STRATEGIC ALERT NEWSLETTER
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| | | “Without the Development of All Nations, There Can Be No Lasting Peace for the Planet”, is the theme of the international online conference the Schiller Institute will hold on Saturday, April 15, 2023, from 4 pm to 11 pm CET, featuring speakers from around the world.
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The proceedings will be in English, with simultaneous translation provided in French, German and Spanish on the Zoom platform.
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Panel 1: 16-19:00, Panel II: 20-23:00
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| | | What started with a relatively small bank in California and was supposed to be no threat to the financial system, has expanded to a "systemic relevant” institution such as Credit Suisse, proving to be exactly what we had warned of: a precursor of the global financial collapse (cf. SAS 11/23). Aggravated by 15 years of money pumping, the overall debt bubble is bigger than in 2008, and the increase in interest rates, supposedly to fight inflation, has provoked the threat of a chain-bankruptcy.
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In addition, as we forecast, central banks scrambled to pour liquidity into the system – money tightening be damned. The over $700 billion distributed by central banks across the Atlantic in the past week won't be enough to cover the expanding hole, as contagion is already spreading throughout the system.
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As a consequence of the Credit Suisse failure, a storm is hitting the market of subordinate bonds, so-called AT1 securities (Additional-Tier 1), or "contingent-convertible" (coco) bonds. Those bonds were created after the global financial crisis of 2008 as a buffer to sacrifice in case of a bank failure, in the hope of preventing a bailout. Purchasers are aware of the risk, but are nevertheless attracted by the high yields.
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Even bigger than the AT1 market (some $275 billion) is the global $2 quadrillion derivatives market. Once bank failures and debt defaults begin, the spreading bankruptcy effect is not like that of simple dominoes in a row, one knocking over the other. It is like a thermonuclear chain-reaction, but in finances, as economist Lyndon LaRouche frequently explained. In other words, the various forms of debt are simply the fuse; but it is the derivatives that are the bomb, whose explosive charge is more than an order of magnitude greater than the debt alone.
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Credit Suisse had a very high derivative to assets ratio: 28:1. Its counterparties in those derivative deals are American megabanks. That is why pressure to bailout CS came from overseas, where the top four American banks own 89% of the entire derivative exposure ($173 trillion dollars). Those banks are (as of the end of 2022):
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- JPMorgan Chase: $54.3 trillion in derivatives, against $3.3 trillion in assets -- a 16:1 ratio;
- Goldman Sachs: $51.0 trillion in derivatives, against $0.5 trillion in assets -- a 99:1 ratio;
- Citibank: $46.0 trillion in derivatives, against $1.7 trillion in assets -- a 27:1 ratio;
- Bank of America: $21.6 trillion in derivatives, against $2.4 trillion in assets—a 9:1 ratio.
| (By contrast, China’s four largest banks have combined assets of $19 trillion, but their derivatives are estimated to be only some $7 trillion -- a ratio of less than 0.4:1.) |
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| | | Is it nemesis that Switzerland, which nearly introduced bank separation legislation a few years ago, is now hit by a financial collapse, which could have been avoided. In Sept. 2009, Swatch founder Nicholas Hayek convinced the leader of the Swiss People’s Party, Christoph Blocher and the leader of the Social Democratic Party, Christian Levrat to jointly sponsor legislation to prevent future bank bailouts, through a separation between commercial and investment banks on the model of the 1933 U.S. Glass-Steagall Act. The initiative had broad support among the population, and in 2011 was approved by the National Council, the lower house of Parliament. However, strong lobbying by the financial industry and “cosmopolitan” elites got the Council of States, the upper House, to vote it down in 2013.
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Had that legislation gone through, Switzerland’s banking system – and its economy - would be insulated today from the failure of one of its investment banks. This awareness is putting the bank separation issue on the table again.
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Thomas Matter (SVP) and Green Party President Balthasar Glättli spoke out in favor of a bank separation system in an SRF television interview on March 17. According to bluewin.ch, “Glättli recalled an attempt in 2011 to introduce a banking separation system that would have to separate high-risk business areas. At that time, the Greens, SP and SVP worked together, but in the end were outvoted by the other parties in the Council of States.”
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SVP’s Matter “agreed: ‘We must now stop mixing investment banking with the investment business.’ UBS must focus on its Swiss business instead of chasing risky adventures abroad, he said.”
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And on March 18, when a solution for Credit Suisse was still in the making, Benjamin Fischer, a young member of the National Council for the SVP, tweeted: “A Black Day for the Swiss financial center. In the past, we missed the chance: instead of a stable bank-separation system, we have now not only a too-big-to-fail bank, but a too-big-to-rescue giant. Will we get the needed majority now?”
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The Swiss business daily Neue Zürcher Zeitung noted March 19 that calls for Glass-Steagall are also coming from several Green Party members.
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| Marc Chesney, professor at the Zürich University and a known supporter of bank regulation, called again for Glass-Steagall in an interview with the blog Infosperber. “Banks should be separated in the framework of a Trennbanken system, into investment banks and commercial banks, as it was the case for decades through the 1933 Glass-Steagall Act which guaranteed a certain economic stability.” |
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| | | Even before Chinese President Xi Jinping landed in Moscow on March 20 for a three day state visit, the Biden Administration had announced they would reject whatever proposals came out of their discussions. National Security Council spokesman John Kirby complained to Fox News on the day before that both China and Russia “are chafing against this international rules-based order.... They don’t like that.” And if “coming out of this meeting, there’s some sort of call for a ceasefire , well, that’s just going to be unacceptable”.
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The Biden Administration’s worry is well founded. Both President Xi and President Putin have carefully prepared the summit, and intend to use the personal exchanges to deepen bilateral relations and discuss major international and regional issues. Beijing’s proposal for a negotiated settlement in Ukraine is most certainly on the agenda (cf. SAS 10/23).
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Before leaving for Moscow, Xi Jinping penned a op-ed in Rossiyskaya Gazeta titled “Forging Ahead To Open a New Chapter of China-Russia Friendship, Cooperation and Common Development” in which he recalled that he has made eight visits to Russia since being elected 10 years ago. “I came each time with high expectations and returned with fruitful results, opening a new chapter for China-Russia relations together with President Putin.” This time, he expects they will “jointly adopt a new vision, a new blueprint and new measures for the growth of China-Russia comprehensive strategic partnership of coordination in the years to come”.
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Vladimir Putin, for his part, published an op-ed in People’s Daily, under the headline “Russia and China: A Future-Bound Partnership”, in which he especially emphasizes the importance of trade relations and economic partnership. “In 2022, our bilateral trade, which had already been considerable by the time, doubled to reach $185 billion. This is a new record.” Moreover, the $200 billion target will likely “be exceeded as early as this year instead of 2024.”
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| In addition to the increase in volume, “the share of settlements in national currencies in our mutual trade is growing, further strengthening the sovereignty of our relations”. Many joint plans and programs for cooperation in energy, industry and agriculture, as well as space research and new technologies are in the pipeline. |
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| | | Throughout Europe, from North to South, protests are growing against the established parties. Specific grievances may vary from country to country, but the common denominator is the rejection of the current neo-liberal order, which has brought economic destruction, brutal social cuts and war, as the following examples show.
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France: Macron Saves His Skin, for Now. The situation is perhaps the most explosive in France, with millions of workers demonstrating on several occasions since January against the infamous “pension reform” pushed by Emmanuel Macron (cf. SAS 06/23). Given the lack of a majority in the National Assembly, the government finally had to adopt the reform by invoking Article 49.3 of the Constitution allowing legislation to be passed by force, without a parliamentary vote.
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This, in turn, led to a “no confidence vote” on March 20 in the National Assembly, which the government very narrowly survived after much wheeling and dealing with the conservative Les Républicains. Macron had threatened to dissolve the parliament and call for new elections in the event the motion passed, which was even more alarming for a number of deputies than facing the anger of their constituents at home. But the protests will certainly continue.
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Support for Dutch Farmers Exploding. Farmers in The Netherlands are up in arms over the EU orders to drastically limit nitrogen emissions by up to 50%, which will force many farms into bankruptcy, reduce food production and raise food prices. They are protesting against the EU’s Green Deal Farm-to-Fork program which mandates severe cuts in livestock numbers and use of fertilizers and crop protection chemicals, etc., with each member state responsible for figuring out specifics and timetables to ensure compliance.
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On March 11, some 25,000 Dutchmen answered the call of the Farmers Defense Force (FDF) and Together for the Netherlands (SvNL) to demonstrate at The Hague. The mayor forbade them to bring more than two tractors into the city, and threatened military intervention if they disobeyed.
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Among the few foreign speakers was Bob Baker, the coordinator for U.S. farm belt organizing for the Schiller Institute. He raised the point that people are starving internationally, which is a deliberate policy of the “financial nexus of the City of London, Wall Street and Amsterdam”, as well as of the Green Deal, for which Russia and China are not to blame.
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The wave of farmer protest against the agriculture shutdown has resulted in a surprising election victory for the recently formed BoerBurgerBeweging party (Farmer Citizen Movement) in provincial elections on March 15. The BBB received more seats in the Senate than the current ruling party – which is a huge defeat for Prime Minister Mark Rutte.
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The irony in the victory is that BBB has not been in the forefront of the farmer movement but is just riding the growing wave of protest. Popular anger is also directed against the EU’s war policy, which has driven natural gas prices sky-high and already bankrupted a large number of family-run bakeries!
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Great Britain: Strike Wave Gathers Strength. Hundreds of thousands of workers went on strike on March 15 in the United Kingdom, including teachers, London Underground train drivers, civil servants, doctors, nurses, lawyers, university staff, and even BBC journalists. Work stoppage by train staff in the ASLEF union, as well as by the Rail, Maritime and Transport (RMT) unions left the entire train network and Underground in London at a standstill. According to some estimates, over half a million workers participated in the day of action, which intersected several ongoing strikes by public sector unions.
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It was the largest show of force by the unions since strike actions started last year as runaway inflation hit deep into the population’s livelihood (cf. SAS 06/23). Inflation now stands at over 10% in Britain.
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Among the strikers were an estimated 130,000 members of the Public and Commercial Services Union (PCS), who walked out from government departments and agencies like Border Force. Workers, who say salaries have not kept up with inflation, are also striking over conditions, job security, and pensions. PCS General Secretary Mark Serwotka said it was a scandal that some of those administering government services were now so poorly paid that they were forced to rely on handouts themselves.
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The actions intersected the announcement of the budget by Chancellor of the Exchequer Jeremy Hunt, which offered no relief to the striking workers.
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General Strike in Greece Protesting the “Crime of Tempi”. In major cities in Greece, tens of thousands again took to the streets on March 16, to demand justice for the victims of the “crime of Tempi”—as last month’s deadly train crash is being called (cf. SAS 11/23). A strike by the railway unions was supported by the public sector (ADEDY) and private sector (GSEE) union federations. All public transportation was shut down, including railways, ships, and airports, while schools closed the same day as both students and teachers supported the strike.
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Demands of the unions and other organizations are not confined to the train crash; they extend to the entire policy of privatization that has been implemented in Greece. They include modern, safe, and cheap mass transportation; strengthening the public health system; free healthcare for all; immediate anti-flood, anti-fire, and anti-earthquake protection measures, including in schools, colleges, hospitals, and workplaces.
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| The government of Prime Minister Kyriakos Mitsotakis, which has been conducting a very clumsy and transparent effort at covering up its responsibility in the privatization-caused train crash, killing 57, chose to deploy riot police, tear gas, and flash bombs to try to break up the demonstrations. |
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| | | A founding member of the German Green Party, Antje Vollmer, passed away on March 15 at age 79 after a long illness. In the political testament she left, entitled “What I Would Still Like To Say”, she blasts the war-mongering current leadership of the Greens. This position is genuine for Vollmer, a Lutheran theologian, who throughout her political life was an outspoken pacifist, including during her mandate as vice chairwoman of the German Bundestag from 1994 to 2005. As one of her last public interventions, she was among the first to sign the Wagenknecht-Schwarzer Manifesto for Peace.
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Referring in her testament to Economy Minister Robert Habeck and in particular to Foreign Minister Annalena Baerbock, Vollmer wrote: “The German economy minister is attempting to replace the old dependencies on Russia and China with new dependencies on countries that can in no way pass for model democracies. The foreign minister is the shrillest trumpet of the new antagonistic NATO strategy.”
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“The justifications of the Greens are astonishing in their argumentative simplicity. At the same time, the cost of armaments and the influence of the arms and energy companies are growing immeasurably. The war senselessly devours the billions that would be urgently needed to save the planet and fight poverty in the global South. The rising China, however, is propagandistically identified as a new geopolitical opponent and is constantly provoked on the Taiwan question. All of this does not augur well.”
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Vollmer wrote that she feels haunted by her “very personal defeat”, namely that her party, the Greens, are now wasting the opportunity they had to change the world for the better. “What has enticed the Greens of today to give all this up for the mere goal of playing along in the great game of geopolitical poker?”
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She took western and in particular German leaders to task for failing to recognize the enormous significance of the historic decisions Moscow took in 1989 to allow a peaceful reunification of Germany and to withdraw all military forces from once Warsaw Pact member countries. But German President Steinmeier did not even have the decency to attend the funeral of the man who had allowed it, Mikhail Gorbachev. Just days later, he stood together with all other western leaders at the grave of Queen Elizabeth. Instead of showing gratitude, they are involved in a war in Ukraine that could lead to the destruction of the planet.
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However, the rest of the world is no longer willing to go along with the West’s arrogance, in Vollmer’s view. Therefore, “My hope is that out of all this, a new Non-Aligned Movement will emerge” to re-assert the rule of international law.
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| Antje Vollmer’s political testimony is a wake-up call to all pacifists and those who oppose NATO’s war strategy to become much more active in the public eye, with anti-war events such as the traditional Easter Marches and the Manifesto. If this develops into the creation of a new political party over the course of this year, one may assume that had she been still alive, Antje Vollmer would likely have become a founding member of it. |
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| | | The indictment of Russian President Putin on March 17 by the International Criminal Court (ICC) provides more evidence that the effort by western governments to use the war in Ukraine to destroy Russia is a project run by arrogant elitists, with no contact with the real world. The announcement, made by ICC chief prosecutor Karim Ahmad Khan, a British attorney, charges Vladimir Putin, along with Russia's Commissioner for Children's Rights, Maria Lvova-Belova, with illegally deporting Ukrainian children to Russia. Claims have been made that at least 15,000 children were kidnapped by Russian forces, while the Russians admit that 1,400 were moved from the areas of Ukraine annexed by Russia, mostly from orphanages and hospitals in war zones, for their protection.
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The indictment was clearly issued for political, and not legal, reasons. Nonetheless, President Biden called the charges "justified" and said it "makes a very strong point", while acknowledging that, like Russia, the U.S. does not recognize the ICC as a legitimate authority.
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The timing of the indictment is replete with ironies, coming on the eve of Chinese President Xi Jinping's summit with Putin in Moscow, and when U.S. media are reporting that military and intelligence officials now believe that Ukraine cannot win, and the time has come for negotiations.
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An even more profound irony, however, which probably escaped Joe Biden's questionable powers of discernment, is that the indictments came two days before the twentieth anniversary of the Iraq war, an occasion marked by multiple articles pointing to the failure to hold accountable any of the military or government officials responsible for that war. Neither the ICC nor any other legal body has prosecuted George W. Bush or Tony Blair for their launching of the war on false pretenses, which is estimated (by British medical journal Lancet) to have led to more than 601,000 deaths of Iraqis between March 19, 2003 and 2006, and countless more in the following years, due to civil society breakdown, and the outbreak of terrorism and religious civil war resulting from the invasion.
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Recall that the decision to attack Iraq was based on a fabricated dossier claiming Iraq had weapons of mass destruction which threatened the West, and that Saddam Hussein was allied with the Al Qaeda terrorists alleged to have been the perpetrators of the 9/11 terror attacks on the U.S. That MI6 dossier had been delivered by the Blair government to U.S. officials, and was used by Bush's Secretary of State Colin Powell in his address to the U.N., to advocate invading Iraq -- though Powell later admitted he knew the charge was false.
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Blair used his speech announcing the launch of the war on March 20, 2003 to reiterate the fabricated intelligence (otherwise known as lies), based on which he ordered military action in Iraq, with the mission to conduct regime change, "to remove Saddam Hussein from power and disarm Iraq of its weapons of mass destruction."
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| Tony Blair and George W. Bush and his team of neocon war hawks are correctly seen by most of the world as war criminals, who have inexplicably not been brought to trial for their crimes, while the ICC, founded in part due to the initiative of George Soros' Open Society NGO, has indicted Putin for removing defenseless children from a war zone. Knowing this helps explain why the "Global South" has refused to join the U.S. and NATO in condemning Russia and arming Ukraine, to conduct regime change in Russia. |
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| | | „Ohne die Entwicklung aller Nationen kann es keinen dauerhaften Frieden auf dem Planeten geben“ lautet das Thema einer Internetkonferenz, die das Schiller-Instituts am 15.4. 2023 mit Rednern aus aller Welt in zwei Sitzungen (16-19 Uhr und 20-23 Uhr) veranstalten wird. Die Konferenzsprache ist Englisch, Simultanübersetzung ins Deutsche, Französische und Spanische wird angeboten. Weitere Informationen und Anmeldung unter:
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| | | Am Wochenende des 18.-19.3. erging aus New York, London und Brüssel der Befehl an Bern und Zürich, die Credit Suisse (CS) um jeden Preis zu retten. Der unaufhaltbare Run auf die Einlagen und die Erosion des Eigenkapitals trieben den einstigen Schweizer Riesen in den Konkurs. Und angesichts der Derivatgeschäfte von US-Großbanken mit der CS (s.u.) hätte das eine Systemkrise ausgelöst.
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Schließlich einigte man sich darauf, daß die Schweizer UBS ihre langjährige Konkurrentin übernimmt. Damit die UBS diese Last auf sich nahm, wurde jedoch folgendes vereinbart: Die UBS übernimmt die CS für3 Mrd. CHF - weniger als die Hälfte des Marktwerts, selbst auf dem derzeitigen niedrigen Niveau. Die Schweizer Regierung setzte mit einer Notverordnung das Mitspracherecht der Aktionäre bei einem solchen Vertrag aus. (Saudi-Arabien, der Hauptaktionär mit fast 10%, wird erfreut sein, für seine für 4 CHF gekauften Aktien 76 Rappen zu erhalten.)
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Zusätzlich werden 16 Mrd. CHF an CS-Schulden in Form nachrangiger Anleihen einfach gestrichen. Diese Gläubiger, denen eine Rendite von 7,5% versprochen wurde, haben ihr ganzes Geld verloren. Zudem wurde zugesagt, mit bis zu 9 Mrd. CHF künftige Verluste aus Derivatwetten der CS zu decken. Darüber hinaus schafft die Schweizerische Nationalbank zwei Sicherheitsnetze von jeweils 100 Mrd. CHF. Insgesamt beläuft sich das Rettungspaket auf 225 Mrd. Franken.
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Unterdessen pumpte auf der anderen Seite des Atlantiks die Federal Reserve mehr Geld in die Kassen als 2008. In der Woche vor den Iden des März nahmen die Banken insgesamt 164,8 Mrd.$ aus zwei Stützungsfenstern der Federal Reserve auf. Davon stammt eine Rekordsumme von 152,85 Mrd.$ aus dem Diskontfenster, dem traditionellen Liquiditätsreservoir für Banken. Den bisherigen Rekord, 111 Mrd.$, hatte es während der Finanzkrise 2008 gegeben!
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Zusammen mit der Rettung regionaler US-Banken und der Mega-Rettung der Credit Suisse legten die Zentralbanken am Wochenende vom 18.-19.3. über 700 Mrd.$ an Rettungsgeldern auf den Tisch - und das ist noch nicht alles.
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Am Sonntagabend, 19.3., gaben sechs Zentralbanken eine beispiellose Erklärung ab, in der sie unbegrenzte Rettungen durch ein Dollar-Swap-Abkommen zusagen. Die sechs Banken sind: Bank of England, Bank of Canada, Bank of Japan, EZB, Schweizerische Nationalbank und Federal Reserve. In der von der Fed veröffentlichten Erklärung heißt es: „Um die Effektivität der Swap-Linien bei der Bereitstellung von US-Dollar-Finanzierung zu verbessern, vereinbarten die Zentralbanken, die derzeit US-Dollar-Geschäfte anbieten, die Frequenz von Geschäften mit siebentägiger Laufzeit von wöchentlich auf täglich zu erhöhen. Diese täglichen Operationen werden am Montag, den 20. März 2023, beginnen und mindestens bis Ende April andauern.“
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| Die Krise von 2008 ist wieder da, eigentlich war sie nie verschwunden. Und das Liquiditätspumpen (QE) ist wieder da, in noch größerem Ausmaß als 2008, weil die Schulden in der Zwischenzeit gestiegen sind. |
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