Helga Zepp-LaRouche: Germany Rejects Lisbon Treaty as Financial 'Perfect Storm' Gathers
July 1, 2008 • 11:20PM


Here is Helga's European briefing call for June 30, 2008:

Helga Zepp-LaRouche

July 1, 2008 (LPAC)So, we have a very dramatic situation, because the general awareness that this system is coming down is really spreading everywhere, and if the BIS puts out reports that sound like our own writings from a year ago, then you know the news has arrived.

But before I go into that, let me start with a really very exciting piece of information, and that is, that today, the Office of the President Koehler, announced that Koehler is not going to undersign the document of EU Reform Treaty! That this was done after the constitutional judges asked him to do that in a formal way. And this obviously is not so hot news for Mrs. Merkel, because the German government, as you know, was insisting, after the "no" in Ireland to the Lisbon Treaty, that the other EU countries should ratify the treaty as quickly as possible. And according to Spiegel Online, this plan is lost, and a monkey wrench is thrown into it by Germany itself.

So this is actually very good, and as one source told me yesterday, that actually the case doesn't look so bad at all, because the judges of the constitutional court, with this Lisbon Treaty have to decide about their own power, thereafter: Because if they agree to the Lisbon Treaty, then all judicial power would go to the European Court and they would basically become irrelevant. So I think this is a very good development, and I think this will fuel similar ferment elsewhere.

Now, the otherwise really big news today, is that, as I said, the BIS has a warning which is quite amazing. They have in their annual report, they say, "The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the U.S., compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point.... It is not impossible that the unwinding of the credit bubble could, after a temporary period of higher inflation, culminate in a deflation that might be hard to manage, all the more so given the high debt levels."

Now, all of this is reported by Ambrose Evans-Pritchard in the Daily Telegraph today, and he also reports that the European banks have suffered worse losses on U.S. property than the American banks, and that they have net dollar liabilities of $900 billion, mostly short-term loans which have to be rolled over. And that because of the credit crunch, this money is really not there, or they can't get it.

So, this is all very interesting, and they use almost identical formulations to what we have been saying for the past years, the subprime market crisis was only the trigger, not the cause, the loose credit policy of Greenspan, and loans were made to "the gullible and the greedy."

This is all very, very dramatic. And even more insane is a report, a memorandum from the OECD, with the title, "The Subprime Crisis" saying that the sub-prime crash cost the banks $420 billion in losses, but then they quote experts saying it's probably double, more in the realm of $900 billion. And they say, ""The total counterparty exposure to hedge funds of $1.3 trillion is very large indeed. It is hard to estimate how much of this would be at risk in the event of [residential mortgage-backed securities] RMBS hedge fund losses causing failures of funds — given the interconnectedness — and it is probably best not to find out."

Now, this is a total declaration of bankruptcy, because we know the interconnectedness is not the figures they name, but it's probably in the three-digit trillion figures, so they don't even want to look at it. But this, what they now admit is already pretty good. But then, the OECD basically says that the governments of the United States and Europe, should bail all of this out. Now, this is totally insane: They propose a new Resolution Trust Corporation, like the infamous Brady Bonds of the 1980s, to absorb the bad debt. In other words, the taxpayers are supposed to buy this stuff up.

Now, Lyn's comment on this Ambrose article was that it is a "valid warning shot" about the sudden changes in the world financial situation for the worse, which is about to hit.

So, I think this is really now the dominant issue, and given the list of participants in the Aspen Institute meeting which is take place right now in Rome—the chairman of Aspen Italy is Giulio Tremonti—but if you look at the list of participants, you can be sure that it is this financial storm which is on the agenda: Kissinger, Robert Rubin, Italian President Napolitano, Mario Draghi, Martin Feldstein, and various other people, so it is actually a very interesting meeting. Rubin was questioned about Tremonti's warning that the impoverishment of the middle class can lead to fascism, which Rubin didn't want to answer. But he basically said that there is no question that a new system is needed.

Okay, now, to just show you that this thing is really completely out of control, the oil price went above $143 today, and obviously, this is not unrelated to the mounting stories about tensions with Iran, all these speculations about an attack by Israel on the Iranian nuclear facilities, to which Iran already answered that they would block the Strait of Hormuz. Now, obviously, if that would happen, then the oil price would shoot up immediately to $250 or worse.

Just in parenthesis, the situation in the United States, where you had the new warning by Seymour Hersh in The New Yorker, which was already in the briefing about all these preparations, but we also talked to a very knowledgeable source, and the estimate is that Israel obviously can not take out Iran. But what they could do, is start the process. Then you would have an Iranian retaliation, and then the U.S. would come in on the defense of Israel. Now, obviously, this is a doomsday scenario, and therefore, we know from discussions with high-ranking, retired military, and that the U.S. Military is dead-set against this attack. And that, however, also the sentiment in the Congress, the military, the CIA, even Gates and Rice are against it, but we should not be complacent, because there are two to three aircraft carriers in the Persian Gulf again, and from other sources who are well-connected to Arab governments, we got the information that the entire Arab world is right now extremely alert to the danger of something happening with Iran. And naturally, the collapse of the financial system is heightening the danger of some desperado action.

Now, back to the economy, the inflation rate officially in the eurozone reached 4% in June, and obviously, the pressure now —self-imposed pressure by the European Central Bank—very likely they will increase the interest rate this Thursday, July 3, and naturally the big faction fight is between those who say you have to fight inflation, and those who say that raising the interest rate right now will cause another series of firms to go under. And even Norbert Walter from Deutsche Bank said, any increase in interest rate will be very painful and for sure, have big damage in real economy.

Now, tomorrow morning, I was told, there will be a very important statement by Lyn in the briefing, pertaining to immediate protection, stop-gap measures—not solutions, but stop-gap measures to prevent a complete social chaos resulting out of this. Remember, Wachovia Bank is about to go under, Lehman Brothers bank is about to go under. And if these large investment banks go under, you will have, among other things, millions of people down the line who lose every investment they thought they had. So this is obviously, a very big thing.

So, the good news, however, is wages of the boards of the Dax firms increased by 650% in 20 years—so at least somebody had a good time! But you know, if you have a lot of dough, you can lose a lot of dough, so—anyway.

So then, how bankrupt the G8 countries are, you can see by the fact that they have now announced shortly before the new Japanese G8 meeting, that they will not be able to make the $25 billion annual payment, which they wanted to give for Africa, which was already agreed upon in Gleneagles, Scotland in 2005, and which was again reconfirmed last year in Heiligendamm last year, with a big Merkel fanfare, over the $25 billion. So this is now detonating—one more policy of Merkel, which is a big air bubble. And it's also critical for Japan, because they had made the development aid one of the big themes for their summit between July 7th-9th. But it is just a reality that this system is completely bankrupt, and morally these governments are bankrupt, on top.

- An Open-Ended Situation –

Which you can also see by the fact that now the crescendo calling for universal sanctions against Zimbabwe, from the British is accelerating. Basically Mugabe is presently in Egypt to attend the African Union summit, and it is not to be expected that the African Union will go along with the demands for the sanctions. It should be noted, however, that over the weekend, President Bush accelerated his nasty remarks against Zimbabwe: Rice demanded a new UN resolution, and The Economist had a story, "Get Rid of Mugabe." And good news is that the Financial Times reports that the Africans' answer to all of that, that British Foreign Secretary for Africa Mark Malloch Brown, that he should be careful with what he says, because it's very counterproductive, coming from a former colonial power, it does not go over well in Africa.

So then, I should say that the situation concerning the U.S. election campaign—it's not yet anywhere decided, but what you have, is, with this massive financial storm building momentum, that obviously nothing is decided, and we have to really wait until after these two conventions, what will shake out and who will be the vice president. Because this all will take place when the disintegration of the system is visible. You can be sure that nothing positive will come out of the Bush Administration. And as Lyn has written in his new Four Powers paper, the only sign of hope for civilization, would be, if by September, one of the then-definite Presidential candidates would come out, saying something fundamental to signal that this candidate would go in the direction of the Four Power agreement. And what Lyn develops in the new paper is actually addressing it to a broader audience, both in the United States, but also internationally: That the picking of the candidate is not business as usual, but it really should pay attention to the fact that that may decide the outcome of not only the fate of the United States, but of civilization at large. Because if you have another idiot being in the White House when the system comes down, you can kiss civilization good-bye.

So you can expect more shock effects between now and the conventions. And Hillary, whose people are in very intensive negotiations with the Obama people, when she returned to the Senate a couple days ago, she was surrounded by hundreds of journalists, and even the Washington Post's reporter, Dana Milbank, who's normally a cynical guy, wrote a beautiful article praising her, how she's back, having 18 million behind her, and there is no question that she is already now the most powerful legislator, and that if Obama's numbers don't increase, and if he doesn't have a minimum of 15% lead over McCain, come Election Day, he will be in worse shape than Kerry was at the time. And obviously, this is a big factor.

Also obviously, the backers of Obama know that, and they're looking at these figures, and if there is a certain correlation of percentage, they probably have no other choice than offer the vice presidency to Hillary. However, that does not necessarily mean she will do it, because it's an issue of policy, and she doesn't want to obviously compromise herself by going with the wrong policies. And she is continuously giving speeches, addressing the issues of the lower 80%.

Now, also, one thing which could completely change the situation is if Fitzgerald does, indeed, indict the Governor of Illinois, which could happen any day, then this could lead to another cascade of articles and involvements of Obama and so forth.

So, therefore, this situation is completely open-ended, but we should also be on alert for another reason, because the no-good Lieberman basically warned that the U.S. may be attacked in 2009 by a new September 11th. Obviously, this is not very original, but these people still have the same ideas how to distract attention from the situation.

- The Immediate Perspective -

Okay, now, concerning what we have to do: Obviously, we have to really mobilize the whole organization, like we have never done before, to use our proposals, and especially Lyn's very powerful, new paper, which is coming at the right moment for people to listen to it, because the absolute awareness that the system is blowing out, and that you have now people talking about a trillion here, a trillion there, and this is just the tip of the iceberg—that really shows inflation going out of control, banks going under, that we have to push this paper of Lyn's like hot cakes and really get it out...

...[T]his issue of a new world economic order, the issue we have been fighting for for the last 35 years, really—and Lyn and some other people for even longer—this is now what has to be decided in favor of mankind. Because it is very clear that the enemy is bankrupt. If you look at the "European Council on Foreign Relations," this monstrosity which was founded last year by George Soros and Joschka Fischer, of all people—and looking at Joschka Fischer being in bed with the 50 most hard-core neo-liberal neo-cons, like Amato, like Koch- Weser, and all these other people who are on the board of this ECFR, it really proves the case that in Germany, to make a career, you have to have at least one corpse in the basement, to be considered trustworthy by the system.

However, they put out a statement, as you know, a couple of days ago, demanding that the Lisbon Treaty be implemented, no matter what, that it has to be sped up. But all of this obviously is now in shambles. But these people, for sure, would mean Synarchy, it would mean fascism, in Germany, in Europe, and if they have their way, in the United States.

So, the battle is really down to the wire, and we should organize as many forces as we can, to say, this thing will not even last, in all likelihood, until the next President is in office on Jan. 20, 2009, because a lot of things will happen now. So we have to make sure that the next candidate makes such a statement in September, but what we can do to flank that, is to organize that the issue of a New Bretton Woods is on the agenda at the UN General Assembly in September.

So I think we have our work cut out for us, and if all of us are really focused on this like Hell, in the same way like this decision of Koehler not to sign the Lisbon Treaty until the Constitutional Court has decided, I think we can win! It may not go in one, big piece, and I think it will probably get more stormy, but our ideas are the only ones that have the possibility to remedy this issue. And I think we should be conscious of that, that we have to win, simply because the alternative is a dark age, and that is becoming more visible by the day.

So that is what I wanted to say: and I think we are in an excellent position, and if we keep doing what we have to do, maybe next year the world will look much better.