THE LEAD
A Warning On Wall Street's Insane War Against Russia
January 20, 2015
Led by the non-stop activity of its New York City teams, the movement of Lyndon LaRouche and the the Schiller Institute are advancing on the goals of bringing down Wall Street and pushing the United States into a new economic alliance with the BRICS nations. "We've got the tiger by the tail: keep swinging!" said Helga Zepp-LaRouche, after keynoting the exceptional New York City conference of the Schiller Institute Jan. 17, which brought Martin Luther King's life purpose together with that of economic development and peace today.
The principle to be restored in doing this is the credit principle of the United States' first Treasury Secretary, Alexander Hamilton, a principle of real economic growth which is diametrically opposed to the way Wall Street and London have ruined the economies of the United States and Europe. With a leaflet, "Alexander Hamilton's Credit Principle," LaRouche's movement will hit Wall Street and New York again this week to follow through on the Jan. 17 breakout event in New York, "BRICS Nations Revive Dr. Martin Luther King's Dream."
Watch the rally live at 12:30 Eastern!
But because of the bankruptcy of Wall Street and the City of London, they continue to drive for war against Russia and China: provocations against Russia in Eastern Europe, war again raging in Ukraine, sanctions and financial warfare overtly aimed at bringing down the Putin government.
EIR Founding Editor LaRouche had a firm message on this today, which must be understood.
"If the United States launches attacks on Russia," LaRouche said, "then Russian weapons will hit the United States before it knows what has happened. If you represent Wall Street, if you participate in its policies, then you're already dead if the United States goes to war with Russia."
The Wall Street and London banks are reeling, showing all signs of another oncoming, well-deserved breakdown. The Wall Street megabanks are on the hook for the "shale oil bubble" now undergoing collapse, and exposed to it by $20 trillion in derivatives contracts now going bad. They've just reported their worst earnings since the Great Depression and laid off 50,000 employees. The European megabanks, under City of London's dictate, are so bankrupt they are desperate to get a $1-2 trillion bailout from the European Central Bank started this week; and were just shocked by big losses when Switzerland cut its ties with the sinking euro currency. As one Wall Street Journal writer expressed it Monday,
"the Davos conference is opening with the world on the edge of a nervous breakdown."
That is, the world of Wall Street.
It is this desperate City of London/Wall Street regime which threatens war — even global thermonuclear war — thinking to save itself by the capitulation of just those nations whose policies threaten it with a new order: China and Russia in particular; the BRICS-allied nations generally.
LaRouche's warning is directed precisely at that insane delusion of a collapsing Wall Street order.
The Schiller Institute's petition calling for the United States and Europe to join with the BRICS nations, is crucial in this situation.
SUPPORTING MATERIAL
Eurozone on the Edge of Breakdown
With the euro sinking and broken glass from the Swiss "escape" action flying in all directions, the bankrupt Eurozone is now headed for the start of massive quantitative easing, and then the posing of a Greek demand for writeoff of sovereign debt throughout the European Union. Support for the Greek Syriza Party's Europe-wide debt conference proposal is increasing, as is Syriza's lead in the polls in Greece before this Sunday's election.
Losses in the financial sector from the Swiss National Bank action were in the many billions, and are still mounting, according to a Bloomberg review Jan. 19. Citigroup, the world's biggest currencies dealer, lost more than $150 million; JPM Chase, $120 million; Deutsche Bank lost $150 million and Barclays about $100 million, and so on. Hedge funds lost much more; but what will have shocked these megabanks is the fact that in every case, the forex/derivatives losses on the Swiss move were 5-6 times the maximum "value at risk" which those banks' models told them they could lose in one day. Denmark, Finland, and other non-Euro EU members are being watched to guess who pulls the cord next.
A London Guardian article Jan. 17 reported support for Syriza's Europe-wide debt conference proposal is increasing. The Guardian cites Hans-Werner Sinn supporting Syriza's proposal; the UK group Jubilee Debt Campaign; Franco Caselli of the LSE; and "a growing chorus of experts." In Ireland the Finance Minister Andrew Noonan, and the Deputy Prime Minister, John Burton, both supported Syriza's proposal last week.
IMF Managing Director Christine Lagarde, visiting Ireland, opposed Greece in the most London imperial tones possible: "A debt is a debt and it is a contract. Defaulting, restructuring, changing the terms has consequences on the signature and the confidence in the signature," said Madame.
The European Central Bank, desperately believed by all now to be on the verge of massive purchases of government bonds, has strictly opposed any writedown of Greek debt, and ruled out "QE" buying of Greek debt because it is of "low quality." Spiegel on Jan. 16 reported, without giving any source, that Draghi briefed Merkel and Schaeuble Jan. 14, on his QE plan for the Jan. 22 ECB meeting; "The plan envisages a 20% to 25% percent limit on purchases of each country's debt" — except Greece, of course. That "limit" adds up to the range of $2-2.5 trillion euros.
Sinn, head of the Institute for Economic Research, told CNBC-TV in an interview Jan. 19 that this QE will trigger exactly the "Swiss" volatility in markets, but on a larger scale. "[The banks] will happy to be able to sell the government bonds, which they consider as partly toxic, and they will have a lot of cash. What will they do — they will primarily try to take it abroad. And they have already begun doing that - what you see in Switzerland," Sinn told CNBC. "If we want to help governments that are in trouble let's do it — but let the parliaments decide, rather than this technocratic body, the ECB."
Russian Academic on Color Revolution, Promotes BRICS as Solution
Oleg Ivanov, chairman of the political Science Department at the Diplomatic Academy in Moscow (tied to the Foreign Ministry), published an op-ed in China's Global Times attacking the color revolution in play against Russia, saying that the Russian people's support for independence, and the emergence of the BRICS, will defeat it.
Ivanov writes that the West's short-term goal is to force the government to capitulate to Western interests, but that
"The long-term goal is to split Russian society. On the one hand, it is aimed at breaking bonds between the government and the people, and on the other hand, to drive a wedge between the government and top Russian businessmen.... The rationale behind such steps is to put pressure on the Russian leadership, not making it change its policies but by replacing the leadership - thus repeating the Ukrainian scenario."
He argues that this will fail, that the Russian people will not give up their independence as expressed in the public support for Putin.
"The Russian people see vividly in Ukraine what can happen to a country when protesters cross the line and resort to violence.... Many Russians perceive the tragedy in Ukraine as a sort of vaccination against 'the rampage of democracy.'"
He points to the BRICS as the long term solution:
"Western sanctions pushed Russia to look for new markets and business partners. The most promising area is to the east of Russia, and China ranks high in this respect. What we need is a new edition of interdependent integration projects like BRICS. BRICS can on its own - together with the Western community if it is willing - create an additional alternative pillar to beef up the economic world order.
"Set up by BRICS, the New Development Bank, with capital of $100 billion, is designed as an insurance policy. It is especially urgent when Western-led institutions such as the IMF and the World Bank fail or do not always play a constructive role in the world economy. Through this, Russian businesses will receive new opportunities for development and for the whole country's economy. Success in this area will slow down the recession in Russia and deprive the opposition of a bargaining chip in their strife with the government.
"Russia is an important player in the interdependent economic system. Sanctions have a boomerang effect hurting the opposite side. Under current circumstances the question is who will suffer more and is capable of bearing the pain caused by sanctions longer.
"Such a situation when both sides compete in hurting each other is detrimental to all sides involved and is absurd. It is advisable to remember the proverb 'burn not your house to rid it of the mouse.'"
Reeling Wall Street Not Ready for Alexander Hamilton's Return
When the LaRouche movement's rally for Alexander Hamilton's credit principle hits Wall Street later today, it will confront a reeling bunch of Wall Street bankers.
Some 50,000 of them have lost their jobs just in the last quarter of 2014, according to the Jan. 19 New York Post, with Bank of America letting go 20,000, and Citibank and JPMorgan Chase 10,000 each. This followed what one bank analyst cited by the Post called
"the worst set of quarterly revenue reports in eight decades,"
which the Post in turn characterized as "a shocking throwback to the Great Depression." The analyst said the layoffs are continuing:
"headcount would get significantly reduced."
At the same time the Dallas Federal Reserve on Jan. 12 projected a probable loss of 140,000 jobs in the energy sector in Texas alone in 2015, although it somehow also forecast that job growth in the Texas economy would continue at some level. In a Seeking Alpha article on this, Wolf Richter listed some of the layoffs underway: 9,000 at Schlumberger; Suncor Energy 1,000; Halliburton 3,500.
With all the big banks facing more losses from the oil debt meltdown and its associated derivatives, the idea of "break-up" has again taken the stage. There are forecasts, like that of Christopher Whalen in a Bloomberg interview Jan. 17, that the Wall Street banks will break up fairly rapidly by selling off units, their hands forced by their stockholders and their falling stock prices.
That process, even if it materializes, would be chaotic, as well as economically useless for any purpose other than well-deserved Schadenfreude directed at Wall Street. The big banks might get split into smaller pieces every bit as toxic, with securities plays and derivatives exposures still in the commercial "depository" banks.
What is needed is Glass-Steagall break-up of the banks by function, separating the thousands of bankrupt speculative units from their commercial-bank "hosts" and letting them go bust. This will produce banks at least capable of lending credit into the real economy.
But this is Hamilton's credit principle. Does Wall Street fear it more than another 100,000 or so layoffs?
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