of the NSA, the CGHQ, was the first to inform the intelligence agencies in Washington of suspicious links between Trump’s entourage and Russians agents. He concludes: “As the evidence of British intelligence meddling in the U.S. election piles up it will create some strains in our bi-lateral ties. It has the potential to harm cooperation on military, law enforcement and intelligence fronts. I suspect there is some scrambling going on behind the scenes to come up with a strategy to contain the damage while rooting out the sedition.” Paul Craig Roberts, a former aide to President Ronald Reagan and a well-known analyst of American affairs, has often sounded the alarm on the growing police state in America, of which Russiagate is one major element today. In his Jan. 25 nationally syndicated column, presented as a “wake-up call” to Americans, he wrote: “If the highest reaches of the police state agencies can get away with an attempted or successful coup against the president of the United States, then that is the com
plete end of democracy and all accountability in government.” He further calls for those involved in the coup to “be identified, charged, and prosecuted for their act of high treason.” Threats Escalate against Donald Trump  for Daring to Take on the “Deep State” With the true origins of the so-called Russiagate scandal against President Trump emerging as a „made-in-London“ operation (see above slug), those desperate to remove him are reverting to outright threats against him, including raising the likelihood that he could be assassinated. That eventuality was first raised the day after Trump‘s inauguration, in an article in the London Spectator  by BBC correspondent Paul Wood, whose article was titled “Will Donald Trump be assassinated, ousted in a coup or just impeached?” Another BBC columnist, Jonathan Freedland, wrote a fictional book with the not-so-subtle title To Kill the President , in which the attempt to murder a Trump-like President was undertaken by members of his cabinet. At this point, threats against Donald Trump are now proliferating in U.S. media, precisely because the President has dared to challenge the FBI and all that involves. One such warning came from Phil Mudd, a regular contributor to CNN , who had joined the CIA in 1985 and was appointed Deputy Director of the FBI’s newly-created National Security Branch in 2005, by then-FBI Director Robert Mueller. The release of the Nunes’ memo, Mudd ranted on Feb. 2, was an attack on the FBI’s “ability to conduct an investigation with integrity...The FBI people are ticked...you think you can intimidate the director?  You better think again, Mr. President.” CNN host Wolf Blitzer responded, “You don’t want the FBI angry at you,” followed by the network’s chief political correspondent, Gloria Borger, who said Trump “is playing a dangerous game.” (Incidentally, as soon as Josh Campbell quit his top position at the FBI 10 days ago, CNN hired him as an “analyst”, while former CIA director John Brennan has been hired by NBC
 to provide “commentary”. It’s a small world.) Then, there is Eugene Robinson, a columnist from the Trumphating Washington Post . Under the headline “Trump has picked a fight with the FBI. He’ll be sorry,” Robinson wrote on Feb. 1: “Presidents don’t win fights with the FBI. Trump apparently wants to learn this lesson the hard way.” Reviewing the sordid history of the FBI, including the bureau’s persecution of Martin Luther King as an example of long-time director J. Edgar Hoover running the FBI “like his own private Stasi,” Robinson would have the reader believe that the FBI has changed, concluding that the FBI today “has no political ax to grind.” Such blatant defense of the corrupt FBI was taken on by historian David Garrow, who wrote the definitive biography of Martin Luther King, Bearing the Cross . Garrow said on Feb. 6 that “anyone eager to embrace the belief that today’s FBI is a rigorously professional and politically unbiased agency is overlooking the facts.” He excoriated anti-Trump Democrats for their “eagerness to cover up, excuse and defend FBI behavior that their predecessors of the 1970s would have readily denounced. The ignominious irony is that judgment-blurring partisan hatred is leading many Democrats to ignore and forsake the lessons that the FBI’s history so richly teaches.” China Defines “Rural Vitalization”  as a Historic Task China‘s State Council issued its first policy document of the year on Feb. 4, and it was devoted to farming and rural areas, in keeping with a 15 year-old tradition. Long the historical backbone of the Chinese economy, agriculture now represents
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far less than 10% of the country‘s GDP, but 40% of the population still remain on the land, and the 10% who have gone to the cities seeking employment, still maintain their ties, often including their families, in the countryside. In light of China‘s commitment to eliminating absolute poverty by 2020, vitalization of rural areas is key. The object is to raise the income levels of China‘s farmers, and more broadly to improve the conditions of life in the countryside. Various land reform measures have already allowed a tremendous increase in productivity in agricultural production. For example, by allowing small farmers to transfer their land, without having to relinquish their property title, it has been possible to incorporate small fields, which are owned by migrant workers in the cities, into larger plots where production can be mechanized. At the same time the entire structure of traditional rural life is being transformed, with new projects for irrigation, water management, electricity transmission, sewage disposal, improvement of sanitation, the installation of modern toilets in village homes, etc. Moreover, the reform includes building modern roads, introducing the internet and e-commerce, and bringing small industries into the rural regions. While local party cadre bear the major responsibility for the implementation of the reform, there is also a major drive to bring people from the cities with the appropriate skills to work in the rural districts to help with the modernization programs, including trained doctors and medical personnel, teachers and small entrepreneurs to set up production facilities, often related to food processing and industrial farming. The establishment of a competent social welfare system to take care of the many elderly people who remain in the countryside is also being developed. In areas where there is no physical possibility to alleviate the conditions, such as in remote mountainous regions, the residents are encouraged to transfer to more modern facilities close by, and millions of people have already been moved. The document urges the party cadre working on the program to gain the confidence of the local population. in the nature and purpose of the program. It sets out as objectives lifting all rural residents out of poverty by 2020, bringing into being „a basic modernization of agriculture and rural areas“ by 2035, and completing a „comprehensive rural vitalization“ by 2050. After the Olympics, Progress Expected  on Inter-Korean Relations On Feb. 10, South Korean President Moon Jae-in held a meeting at the Blue House with Kim Yo-jong, the sister and trusted adviser of North Korean leader Kim Jong-un. She delivered to him a letter from her brother, inviting the South Korean President to visit Pyongyang for a summit meeting at his earliest convenience. While President Moon did not immediately accept the offer, his positive response added a potentially strategic dimension to the overall upbeat mood created by the North and South Korean athletes marching in together under a unification flag. The potential for a warming of ties between North and South Korea holds open the possibility of an eventual resumption of the Six Party Talks (North Korea, South Korea, Japan, China, Russia, the United States), which were suspended in 2008. Such negotiations would cover the status of North Korea‘s nuclear weapons and ballistic missiles, which are the subject of intense international sanctions. President Moon reportedly urged the North Koreans, during the meeting, to open direct talks with the United States. For the time being, the Trump Administration is maintaining
a strict posture of demanding that North Korea first agree to talks on denuclearization before there can be any relenting on sanctions and threats of military action. Vice President Mike Pence led the US delegation to the opening ceremony of the Olympics, but refused to have any contact with the North Korean officials who were seated in the same VIP section or to stand when the Korean teams marched in. However, he told a reporter from the Washington Post on the way back from the Olympics, that the Trump Administration is willing to talk with the North Korean regime. President Trump himself has repeatedly said he would discuss with Kim Jong-un “under the right circumstances”, and that he hoped the North-South talks “will lead to success for the world”. While President Moon showed no signs of breaking with Washington over the issue of the opening from North Korea, he went out of his way to declare the Winter Olympics to be the “Olympic games of peace.” There is still an enormous gap between the initiation of the inter-Korean talks and the holding of talks on the issue of denuclearization of the peninsula. Beijing has played a pivotal role in working with Washington to create the conditions for a peaceful resolution of the Korea conflict. As President Moon was meeting at the Blue House with Kim Yo-jong, Chinese State Councilor Yang Jiechi was meeting with President Trump and Jared Kushner in Washington. While the public accounts of those talks focused on US-China relations, where tensions over trade issues have recently cast a cloud over the positive personal relationship between President Trump and China‘s President Xi Jinping, there is no doubt that the Korean issue was an important feature of the talks. Italian LaRouche Movement Issues Statement on Italy’s Urgent Economic Recovery On March 4, parliamentary elections will take place in Italy, and the outcome remains at this point quite uncertain. For the first time, the electoral reform, which Prime Minister Renzi finally managed to pass despite tremendous opposition, will be applied: it requires a party, or a coalition, to receive 40% of the popular vote in order to be able to form the government. The reform was primarily aimed at preventing the largest party at this time, the Five Star Movement (credited with 28% of the vote in the polls), from taking power. Otherwise, a rightwing coalition (Forza Italia and Lega) has been formed as well as a center-left coalition around  Renzi‘s Democratic Party. Basically, they are all for maintaining the status quo. On the same March 4, regional elections in Lombardy will be held, in which a “citizens‘ list” was planning to run, including Liliana Gorini, the chairwoman of Movisol, the LaRouche movement in Italy. However, that slate was subsequently sabotaged. In a statement issued on Feb. 5, Gorini charged that Renzi‘s reform is aimed above all at “preventing new ideas, and at creating instability”, which is all to the advantage of the “financial oligarchy”. Gorini reiterates in her statement the 5 points of Movisol‘s program for the legislative elections: “1. Immediately reinstate a banking separation, such as Franklin Roosevelt‘s Glass-Steagall Act, before the imminent collapse of Wall Street‘s latest financial bubbles. “2. Return to a national banking system, as originally defined by Alexander Hamilton. Only state credit can allow growth. “3. State credit for high-technology and high-productivity employment, including the rebuilding of our infrastructure, starting with the earthquake areas.
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“4. Launch a crash program to develop fusion power and space exploration. “5. Join the Belt and Road Initiative proposed by China, and the great projects of the Maritime Silk Road, which is the key for our ports in Genoa, Trieste, Venice and to develop the Mezzogiorno.” China‘s infrastructure development project, Gorini explains, offers many so-called developing nations, “their first real opportunity for modern development”, and the industrialized countries “a critical opportunity for a new era of rebuilding, advancing, and producing.” These measures, together with a revival of classical culture from Dante to Giuseppe Verdi, “are the key for a new Renaissance in our country.” Gorini concludes: “Even if we are not running in this election, we ask you to propose our five-point program to your candidate, and demand it be adopted.” Ibero-America Enthusiastic about BRI, While Washington Misses the Chance to Join In The Jan. 22 meeting of China’s Foreign Minister Wang Yi with 33 foreign ministers of the Community of Latin American and Caribbean States (Celac) in Santiago, Chile was marked by great optimism (cf. SAS 4/18). All of the Celac ministers welcomed Wang Yi’s offers of “win-win” cooperation as well as his formal invitation to all those countries to join the Belt and Road Initiative (BRI). Enthusiasm was such that the China-Celac Forum issued a special 5-point declaration on the BRI, which states that China “considers that Latin American and Caribbean nations are a natural extension of the Maritime Silk Road and are indispensable participants in the Belt and Road’s international cooperation.” In turn, the foreign ministers “welcomed with interest the Chinese Foreign Minister’s presentation on the Belt and Road, to deepen cooperation among the nations of Latin America and the Caribbean” in a variety of key sectors. Although never mentioned explicitly, the question that hung in the air in the extensive Santiago discussions, was “what about the U.S.?”. The region suffered through 16 years of disastrous relations under George W. Bush and Barack Obama, and everyone is now asking whether the Trump Administration will change course and help develop the Celac region economically, together with China? Rather than recognize the reality of the “Silk Road spirit” that is taking hold to the south of the United States, Secretary of State Rex Tillerson delivered a disappointing answer to that question on Feb. 1, just as he was about to embark on a fivenation tour of Ibero-America. Evidently, he felt the need to reassure the neo-con, geopolitical factions in the U.S. He called for regime-change in Venezuela and Cuba, supported the supposed “anti-corruption” drive by the U.S. Justice Department and FBI, and rejected the BRI, in  addition to labeling China and Russia, “imperial powers” whose “predatory” policies pose a threat to the region. While the City of London’s Economist quickly echoed Tillerson’s claims, much of the rest of the region rejected this discredited geopolitical message.  Diego Guelar, Argentine ambassador to China, told the EFE news service Feb. 6 that “there’s a very clear multipolar equation in the world today and that’s good…the era of imperialisms is dead. China plays a very important role with all Latin American nations, in terms of trade, financing and investment.” Similar messages came from the Colombia’s ambassador
to China, Uruguay’s Consul General in Shanghai, Chile’s trade director in China, as well as Peru’s Minister of International Trade.  Belt and Road: New German Book Recognizes Pioneer Role of EIR and Schiller Institute A book published in December, 2017 in Germany, titled in English translation China’s New Silk Road – Cooperation rather than Isolation – Role change in world trade, quotes EIR as a precursor and source of the New Silk Road policy. The intention of the authors, Professors Wolf D. Hartmann, Wolfgang Maennig, and Run Wang, is to positively influence the debate on China in Germany. Interestingly, the book was published by the influential Frankfurter Allgemeine
 Buch publishing house, which is linked to the leading news daily of the same name. In three different places, the authors quote from EIR publications. They describe the idea of “development corridors” taken from a Nov. 2014 EIR report where “the New Silk Road is presented as part of a World Landbridge. This comprehensive report, entitled The New Silk Road becomes the World Land bridge, considers this type of development model as the basis for a peaceful future for humanity.” And further on: “The previously mentioned EIR report on the New Silk Road lists a whole series of major international projects, which could be part of a ‚World Landbridge‘ among the continents”. Fifteen projects are then listed, including the Bering Strait Tunnel, the Kra Canal in Thailand, the SakhalinHokkaido Tunnel or bridge, the Strait of Gibraltar tunnel, etc. “Furthermore, eleven international corridors are listed in the EIR Special Report; they concern mainly important rail connections, like the trans-Siberian railway, which was constructed back in the 1891-1916 period and comprises the 9289 km-long first transcontinental connection from Moscow to Vladivostok. “It is known that precisely such development corridors along railways and highways have been preserved and greatly contribute to the prosperity of a nation. This phenomenon can be substantiated in the historical trade routes over the millennia, as the old Silk Road demonstrates. That is also the origin of the modern term for China‘s ‚Marco Polo Strategy‘ for developing new routes that have the above-mentioned positive effects on the adjacent regions in at least 100 km wide corridors along the main routes.” The authors also note: “It is remarkable that there is only one documentation in the German language on Germany’s chances with the New Silk Road . It contains the proceedings of an international conference of the Schiller Institute in Essen, on Oct. 21, 2016.” You can order copies of  The New Silk Road becomes the World Landbridge in English, Chinese, Arabic and German at https://www.eirshop.de/produkt/the-new-silk-road-becomesthe-world-land-bridge-2/ or per email at info@eir.de.
E.I.R. STRATEGIC ALERT        www.eir.de  Published by: E.I.R.GmbH,  Bahnstr. 9a, 65205 Wiesbaden Tel.: 0611/73650, Fax: 0611/7365101, Email:  info@eir.com Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani Subscription: EUR 3000/ ISSN  0936-7527 © E.I.R. GmbH  Alle Rechte vorbehalten, auch die des Nachdrucks von Auszügen, derphotomechanischen Wiedergabe und der Übersetzung, Printed in Germ