E.I.R.STRATEGIC ALERT
WEEKLY NEWSLETTER
Volume 35, No. 40, October 7, 2021
Soaring Energy Prices:
It’s Hyperinflation, Stupid!...
The 15-30% increase in gas and electricity prices which have started to hit households in Europe is only a fraction of the huge price rise of gas on the spot market, which is up by 280% this year alone. This comes close to the technical defi
nition of hyperinflation, which is put at a steady increase by 50% monthly.
While the immediate causes of the energy price explosion are Green Deal policies, which have led producers to shift from coal to gas, the hyperinflationary dynamic was underway long before and only needed an opportunity to run rampant. In
deed, commodity prices had already exploded in Spring 2020, hitting copper, lumber, wheat etc. (cf. AS 18/21). At the time, establishment figures came up with a “lone assassin” theory to explain the rise, claiming it was due to the increased de
mand coming from the Chinese recovery.
Today’s “lone assassin” theory tells us that energy prices have increased because Zeus blew less wind in the North Sea and the explosion of CO2 prices made coal too expensive. On top of all that, the villain Vladimir Putin is turning off gas sup
plies to Europe.
The failure of renewable energies, especially in wind en ergy-dependent Great Britain and Germany, truly is a factor, just as is the decision to double CO2 price to promote “climate transition”. However, they are only options that financial mar kets seized upon to unleash a speculative assault. In fact, were it for the simple market mechanism of supply and demand, prices would not increase in a hyperinflationary way. But they are doing so because all commodity prices – including CO2, which is traded as a commodity - are determined by financial bets on the future market. In other words, the demand for a commodity is multiplied by the speculators, who create an artificial scarcity and astronomical prices.
What is going on is the final act of the crisis of the global financial system which, as Lyndon LaRouche so often insisted, was already hopelessly bankrupt decades ago. There is only one alternative: the system will disintegrates either through a chain-reaction of financial bankruptcies or through a hyperin
flationary blowout, if central banks insist on continuing their bailout policies. The Green Deal represents the attempt to take the second path under the pretext of climate transition.
... And Yes, There Is a Workable Alternative In a recent webinar on “Economy and Finance of Climate Ide ology”, Italian economist Professor Mario Giaccio recounted that a high-placed source at the UN told him that “the global economic system is obsolete; it is not possible to ‘extract’ more value and therefore it must be changed.” What we now see, the professor continued, is “the effort to financially reor ganize the world economy using climate as a pretext”.
This candid confession is no surprise to readers of this newsletter, as we have exposed the real nature of the Green Deal/Great Reset from the beginning. But it proves that the central banks’ narrative about inflation being “transitory” is a lie, and that consumer price increases are planned, in order to “extract” value from the physical economy, in a final act of cannibalization.
Indeed, expansionary monetary policy has led to a dead end, with negative rates on all financial markets and less and less opportunities for a further expansion of the bubble. Since central banks are buying all sorts of assets, even yields on junk bonds have collapsed; the financial system must have a huge volume of additional loot taken from consumers, businesses, and taxpayers, in one way or another, in order to survive. The alternative would be a bankruptcy reorganization of the system, which the current elite is deadly opposed to.
(In this context, the approach taken by Chinese authorities to the insolvency of real estate giant Evergrande is exem plary. If Evergrande were a western company, it would be considered “too big to fail” and obtain a government bailout, with a hefty 14% return for the speculators. Not so in China, where retail customers, and not the creditors, will be pro tected – cf. below.)
Consumer price inflation is not accidental: it is the choice made by central banks in order to keep the system alive: on the one hand, by extracting more value from the physical economy; on the other hand, by forcing a reduction of the global debt through inflation. However, the steep increase in energy costs is already hitting production activities and threat
ening a collapse of the physical economy.
Nonetheless, there is still time to prevent hell from break ing loose, by reorganizing global finances according to the Glass-Steagall standard, shutting down financial speculation, regulating global commodity markets and launching a recov-
ery program on the principles of physical economy defined by Lyndon LaRouche. (An illustration of this approach is provided in a new brochure published by The LaRouche Organization, https://laroucheorganization.nationbuilder.com/returning_to_
the_american_system_the_coming_us_economic_miracle)
Chinese Government Manages Evergrande Default, Without a Bailout
On Sept. 29, China’s real estate developer Evergrande missed its second major interest payment deadline in two weeks, de faulting on a $47.5 million payment due on a 2024 dollar bond held principally by international financial speculators, including BlackRock Inc., Ashmore Group and HSBC Hold ing. One week before, it had defaulted on an $83 million payment – a decision that was widely expected by investors worldwide.
In fact, from its first publication of a notice about the Ever grande bankruptcy threat, EIR noted that the People’s Bank of China and the bank regulators in Beijing were doing what the West should have done in 2008, and since then, when major, speculative financial corporations threatened to fail (cf. SAS 38/21). They notified Evergrande’s major bondholders to prepare for a large haircut, and compelled the company to direct its funds to fulfilling its contractual commitments to households and to the Chinese economy. That means complet ing construction of housing in which households had already invested.
While Evergrande began as a real estate developer, it then branched out into more speculative, get rich quick schemes, including electric mobility vehicles, a soccer club and theme parks. According to Professor Cong Yi of Tianjin University of Finance and Economics, the central government has guided the domestic property market since 2016. “Houses are for people to live in, not for people to speculate on”, he told Glob al Times (Sept. 23). “Hence, the exposure of Evergrande’s crisis underscores the authorities’ firm determination to regu
late a rapidly expanding sector, whose development relies on piles of debt.”
As for those who compare Evergrande to the 2008 “shock” caused by the Lehman Brothers bankruptcy, they “do not un derstand China’s development model”, Cong explained. “Chi na’s future economic development relies on innovation and the real economy, rather than the short-term booster of the property sector.”
Concretely, Evergrande announced it would be selling a $1.5 billion stake in Shengjing Bank to a state-owned asset management firm. This de facto infusion of capital into the company by the Chinese government should serve to protect the domestic home buyers threatened by the bankruptcy, and not to the company’s international creditors.
China’s Secret for Avoiding a Financial Crash Italian economist and China expert Michele Geraci explained in a comment on his blog, why he believes that, contrary to the system in the trans-Atlantic world, Evergrande will not unleash a systemic crisis for China.
“China can manage crises because it controls all necessary macro-economic variables, which have been denied to us. Here is the list of what they have and what we don’t: “1. They issue their (own) currency.
“2. They decide the interest rate curve around the table. “3. They have no deficit constraints.
“4. They decide currency exchange around the table. “5. They control current accounts through independent trade policies.
“6. They control capital in- and outflows.
“7. They do not have an international currency, thus they are not captive to Wall Street.
“8. Lastly, the key is that they have no big foreign debt. “…That is why Evergrande won’t be, in my view, a systemic risk….”
The reader knowledgeable in the American System of Politi cal Economy will recognize major features of a Hamiltonian system of credit and trade policies in these Chinese policies. But they also apply to the comparatively healthier banking systems that used to exist in Europe, and urgently need to be restored.
When “Climate Change” and “Ecocide” Become Pretexts for Military Action... To get an idea of the plans of the trans-Atlantic geopolitical “elites” , it’s always instructive to consult London’s Royal Insti tute for International Affairs (RIIA – also known as Chatham House), the primary think tank of the British Empire. In a piece published on its website on Sept. 29, we read that climate change poses such a serious threat to global security that it requires a complete rethinking of “tradition al security concepts”, and thus of military priorities (See https://www.chathamhouse.org/2021/09/building-global climate-security).
The article, titled “Building Global Climate Security”, cites severe weather events, mass migration, the lack of water and disease as factors that “are adding to old and new security concerns”. But, not to worry, according to authors Patrick Schröder and Thammy Evans, because “the security commu
nity has advanced the securitization agenda of climate change by recognizing climate change as a critical factor that militar ies will have to deal with...”
After all, the climate worsens “conflict environments,” such as Afghanistan, Mali, and the Tigray region of Ethiopia prove, and is of course responsible for internal displacements, migra tions, etc.
The message here is that the armed forces -- the “security community” -- are going to play a major role in enforcing the various “green deals” and depopulation, with all that this implies in terms of violating sovereignty and intervening in nations’ internal affairs to defend the environment. Over the past decades, under the trumped-up notion of the “Respon
sibility to Protect”, the U.S. and NATO have used the pretext of human rights violations to carry out military operations throughout the world.
Now, state the authors, “Calls to legally define ecocide as a crime under the International Criminal Court have been growing and the prospect of armed forces defending against ecocide looks increasingly likely. For example, the partnering of militaries with national law enforcement agencies might be needed to defend the Amazon and other key habitats from further destruction.”
They also cite other “more complex interventions”, such as countering illegal wildlife trade, shipping toxic waste and even
EIR STRATEGIC ALERT 2 WEEKLY NEWSLETTER n°40 / 2021
prohibiting illegal fishing! They, too, could involve “the use of force directly against actors causing ecological damage or enforcing a mandate to protect shared ecological assets”. On the other hand, there are also simple interventions such as planting forests or a “great green wall” that military forces might undertake.
Such operations come under the collective notion of “re generative security”. The article notes in conclusion that the European Union, “as well as Germany’s Bundeswehr” could take the lead in “institutionalizing” such regenerative security approaches.
German CDU Heads Toward Self-Destruction Momentum is building within the German CDU to remove par ty chairman and former chancellor candidate Armin Laschet
from his posts, giving him the prime blame for the party’s Sept. 26 election results, which were the lowest in postwar election history (cf. SAS 39/21).
As it is now almost certain that the next German govern ment will be led by SPD chancellor candidate Olaf Scholz and consist of the SPD, the Greens and the Free Democrats (FDP), Laschet’s adversaries in the CDU are in need of a scapegoat to expiate the defeat.
Driving the campaign for replacing Laschet is the Wirtschaftsrat, the CDU’s business lobby, together with the outgoing Health Minister Jens Spahn, who has called for a quick severance to take place at a special party convention in January. Although Spahn certainly has the ambition to take over the party’s chairmanship, whether he has enough sup
porters in the party to do so is questionable. At the last elec tion for a new chairman last January, he was backed by only a minority, with the majority going to Laschet.
A second factor, allied with the Wirtschaftsrat, is Friedrich Merz, who was president of Blackrock’s German branch for several years until late 2019, when he decided to run for the CDU chairmanship. He lost the same vote against Laschet in January, but only by a few percentage points. Immediately after election day, Merz, like Spahn, demanded an “urgent re
positioning” of the party. Although not addressed directly, this implies that heads will roll at the top. Thus, whoever is next party chairman, is unlikely to be backed by the entire party, which will considerably weaken the party’s political clout.
All this in-fighting, compounded by the fact that Chancel lor Angela Merkel did not really campaign for Laschet at all, prevented the CDU from conducting a forceful campaign to win the Sept.26 elections. Therefore, the prime blame for the defeat goes to the party itself, or rather, to what became of it after 18 years of being led by Merkel (2000-2018). During that time, she made sure that no serious rival with enough
backing inside the party would develop to challenge her. The net result of this is that several currents are now fight ing to gain dominance, accompanied by an erosion of the voter base these past several years, as the party increasingly became pro-austerity and “green”. Indeed, an estimated 1.5 million voters migrated from the CDU to the SPD in the na tional election.
The planned reshuffle at the top of the party will introduce a new phase in the CDU’s decline, which will likely lead to its self-destruction as a leading factor in German politics.
Afghanistan: Unfreeze the Assets
to Avoid a Catastrophe
On Aug.15, U.S. Treasury Secretary Janet Yellen issued an order to freeze all the national assets of Afghanistan held in the Federal Reserve and other U.S. financial institutions. That ominous decision has still not been reversed. As a result, the funds that rightly belong to the Afghani people and state can
not be used to relieve the dire needs of the population. Al though the military personnel has been withdrawn, financial warfare continues.
According to an Aug. 18 tweet by Ajmal Ahmady, the head of Afghanistan’s central bank under the previous Ghani gov ernment, Afghanistan had approximately $7 billion in assets at the New York Federal Reserve Bank, and over $1.5 billion in other assets, in international accounts (apparently private banks in New York and London).
Ahmady added that Afghanistan was “reliant on obtaining physical shipments of cash every few weeks” from the New York Fed, in order to have any currency in the country for the population to use. And that was before the Taliban takeover. But Janet Yellen’s brutal decision made the country’s subjec
tion even worse by freezing the funds.
This is an unacceptable situation, as was recognized by Pak istan Foreign Minister Shah Mahmood Qureshi on the side lines of the UN General Assembly, who strongly urged “the powers that be that they should revisit that policy and think of an unfreeze.”
China’s Foreign Minister Wang Yi has also called for lifting the various unilateral sanctions or restrictions on Afghanistan as soon as possible, pointing out that country’s foreign ex change reserves should not be used as a bargaining chip to exert political pressure on the regime.
Moscow’s envoy to Afghanistan Zamir Kabulov had already warned at the end of August that if the US does not unfreeze the assets, the new Afghan authorities would likely turn to the “trafficking of illegal opiates” and to selling the weap
ons abandoned by the Afghan army and the US on the black market.
Although the Taliban have promised to ban poppy cultiva tion once again, to do so, they need to be able to finance crop substitution and ensure the farmers of other means of livelihood, as London’s Telegraph pointed out. In addition to opium, the European Monitoring Center for Drugs issued a report on Sept. 30 warning of the danger of a flood of cheap metamphetamines produced in Afghanistan.
Meanwhile, the first major shipment of humanitarian aid arrived in Kabul from China on Sept. 28, including medicines, blankets and other protective supplies for the winter. Food is still urgently needed. The Executive Director of the World Food Program David Beasley has warned that more than 75% of the population does not have enough to eat, many are “borrowing” food, or must go without.
Alexander Matheou, the Asia Pacific Director of the Red Cross and Red Crescent, said they are now delivering “emer gency relief and recovery assistance to 560,000 people in 16 provinces that have been the worst affected by severe drought and displacement.” With severe food shortages and COVID-19, overall, “Some 18 million Afghans are in urgent need of humanitarian assistance.”
EIR STRATEGIC ALERT n°40 / 2021 WEEKLY NEWSLETTER 3
Through the Hypocrisy of the “Human Rights” Narrative on the Taliban
The fourth annual “Normandy for Peace World Forum”, held last week in Caen, in northwestern France, was “overall an exercise in Orwellian brainwashing”, according to the Schiller Institute representative who attended. The event was spon
sored by The New York Times, Le Monde, Paris Match, Ouest France, Jeune Afrique, RFI and France24, with the agenda largely dominated by “Open Diplomacy”, a French think tank created by the Foreign Affairs Ministry to promote the “world destiny of a geopolitical Europe”. Thus, French Ambassador to the UN Nicolas de Rivière insisted via video hookup on the importance of promoting “European autonomy” and prevent
ing direct bilateral relations between China, Russia, Iran and Western countries.
The 27 debates scheduled dealt with issues of global gover nance, the global challenges facing Joe Biden and the United States, climate change, conflict resolution in most major hot spots, in particular Yemen, Russia, Iran, Lebanon, Turkey and Libya, etc. .
But Afghanistan was a special focus of attention. The basic line of the panelists was that the idea of a “Taliban 4.0” is just a myth these terrorists are trying to “sell” to the West, in order to procure funding, while they remain firmly committed to ap
plying sharia and repressing women. Peace is not only unlikely, they implied, but “impossible” -- and even undesirable! There was a great deal of lamentation over women’s rights, the lack of democracy, and the expected resurgence of ter rorism, but very little was said about the abject failure of the Western policy to improve the lives of the Afghan people. That changed abruptly during the Q&A period, when Karel Vereycken,a contributor to the French Schiller Institute, was the first to reach the microphone. He told the some 800 people packed into the room: “I fear that this debate is pol luted by ‘group think’ which claims that we in the West ‘are the good guys’ and the rest of the world are the ‘bad guys’.” That view, he continued, is not shared by Russia, Iran, China, Pakistan, India, Tajikistan and other neighboring countries. “They think it is in their interest to stabilize and develop Af ghanistan, to create a process which will steer the country in a positive direction for all.
“Secondly, I want each of you to tell me if you share the view of the Schiller Institute and of Doctors without Borders, that the Afghan National Bank should be immediately allowed to use the deposits of the Afghan people that are currently blocked on the accounts of the U.S. Federal Reserve. The World Bank has also blocked all financing, thus provoking a health disaster. As a result, the people of Afghanistan are dy
ing of hunger and sickness, while you are just talking about human rights and democracy.”
The panelists attempted to dodge the question and quickly move on to the next person. But the audience was shocked by their refusal to answer what was, after all, a very basic question. Afterwards, several people made a point of coming to Vereckyen to thank him for introducing some reality into the debate.
Mike Pompeo’s Secret Plans
to Have the CIA Kidnap or Kill Assange Plans were discussed and drafted by CIA officials in 2017 to silence WikiLeaks founder Julian Assange, by kidnapping him
and/or assassinating him. That is the (unrefuted) substance of an article reporters Zach Dorfman, Sean Naylor and Michael Isikoff posted on Yahoo News on Sept. 26. They report that the planning was catalyzed by then-CIA Director Mike Pompeo, who had an “obsession” with Assange and WikiLeaks.
This article confirms in large part reporting from Max Blu menthal of the Gray Zone, published in May 2020, which fo cused on the CIA’s use of Sheldon Adelson’s private security team in spying on Assange while he was in asylum at the Ec uadorian embassy in London. It also confirms the concerns and fears of many that the harsh treatment he is subjected to in a London prison, and his possible extradition to stand trial in the U.S., are intended to kill him.
By 2017, Assange had been living in Ecuador’s Embassy in London for five years in order to avoid extradition. Although U.S. intelligence agencies had been closely surveiling him dur ing that time, the plans to assassinate him were spurred by WikiLeaks’ ongoing publication of highly sensitive CIA hacking tools, known as “Vault 7”. The CIA believed this revelation had caused the largest data loss in the agency’s history. The authors quote an unidentified source that Pompeo was made completely furious by this event.
In fact, on April 13, 2017, in his first speech as CIA Direc tor, Pompeo said: “WikiLeaks walks like a hostile intelligence service and talks like a hostile intelligence service, and has encouraged its followers to find jobs at the CIA in order to obtain intelligence. It’s time to call out WikiLeaks for what it really is: a non-state hostile intelligence service often abetted by state actors like Russia.”
By identifying the website founded by Assange as an “intel ligence service”, operations against it could be categorized as action against another spy service, which would not require special authorization from the President (then Donald Trump). In fact, despite efforts to link Trump to the actions against As sange, the reporters could find no evidence of his involvement.
The investigation by Dorfman, Naylor and Isikoff included conversations with more than 30 former U.S. officials – eight of whom described CIA plans to abduct Assange. Their report declares: “It was a campaign spearheaded by Pompeo that bent important legal strictures, which may have jeopardized any prosecution of Assange, and risked a damaging episode in the United Kingdom....” They note there was opposition to the proposed operations from both National Security Agency officials, and members of Trump’s legal team.
Eventually, those arguing for an approach based on the courts, rather than espionage or covert action, won the policy debate. And then, on April 11, 2019, Ecuador’s new govern ment revoked Assange’s asylum and evicted him. British police immediately arrested him, and the U.S. government unsealed its initial indictment of Assange the same day, seeking his ex tradition from Britain.
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EIR STRATEGIC ALERT 4 WEEKLY NEWSLETTER n°40 / 2021
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