Volume 26, No. 21 - May 24, 2012
An “Impressive if not Adequate” Political Shift in Favor of Glass-Steagall
The G8 meeting in Camp David came and went, as usual, with no decisive action from the leaders of the world’s economic powers faced with the imminent meltdown of the financial system. But they did manage, again as usual, to patch together a noncommittal final communique promising economic growth and austerity at the same time, as concessions to all sides.
Meanwhile, the new banking crisis – which was supposed to be impossible -- beginning with the JP Morgan debacle and the Spanish banks in particular, have led leading circles in the United States to come out openly for separating investment banks from commercial banks, on the Glass-Steagall model. There is definitely a political shift underway, as Lyndon LaRouche stressed, which is “impressive if not adequate”. And it’s putting wind in the sails of the LaRouche movement’s campaign, and of Marcy Kaptur’s bill in the House, which had 60 co-sponsors as of May 19, and is ready to be brought before the relevant Commission, and then to the floor.
The most prominent call for Glass-Steagall came from Elizabeth Warren, a well-known expert in bankruptcy law and an influential politician, who is now running for Senate in Massachusetts. She was chairman of the Congressional Oversight Panel to oversee implementation of the Emergency Economic Stabilization Act (the first bank bailout program in October 2008) and is a frequent guest of economic programs in U.S. television.
A petition drive in favor of Glass-Steagall that she launched online collected some 100,000 signatures within a few days, to be presented to Congress. Originally a supporter of the “Volcker Rule”, she was asked by the FireDogLake blog site on May 17, whether the Volcker Rule and Glass-Steagall are two ways of getting at the same problem. She replied they are not, that implementation of the Volcker rule is too complex, as can be seen in the JPMorgan Chase crash. “If it’s true that the Volcker rule can’t adequately manage the risks that the largest banks are determined to take on, then the right answer is Glass-Steagall. A modernized Glass-Steagall. Separate commercial banking from Wall Street.”
Other candidates have called for enactment of a new law separating the banks, as have innumerable analysts and commentators. Former Clinton Labor Minister Robert Reich, a long-time backer of Glass-Steagall, has intensified his campaign, focusing on the inadequacy of the Volcker rule as well.
At this year’s national conference of the Machinists Union, union leaders were urged by their president, Tom Buffenbarger, to lobby Congress to restore the Glass-Steagall Act.
In Europe, the discussion on bank separation is particularly prominent in France (cf. below) and Italy. Here, a series of institutional figures – some from unexpected quarters -- have come out publically in favor of Glass-Steagall:
* Stock exchange regulator Giuseppe Vegas departed from his written speech at the annual meeting with stock market traders on May 14, to call for reintroducing banking separation. Separating investment banks from commercial banks, Vegas said after pointing to the JPMorgan case, “would lead to a better knowledge of risks and to defining more targetted cautious rules.”
* Gianluigi Gabetti, former financial czar of the Fiat Holding and current honorary chairman of Exor, the Agnelli family holding, not only called for a reintroduction of Glass-Steagall, but also of a credit system such as under the Marshall Plan, “a wonderful tool with which the United States offered credit to the rest of the world and banks could offer credit to their customers, selecting them in a responsible way.” Today, “there is such a passion to avoid risk , [i.e. investment in the real economy], that I do not understand what we need banks for,” Gabetti said polemically.
* The City Council in Prato, Tuscany, unanimously voted a resolution calling for Glass-Steagall, introduced by a LaRouche supporter.
*The website of the National Teachers Union, Gilda, published an article by a Movisol representative and Modena Gilda board member calling for a reintroduction the classical standard in education and the Glass-Steagall standard in the economy.
In Germany, the SPD has worked out a position paper in close coordination with the French Socialist Party, rejecting the Fiscal Pact in its present form and demanding a separation of banking functions, although the details of it are not known.
Medvedev Warns: Undermining National Sovereignty Can Lead to Nuclear War
On the eve of his trip to the United States to attend the G8 meeting at Camp David, Russian Prime Minister Dmitri Medvedev delivered an unequivocal message to President Barack Obama and other leaders of NATO countries, who are threatening to intervene with regime-change operations in Syria, Iran, and elsewhere.
EIR STRATEGIC ALERT
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Such actions, he said, can “easily lead to full-scale wars, even with nuclear weapons.”
Russia Today headlined its wire on Medvedev’s speech: “Infringing national sovereignty could lead to nuclear apocalypse.” Medvedev’s unambiguous language, delivered at an International Legal Forum in St. Petersburg, follows on similar warnings issued May 3 by Russian Chief of Staff Nikolai Makarov, that the NATO policy of an anti-missile defense shield in Europe could lead to a Russian pre-emptive strike on the installations.
Principled opposition to the U.S. and NATO policy is also seen as the real reason why President Vladimir Putin cancelled his attendance at the G-8 summit as well as his personal meeting with President Obama at the last minute, in addition to his earlier-announced refusal to attend the NATO summit in Chicago (cf. SAS 19-20/12).
Now, through Medvedev, the Russians are making it clear that they cannot accept attacks on nation-states’ prerogatives – such as the escalating Western intervention to oust Syrian President Bashar Assad, in particular. This is reportedly the message which Putin has told Russian ambassadors throughout the world to convey to the respective leaders, and it has now been dubbed the “Putin doctrine.”
It is also a reaction to the “Atrocities Prevention Board” which President Obama has just set up in the United States, in order to make the case for “humanitarian military interventions” anywhere in the world under the pretext of protecting civilian populations and preventing human rights violations. In other words, a pretext for launching preventive wars, which are otherwise prohibited under the UN Charter.
Prime Minister Medvedev laid out Russia’s position in his speech, which is worth quoting at length. He stressed that the need to act together to counter global challenges, such as “the proliferation of weapons of mass destruction, international terrorism, organized transnational crime, drug trafficking, and the threat of natural and man-made disasters, “ must be done with “undeviating respect for the supremacy of law.”
“Particularly dangerous, in my view, are unilateral actions made in violation of the fundamental principles of the Charter of the United Nations, which is the main venue where the international community brings it problems. In fact, this is the only venue we have, even though some may not like it. But it truly is the only venue. And we understand that the UN Charter calls for respecting the supreme power of law and the sovereignty of states.
“One more thing that I believe is important, considering my experience in politics, is the concept of state sovereignty. It should not be undermined even if for the sake of achieving some immediate political gain, including an election to a particular post. Such attempts threaten global order. There have been many recent examples of the concept of state sovereignty being undermined. Military operations against foreign states bypassing the United Nations, declarations of illegitimacy of certain political regimes on behalf of foreign states rather than the people of the country involved and imposing various collective sanctions, again bypassing international institutions, are some of them. “This does not improve the situation in the world while rash military interference in the affairs of another state usually results in radicals coming to power.
“Such actions, which undermine state sovereignty, can easily lead to full-scale regional wars even -- I am not trying to scare anyone here -- with the use of nuclear weapons. Everybody should remember this especially when we analyse the concept of state sovereignty.”
Military Leaders Urge Congress to Repeal Military-Detention Provisions of NDAA
President Obama’s drive to implement police state measures and the “unitary executive” doctrine is running into obstacles, in particular around the National Defense Authorization Act (NDAA).
Last week, the Congress debated an amendment to that infamous law enacted by Obama in December, which allows unlimited military detention, anywhere in the world including the U.S., of anyone, including American citizens, suspected of links to terrorism, without a trial. The decision on who to detain lies solely with the President.
The amendment, proposed by Democrat Adam Smith and Republican Justin Amash, would have guaranteed that anyone arrested on U.S. soil would be charged, and tried, and that the Federal Government would have to make its case before a federal judge.
In a fairly unusual move, 27 retired generals and admirals intervened into the debate with an open letter released on May 16, urging Members of Congress to support the Smith-Amash amendment, and to repeal mandatory military custody of terrorism suspects.
„As retired general and flag officers, we do not make this request lightly,“ they wrote. „However, we strongly believe that sound national security policy depends on faithful adherence to the rule of law. Though it is lawful for the military to detain those engaged in hostilities in an armed conflict, the armed forces should not supplant our law enforcement and intelligence agencies at home. Those detained in the U.S. should not be held indefinitely without charge or trial or forced into military custody.“
Among the signers are Gen. Joseph Hoar, Gen. Charles Krulack, Lt. Gen. Harry Soyster, Brig. Gen. John Johns, and Maj. Gen. Antonio Taguba.
In spite of the pressure, the House of Representatives rejected, on May 18, the Smith-Amash amendment by a vote of 232 to 182, and approved another vague amendment, which would only prohibit the government from denying U.S. citizens their constitutional rights, by a vote of 243 to 173.
However, the NDAA did suffer a defeat in the justice system, in a lawsuit filed in the Southern District of New York. The seven plaintiffs, including journalists and activists, alleged that the provisions violate their rights to free speech and association, guaranteed by the First Amendment, as well as due process rights guaranteed by the Fifth Amendment of the Constitution.
The Court found that the law does violate First Amendment rights, in particular by allowing indefinite detention of people who may have associated with terrorists without even knowing it. Enforcement of the Act has thus been suspended.
The court also found that plaintiffs are likely to succeed on the due process rights under the Fifth Amendment, because the statute is so vague that it is virtually impossible to know what conduct could subject one to indefinite detention.
78 Candidates for S&P
in French Legislative Elections!
May 18th was the deadline for filing candidacies in the French legislatives elections that take place on June 10, followed by runoffs on June 17. Solidarité et Progrès filed 78 candidates (together with 78 alternates and 78 financial officers), who will campaign on the recovery platform which Jacques Cheminade made widely known during his Presidential campaign.
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All candidates, including two mayors, have their own campaign blogs. They will be running in 33 departments, mainly urban and suburban districts of Montpellier, Sète, Toulouse, Montauban, Lyon, Grenoble, Dijon, Strasbourg, Nancy, Metz, Lille, Arras, Rouen, Paris, Argenteuil, Rennes, Bordeaux, Clermont-Ferrand, etc. as well as in all 11 newly created districts for the French living abroad.
A short release put out by S&P outlines the three major measures to be taken to put an end to crippling austerity and create millions of skilled jobs:
* setting up a parliamentary investigative commission on the crisis, and sorting out legitimate from the illegitimate debts,
* separating banks Glass-Steagall style
* issuing massive amounts of public credit for great projects.
The news of the slate was picked up shortly afterward, on the Europe 1 website, which is one of the three major radio stations in France. Interestingly, the article mentions the appeal for donations launched by S&P, because the banks refuse to extend loans to the party. It also quotes from a recent interview given by Cheminade to Sud Radio, saying that the objective is get out the ideas to influence the political debate. People will see, “in the coming crisis, that what I said was true,” and they will turn to us. “Look at Greece: the far left, which was getting 0% ten years ago, is now getting 17%.”
“A grain of sand can become a remarkable catalyst, just as a tiny atom contains incredible power,” he said on Sud Radio.
Reality Challenges Hollande:
Take on the Fight or Betray the People?
François Hollande, before being elected president of France, sparked great hopes all over Europe because of his campaign against the vicious austerity programs that have ruined most European countries, and in favor of growth, considered the absolute precondition for returning to healthy finances.
The Economist of London and many bankers, who are intent on bailing out the current system, portrayed Hollande’s program to increase the minimum wage and some pensions, and his promise to rehire over 50,000 teachers, etc., as blatant proof that “France” was in a state of denial. They, of course, promote “financial fascism with a human face”, such as that of Mario Monti. Some even proposed that former ECB governor Jean-Claude Trichet or WTO boss Pascal Lamy (who is, after all, a socialist), become Budget Minister in the new government.
That didn’t happen. Hollande even took the risk of “frightening” the markets by naming Bernard Cazeneuve as Minister of European Affairs and former Prime Minister and Finance Minister Laurent Fabius as Foreign Affairs Minister – whereas both of them campaigned against the EU “Constitution” in the 2005 referendum. However, Fabius is now definitely in favor of further consolidating European integration and “economic governance”.
At a private meeting with Angela Merkel, and with President Obama and other leaders at the G-8 summit, Hollande managed to have the word “growth” appear in the final communiqués. However, the measures presented by his team -- such as project-bonds issued by the European Investment Bank to sovereign credit institutions which can then re-lend them to productive industries, or the financial transaction tax, the use of untapped EU structural funds, Eurobonds for bailouts and a broader role of the ECB -- are not only incompetent, but fail to take into account the real nature of the current systemic financial meltdown.
The agenda laid out by Hollande, who always looks for mutual consent among all players, is at best out of sync with the time-frame of current events. At the G-8 meeting, rather than calling for eliminating entire sections of unpayable gambling debts, he said that Spanish banks might need urgent recapitalization.
What is positive, for now, is Hollande’s determination to impose, in one form or another, the separation of banking activities. According to La Tribune, such a reform will be debated and voted on in Parliament as of July 3. One of his advisors, economist Karine Berger, said the reform will not be of the Volcker or Vickers type, but something specific to the French banking system.
The French President has not yet fully realized – but reality will soon force him to -- that he will have to choose between the “Bastille” (the people) and “Europe” (the markets).
Opel’s Future at Stake Again, in Germany
Protests and walkouts are planned for the end of May at the General Motors Opel production sites in Germany, following the surprise announcements by the corporate management that the Astra model will no longer be produced in Germany as of 2015, but in Ellesmere port (Britain) and Gliwice (Poland).
Considerable wage cuts at the sites in Britain and Poland are said to be the management’s main motives for shutting down production of Opel’s best selling model in Germany. The decision, which mainly affects the plant in Ruesselsheim, comes on top of the recent announcement that the carmaker might shut down its plant in Bochum completely, with its 3,200 workers, in 2014.
This puts a huge question mark over the future of Opel as a leading car producer in Germany. GM’s corporate policy for quite some time has been to prevent its German subsidiary from entering markets abroad. A prime demand of labor is to have those restrictions lifted, so that Opel can increase production and bring in more profit.
At the same time, GM maintains a highly aggressive sales strategy on the world market from its Daewoo base in South Korea, where production and labor costs are below those in Germany. The future of a pillar of automobile construction in Germany, with 25,000 workers directly employed at Opel’s four sites, and another 80,000 among industrial suppliers, is thus at stake.
Labor leaders at Opel and in the metal workers union are now calling for a “comprehensive plan to secure production and employment in Germany,” but as long as they remain focussed exclusively on manufacturing passenger cars, they’ll be on the losing end against the management. The solution lies in the proposal made several years ago by the LaRouche movement worldwide, including during the GM crisis in the U.S.: faced with increasing competition from new automobile manufacturing countries, carmakers in the USA and in Europe can only survive by retooling machines from production of cars to components of new transport systems, in particular for densely-populated urban regions, such as maglev train systems. The same proposal went out in Germany during the two large crises at Opel in 2004 and 2009, and met with great interest among labor leaders. But it was eventually rejected in the hope (now proven vain) that car manufacturing would experience an unlimited future.
Now, it is on the agenda again, but it remains to be seen whether labor leaders have learned a lesson. There may not be a second chance for saving Opel, this time.
EIR STRATEGIC ALERT
4 WEEKLY NEWSLETTER
° 21 / 2012
The Choice Before Greece and Europe
Is “Freedom or Death”
Greece is slated to go to a second round of elections on June 17, following the failure of any party to form a coalition government. Although the two pro-bailout parties, New Democracy and Pasok, certainly made a shameless attempt to co-op the left wing SYRIZA party, which came in second in the first round, and the center-right Independent Greeks, into a coalition that would continue the suicidal EU policy.
Greek resistance fighter and world famous composer, Mikis Theodorakis, has now issued a “Call For Unity Of Anti-Memorandum Forces,” declaring the question now before all Greek patriots is the same existential question that their ancestors had to face so many times in the past: “Freedom or Death”. Victory will only come with the uniting of the people “under fire” behind a “a single red line”. He called for setting up a “Social Patriotic Front” comprising the anti-memorandum parties including the KKE (the Greek Communist Party”, SYRIZA, Democratic Left and the Independent Greeks
The leader of SYRIZA, 38 year-old engineer Alexis Tsipras, has not let himself be intimidated by international pressure. In an interview with CNN’s Christine Amanpour, he warned that if the EU does not change its policies, Europe and Greece will all go “directly to hell”. As for German Chancellor Merkel’s threats to throw Greece out of the euro, he said, “I don’t know what Madame Merkel wants to do, but I know what we want to do...We want to change the austerity measures in Greece, also in Europe. We want to do this with the cooperation of other forces and people of Europe, the people who want a big change. Because everybody now understands that with this policy we are going directly to the hell...”
As for threats of being forced to go back to the drachma, Tsipras warned that the day after Greece would do so, the markets would find the next country to exit, which “will be Italy or Spain”.
While strongly against austerity, the SYRIZA leader punts on the fact that the entire financial system, including the euro, is bankrupt. The first thing he would do if he becomes president, he said, would be to “cancel all these austerity measures…. We believe that this crisis is not a Greek crisis but a European crisis. And we will try to find a common solution - about the role of ECB, about the Europe bonds, about the negotiation of the public debt of all the European countries.”
Tsipras is optimistic that partners can be found for such negotiations. While he would not take any “unilateral action”, he said, if Greece is cut off from funding, “then we will be forced to stop paying our creditors” so we can to pay its our workers and retirees. “Whatever we do, things will be difficult. But it will also be difficult at the same time for all of Europe because the euro will collapse.” Therefore, both sides should step back “before we reach that point” and find a “European solution.”
In reference to the need for a stimulus policy, Tsipras said in a recent interview with the British daily, The Guardian, that “Europe is desperately in need of a Roosevelt-style New Deal.”
Argentine President Reasserts
National Policy of Growth, FDR Style
When the government of President Cristina Fernandez de Kirchner re-nationalized the petroleum company YPF in April, taking over 51% of the shares held by the Spanish Repsol, Europe reacted with horror. Members of the European Parliament called it “an attack on the exercise of free enterprise,” British Foreign Secretary William Hague expressed his “deep concerns,” and Spain threatened Argentina with “retaliations”, while the Spanish Secretary of State for Trade announced that the decision would be challenged at the G-20.
The reason why the reactions met with such fury was suggested by Richard Drayton, Professor of Imperial History at Kings College London, in The Guardian. Oil and profits, he wrote, are not the ultimate stakes in the matter, but rather the fact that Argentina has interrupted the “chain of securitisation anchored in the real world by its oil at one end, but with investment banks in London and New York, the holders of swap and other derivative liabilities on Repsol and YPF debt, at the other.”
As for the G-20 meeting in June, their finance leaders refused to put the issue of YPF on the agenda, stating that “it is not a forum for bilateral debate.” Furthermore, the BRICS nations (Brazil, Russia, India, China, South Africa) decided to defend Argentina. They also invited Argentina to co-sponsor the declaration on the issue of employment, economic growth, and international commerce to be discussed at that summit, which states that open trade does not generate economic growth, development and social inclusion on its own, but that there are other policies that promote investment in human capital and infrastructure.
Nonetheless, Europe and the United States, which are sinking hopelessly into bankrupcy, still attempt to lecture some of the fastest growing economies in the world on the issue of economics (when not threatening them with war).
One figure speaks volumes: while youth unemployment in Spain approaches a level of 50%, Argentina has turned its economy around and has record levels of employment, including in productive high-skilled jobs. Thus, according to Spanish consulates in Argentina, some 1,200 Spaniards immigrate and settle in Argentina every month, many among them highly skilled engineers, architects or IT experts. This is not surprising, considering the Argentine government’s in-depth promotion of science and technology, which Cristina Fernandez has termed “a policy of state,” never to be abandoned.
Since 2003, when her husband, Nestor Kirchner was elected president, Argentina´s investment in education has tripled, and the budget for science and technology has increased by 937%! Human resources dedicated to science have increased by 66%, the number of researchers by 72%, and scientific infrastructure by a 67%.
890 scientists have been repatriated, and that figure is expected to reach 1,000 by the end of the year, nearly 40% of whom return to their home country from the United States, where science is dying under the current political conditions.
Cristina Fernandez has made clear, as did her late husband, that she is carrying out a Rooseveltian policy. In a May 16 speech in front of students, she again stated, that had Argentina adopted the model of economic recovery in the 1930s of the United States under Franklin Roosevelt, the country would have avoided becoming “one more pearl in the British crown.”
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Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani
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