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2 Απρ 2013

The Schille Institute : The Troika Plans to Grab Bank Deposits All Over the Eurozone


WEEKLY NEWSLETTER
Volume 27, No. 14 - April 4, 2013

The confiscation of bank accounts in Cyprus is but the first implementation of a long-planned solution for the entire trans-Atlantic region. Under the new scheme, the bank bailouts,which have been carried out since 2008 with taxpayers’ money,are to be replaced by bank “bail-ins”, i.e. the money of the respective shareholders and depositors will be expropriated to recapitalize the banks.


The European parliament will soon be voting a bank resolution
legislation submitted by the EU Commission on June 6,
2012, which is centered on a bail-in scheme including confiscation
of deposits above the guaranteed threshold of EU100,000.
The man leading the negotiations with the EU member states
on finalizing that legislation, MEP Gunnar Hokmark (Sweden,
European People’s Party group), made that crystal clear in
remarks on March 29. “You need to be able to do the bailin
as well with deposits,” he told Reuters. “Deposits below
EU100,000 are protected... deposits above EU100,000 are
not protected and shall be treated as part of the capital that
can be bailed in.” He is confident, he added, that a majority of
the other European parliamentarians support the idea.

On March 25, the new chairman of the Euro Group, Dutchman
Jeroen Dijsselbloem, had created a furor when he stated
that the seizure of bank accounts in Cyprus was a “template”
for the Eurozone. Dijsselbloem himself, as well as other European
authorities, then had to backtrack, and claim that Cyprus
was “unique.” But European Central Bank Governing Councl
member Klaas Knot told the Dutch daily Het Financieele Dagblad
a few days later that this policy has been “on the table for
a longer time” in Europe.

Indeed, the draft legislation at the European Parliament is
proof that the Cyprus bank robbery was not a last-minute invention
by the German government, but rather a well-planned
operation concocted by the EU Commission.

There, the depositors with accounts larger than €100,000,
about to be fleeced, include small and medium enterprises,
which have business accounts at banks through which they receive
payments from customers, and from which they make
payments to their vendors, pay taxes and payroll withholdings
(e.g. social security contributions), pay employees, etc. In other
words, they use the accounts to run their businesses. These are
the most liquid assets that are in the banks which can be stolen.

When they are, the economy will immediately collapse.
Depositors can be looted also through the Spanish variant: one
million Spanish households were swindled into using their savings
to buy “preferred stocks”’ (preferentes) in most of the major
banks of the country. As in the case of bankrupt Bankia, those
stocks are now worth less than 1% of their original value.
Yet another version is planned for Italy, which could come
under the Troika regime in the case of protracted ungovernability.

Italy has no big banking problem, but a state debt of
127% to GDP, a large chunk of which is trade on international
markets. In order to guarantee that debt for bondholders, Jörg
Krämer, chief economist of Commerzbank, proposed to reduce
it to 100% of GDP by implementing a 15% levy on Italian
private wealth, claiming that Italians are “richer” than Germans
and can afford it. He used, among others, statistics published
by the Bundesbank showing that average Italian private
wealth, at EU164,000, is far more than the German average of
EU76,000. These figures, however, include financial wealth as
well as property, such as housing real estate, and two-thirds of
Italians are homeowners, compared to 44% of Germans. Average
income in Italy is much lower than in Germany: EU19,655
per year per capita as against well over EU30,000.

However, as Cyprus is being hit by all the calamities which
euro-fanatics said would come down on any country that leaves
the euro, but without the advantage of returning to a national
currency, a growing number of Italians are publicly asking
whether the cost of remaining in the Eurozone is too high.
Similar Schemes in the UK and the U.S.

A joint paper written by the US. Federal Deposit Insurance Corporation
and the Bank of England issued on Dec. 10, 2012,
shows that U.S and UK authorities are also planning to loot depositors’
money exactly like the EU. The BOE-FDIC document
considers deposits in the banks as “unsecured creditors,” and
thus subject to seizure for bailing in the banks.
In a comment on the paper, author Ellen Brown wrote on
truthdig.com on March 28: “No exception is indicated for ‘insured
deposits’ in the U.S. meaning those under $250,000, the
deposits we thought were protected by FDIC insurance. This
can hardly be an oversight, since it is the FDIC that is issuing
the directive.” She adds: “If the anticipated enabling legislation
is passed, the FDIC will no longer need to protect depositor
funds; it can just confiscate them.”

To complete the trans-Atlantic picture, the Hellasfrappe blog
reports that Canada’s “Economic Action Plan 2013” suggests
that banks can be recapitalized by converting certain liabilities,
including deposits, into regulatory capital.
EIR STRATEGIC ALERT
2 WEEKLY NEWSLETTER n°14 / 2013

The schemes are very close to being implemented. The popular
financial blog, the Slog on March 29 gave the example of
Bank Santander UK, which it says just sent out a notice to its
customers, on changed terms and conditions for “Santander
business current accounts and business savings accounts” with
a business turnover up £250,000.” That would include small
and medium enterprises.

The notice says that “Any money held for you in an account
with Santander UK plc will be held in its capacity as a bank and
not as a trustee. In accordance with Financial Service Authority
requirements we are obliged to notify you that the client
money rules on money do not apply to a Banking Consolidation
Directive (BCD) in relation to deposits within the meaning of
the BCD held by that institution. As a result, the money will not
be held within the client money rules of the FSA.”
So, the cat is finally coming out of the bag. That also explains
why the Obama Administation and EU leaders have increased
the pressure to quash the debate on Glass-Steagall bank separation,
which is the only orderly way to save the citizens’ legitimate
assets.

For Lyndon LaRouche, this comes as no surprise. As we reported
at the time, he warned against the precise policy that is
outlined in the BOE-FDIC plan -- and explained why only Glass-
Steagall is a viable alternative -- in his Feb. 15, 2013 webcast,
where he forecast:

“The vast mass of debt, which is represented by the monetarist
operation, would be cancelled. In its place, they would
have a new system of finances, which ignores entirely all the
obligations associated with the old! Which would mean that
most of the people of the world would be starving to death,
quickly.... I know exactly what they’re doing, because I know
how systems work. And what they’re doing, the only way it will
work, is to cancel the entire bailout system -- just wipe it off
the plate, and come in with a new system, in which people who
are privileged will be brought into that system, and they will be
given relatively good incomes to live on, but unfortunately the
greater majority of the population will have none. This is the
greatest population-reduction scheme so far in known history.
And that’s what the policy of the people who oppose Glass-
Steagall is -- whether they themselves know it or not. But they
will be held accountable for the effect of that policy.”
BüSo Campaign for Bank Separation
Covered in Media

Behind closed doors, politicians and businessmen in Germany
have long been discussing the mobilization of the Civil Rights
Movement-Solidarity (BüSo) and the Schiller Institute for an
authentic separation of banks. FDP parliamentarian Frank
Schäffler is one of the few who have recognized it openly – and
in written form – on a recent blog (cf. SAS 12/13). Now, the
breathtakingly rapid unravelling of the euro system is forcing
the issue even more to the fore.

The lively BüSo campaign on the streets of Berlin attracted
the attention of the editor of the online newspaper Deutsch-
Türkische Nachrichten (DTN), which published March 22 an
article based on discussions with party members.
“The Bürgerrechtsbewegung Solidarität“ (BüSo) demands
the separation of investment banks and commercial banks.
Small savers should not have to cover the risks of investment
deals with their bank deposits,” the article begins. “The party
state chairman says: if the banks in Cyprus go under, it will trigger
a dramatic chain reaction in the EU. The euro as a currency
is extremely endangered.”

After describing what an activist told him on the original
Glass-Steagall Act, and its strict separation of investment activity
from deposits, the article notes that the unseparated universal
banks of today encompass all banking and financial services.
“The clients’ deposits of clients are used for speculative deals.”
In a separate discussion with Dr. Wolfgang Lillge, the state
party chairman, DTN was told that the German population is
not aware of the risks of the Cyprus crisis. “The present banking
system in Cyprus is the same in the other EU countries. A
collapse in Cyprus would lead to a chain reaction in the euro
area. Many banks would default. That would be the end of the
euro, Lillge says. The idea of the mandatory levy only shows
how great the panic is.”

“But in the USA, a re-thinking can be observed,” the article
ends. “The pioneer for the reintroduction of separated banks
is U.S. Congresswoman Marcy Kaptur. In 2012, she launched
a legislative initiative in which she called for the reinstitution
of the Glass-Steagall Act. 80 more members of Congress and
organizations signed on to the initiative.”

The article is illustrated with a picture of Franklin Roosevelt
at a news conference, and the caption “Roosevelt was a great
promoter of separated banks.”

“Cyprus Should Leave the Eurozone”,
Jacques Cheminade Tells Hellada

The Greek daily Hellada (Greece) of March 27 published a
hard-hitting interview with Jacques Cheminade, former French
Presidential candidate and LaRouche movement leader in
France, under the headline “The Eurozone Supports the Banking
Oligarchy”. The interview hit the streets of Greece at a time
when the Greeks are still in a state of shock over the Eurogroup’s
unprecedented confiscation of bank deposits in Cyprus,
and Cheminade’s remarks are certain to strengthen popular
resistance to EU policy among Greeks.
The one question on everyone’s mind, which Hellada highlighted
on the two page spread, is: “Should Cyprus choose to
leave the Eurozone, and if yes, how should the Cypriot government
manage the ‘next day’?”

Cheminade’s reply was straight-forward: “My answer is that
every member nation should leave the Eurozone, for the common
good of all. The euro was created by monetarist central
bankers, the likes of Robert Mundell, and imposed on Chancellor
Kohl by President Mitterrand. It was doomed to fail from
the word go.

“As for Cyprus, it should leave. It is not going to be a bed
of roses, but as Greece knows, to stay inside means to be tortured
from outside. The point is that there is no national fallback
option per se. So Cyprus should proceed in cornering the
Eurozone authorities, and exhibiting to the eyes of the world
their incompetence and injustice. This in turn, if well negotiated
with Russia and also China, should create a wave throughout
Europe and the whole trans-Atlantic world financial system. At
the same time, to avoid the chaos and confusion coming from
such an initiative, Cyprus should call for a global Glass-Steagall
and a New Bretton Woods, together with Greece. As for Europe,
it has to be rebuilt as an association of sovereign nations
with common development projects, a Europe of the peoples
and the fatherlands.

“Cyprus can be the grain of sand that changes history, provided
that she considers herself as a detonator for a new paradigm
on a world scale.”
In answering the first question, on the main causes of the
current crisis, and the solution, Cheminade gave an idea of just
EIR STRATEGIC ALERT
n°14 / 2013 WEEKLY NEWSLETTER 3
how huge the problem worldwide is, by mentioning one figure.
When he first denounced financial derivative products, which
are bets on future prices, in 1993, they amounted to a total of
about 5 trillion dollars. Now they are officially at 700 trillion,
more than ten times the yearly Gross National Product of the
entire world! “This system is a true financial madhouse.”

The vice behind the euro, Cheminade said, is that “it was not
created to support development projects or social policies, but
to enforce so-called orthodox monetarist policies, which mean
austerity for the people and indefinite State bail out for the
banks ‘too big to fail’. Those banks have been involved in actual
gigantic frauds, for example on the Libor and Euribor interest
rates, to such an extent that now it is openly said that they are
also ‘too big to jail’.

“Eric Holder, the Attorney General of the treacherous Obama
Administration, has just admitted that he will not go after
those banking interests, because to enforce the existent laws
and Constitutional principles would lead to a disintegration of
the national (U.S.) and international financial system! In other
words, this financial oligarchy ruins real production, ruins agriculture
and industry, and imposes austerity on the people just
to keep its power worldwide. The Eurozone has become their
auxiliary. This is no more capitalism or even financial capitalism,
it is financial fascism.

“The solution to this murderous mess is to re-establish the
priority of production and labor through a Glass-Steagall system,
a State credit policy for infrastructure and the creation of
economic platforms based on more advanced, more productive
technologies, and a concept of qualified, inventive and properly
paid labor. We have to clean up the mess – with a Glass-Steagall
– and at the same time build the future – a credit system.”
In other answers, Cheminade dealt with the need to finance
the plan elaborated by the LaRouche movement for integrating
the Mediterranean into the Eurasian Land-Bridge, and underlined
the need for Europe to cooperate with Russia on development
projects as well as on the defense of the Earth against
dangers from outer space.
Jacques Cheminade in Swiss Bilan:
Time to End the Bubble Economy!
The associate editor-in-chief of the Swiss economic magazine
Bilan, Myret Zaki, invited Jacques Cheminade into the studio on
March 13 for a fascinating discussion of the financial crisis and
the way out of it, the video of which is posted on the website.
The 45 minute debate brought together two highly knowledgeable
observers of the financial world, as Myret Zaki herself
has written books and innumerable articles on the financial
bubbles, the irrationality of the dollar system, and the economic
war waged against Switzerland.
Zaki opened the discussion began with the issue of austerity,
asking how it can be avoided when states have been bankrupted
by the bank bailouts. We can’t undo that, she said, but
what is the alternative. Cheminade countered that the “rigor”
needed should be applied to the banks that speculated and not
to the peoples. He compared the policy of the international
community to the remedy of Molière’s doctor: the patient is
sick, so he is bled, he gets even sicker, and is bled again. In the
end, he’s healed, but he’s dead ! Today, the Greeks are cutting
trees in public parks to heat their homes, while tuberculosis
and malaria are reemerging. In Portugal, millions of people are
singing the songs of the Revolution that brought down the dictator
Salazar on July 25, 1974, to denounce another, yet more
murderous, dictatorship, that of the Troika.
I agree with you on that, Zaki conceded. She later noted
that the austerity imposed on Portugal in 2012 was of the
same amount (1.5 billion euros) as the profits earned during
2011 by three hedge funds alone through speculating against
Portugal.

The discussion went through the dangerous policy of monetary
expansion by the Federal Reserve, and the absurdity of a
situation where the stock exchanges today are higher than ever,
while the economy is in a shambles.
What is the alternative, Zaki asked, since in her view, wiping
out the debt is indefensible from a moral standpoint. In reply,
Cheminade said, we have to see who created that debt. And
we have to distinguish between state debt and bank debts. For
the latter, the legitimate debts have to be separated from the
illegitimate ones in the framework of Glass-Steagall legislation.
And that will mean bankruptcies among the investment banks.
There have to be some bankruptcies, Zaki exclaimed. There
are some people, who made excessive debts, who will have to
take the losses.
On the question of gold, both specialists went through the
manipulations of this market. Since 2009, they agreed, China
managed to purchase between 4,000 and 6,000 tons of gold!
But, Cheminade added, that will not allow China to escape from
the tsunami of a global crisis of the trans-Atlantic system. A
new Bretton Woods is necessary: strict separation of the banks,
an agreement among nation states to issue long-term credit in
great projects and high-technology. That used to be the case in
Switzerland, Cheminade said, when investments were made in
pharmaceuticals, the chemical industry and metallurgy.

Otherwise, we will end up in a war of all against all, Cheminade
said, going into the Anglo-American maneuvers to eliminate
the Swiss tax haven to their own advantage. Zaki, who
wrote a book on this in 2010, confirmed that Anglo-American
offshore trusts and companies have taken over since then. Today,
the only way to avoid taxes is to use Anglo-American tax
havens.
The last issue debated was the free trade agreement being
pushed between the European Union and the United States.
But can two limpers really be expected to stand straight?,
Myret Zaki asked. The purpose, Cheminade said, is to destroy
any remaining resistance in the nation-states, in particular agricultural
self-sufficiency in Switzerland, and in France. What
is needed is an intelligent protectionism so that budding industries
and populations are safe from dumping.
Schiller Institute Conference Focusses on
Solutions to Strategic and Economic Crises

On March 23, 1983, U.S. President Ronald Reagan announced
an historic initiative to “render nuclear weapons obsolete”,
later to be called the Strategic Defense Initiative (SDI), which
was based on a proposal developed in particular by Lyndon La-
Rouche over the preceding years.

Thirty years later to the day, while that program was never
implemented, the Schiller Institute held a major conference
near Washington to deliberate on “A New Paradigm to Save
Mankind, The Need for the Principle of the SDI Today.” Indeed,
the danger of thermonuclear war is still very much a reality
today, while the economic crisis is far worse.
Helga Zepp-LaRouche stated in her keynote presentation: “I
would really emphasize that the continued existence of civilization
depends on two preconditions: One is the immediate
-- and I really mean immediate, that is, in the next days, or at
maximum, weeks -- implementation of Glass-Steagall. And the
EIR STRATEGIC ALERT
4 WEEKLY NEWSLETTER n° 14 / 2013
second condition is to finally implement the Strategic Defense
of the Earth, in the tradition of the SDI.”

The conference featured two panel discussions, the first of
the need for a transition from the SDI to the Strategic Defense
of Earth (SDE), and the second on the solution to the economic
crisis, which includes bank separation as a first step.
After Zepp-LaRouche’s keynote, EIR Counterintelligence Editor
Jeffrey Steinberg presented the inside history of the initiation
of the SDI program, focussing on the role of Lyndon La-
Rouche and his political movement. With the agreement of the
Reagan Administration, LaRouche had been negotiating with
Soviet diplomats on the possibility of joint development of such
systems, based on new physical principles, to destroy missiles
after launch, but before they actually reach their target. When
President Reagan officially made the offer, in 1983, Soviet
leaders rejected it.

LaRouche himself then made make brief remarks about the
necessity of stopping the process leading to nuclear war, while
at the same time moving to the urgent mission of organizing
a planetary defense, against objects from the Solar System
threatening the Earth.
Three presentations followed which dealt with some of the
technical and political aspects of SDI implementation. The first
was by Frank Cevasco, who was in the Office of the Secretary
of Defense during the time of the Reagan announcement and
its aftermath; the second by Kevin Zondervan, an aerospace
engineer who gave a presentation authorized by the Missile Defense
Agency, on the public domain information on the current
Ballistic Missile Defense System; and the third by Ben Deniston
of LaRouchePAC, who went into the movement’s work on defense
of the planet against asteroids.

The final presentation on the panel was by Bruce Fein, a
constitutional lawyer and former Deputy Attorney General in
the Reagan Administration, who spoke on the “Lessons of the
Reagan Era for Today’s Challenges.”
The Committee on Implementation of the International
Global Monitoring Aerospace System (IGMASS) project, a Russian
initiative for defense of Earth from seismic, weather, and
space threats, sent greetings to the Schiller Institute conference
in the form of a Russian TV feature on IGMASS, including an
interview with the committee’s chairman, Prof. Anatoli Perminov
(former head of Roscosmos, the Russian space agency). In
a letter thanking the Schiller Institute conference organizers
for giving “encouragement” to the IGMASS project, Perminov
wrote, “We believe that realization of the Project in its pilot
version will convince the world community [of the] feasibility of
the high objectives of IGMASS, aimed at gradual development
of a unified global security field with respect to global natural
and man-made threats in the framework of a new paradigm
of international cooperation, on the way to overcome existing
tension and conflicts.”

The discussion period after this panel provided an opportunity
to underscore that today’s Cheney-Obama vintage global
Ballistic Missile Defense System is not a realization of the vision
of LaRouche and Reagan for strategic cooperation against
the threat of thermonuclear war. The BMDS does represent a
threat to the strategic nuclear deterrent forces of Russia and
China, something which would not have been the case with
implementation of the full SDI conception of strategic cooperation,
including “open laboratory” sharing of technology. A
number of post-Soviet Russian offers for strategic defense cooperation
have been rejected or ignored in the West, including
Moscow’s 1993 “Trust” proposal for U.S.-Russian experiments
on anti-missile “plasma weapon” technologies, and then Prime
Minister Putin’s 2007 Kennebunkport overture for joint operation
of anti-missile radars and other systems in Eurasia.
The conference participants also heard greetings read from
the first spokesman from the developing sector to endorse La-
Rouche’s beam weapons proposal in the 1980s, Gen. Hector
Fautario of Argentina.
Stopping the Hyperinflationary Blowout

The second panel of the conference featured presentations
on LaRouche’s program to stop the breakdown crisis, and the
organizing drive now underway in the United States to implement
that program. One special contribution to the panel was
a video address by Republican Representative Walter Jones,
who urged the assembled to mobilize for the current House bill
which would reinstate Glass-Steagall, HR 129, a bill of which
he is a co-sponsor along with 45 others as of this writing. He
also addressed the strategic crisis, by presenting his initiative
demanding that Congress declassify 28 pages of the 9/11 Commission
report, which would reveal that Saudi officials were
behind the devastating 2001 attacks on the United States.
After a keynote by EIR Ibero-American editor Dennis Small,
which stressed the crucial economic parameter of the productive
powers of labor as the means for evaluating an economy’s
performance and potential, two state leaders presented reports
on their battles for Glass-Steagall. State Rep. Thomas Jackson
of Alabama, the chairman of the Alabama House Democratic
Caucus, and James Benham, president of the Indiana Farmers
Union, gave lively accounts of the conditions they face in
organizing for bank separation in their respective states. Benham
presented in particular the need for such protection in the
agricultural sector.

Concluding the session were two LaRouche movement organizers
actively involved in the fight in Washington, D.C. to pass
LaRouche’s program: Michael Kirsch, who authored the La-
RouchePAC’s latest proposal for a new National Bank, and Paul
Gallagher, Economics Editor of EIR, who has been intimately
involved in the drive for passing Glass-Steagall in Congress.
Gallagher, who, as head of the Fusion Energy Foundation,
also spearheaded the drive for the SDI in 1983, provided a
crucial reflection comparing the fights then and now. Three
months before Reagan announced the SDI, he said, everyone
said it would never be done; today, “popular wisdom” in
Washington also says Glass-Steagall will never be restored.
With the proper fight by a leadership which knows what is at
stake and can convey it, that popular wisdom will be proven
wrong again.

The conference concluded with an evening concert, which
uplifted the participants for the fight ahead.
E.I.R. STRATEGIC ALERT www.eir.de
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