(: 73 �% a· 5, � 'il, SOVIET UNION OF STATECRAFT Will Moscow Become the Third Rome? How the KGB Strategic Studies by Lyndon H. LaRouche, Jr. Controls the Peace Movement. Includes transcript of the infamous spring 1983 me'eting in Minneapolis at which KGB officials gave the marching orders to Walter Mondale's "peace Operation Juarez. LaRouche's famous analysis of the Ibero­ movement": Destroy the· Strategic Defense Initiative! Order American "debt bomb"-a program for continental integra­ #83011. $250, tion. Order #82010*. $100. How Moscow Plays the Muslim Card in the Middle East. A Conceptual Outline of Modem Economic Science. Or­ Order #84003. $250. der #82016. $50. Global Showdown: The Russian Imperial War Plan for Religion, Science, and Statecraft: New Directions in 1988. The most comprehensive documentation of the Soviet Indo·European Philology. Order #83001. $100. strategic threat available. A 368-page document with maps, tables, graphs, and index. Issued July 1985. Order #85006. Saudi Arabia in the Year 2023. The thematic task of the $250. Arab world in the next four decades: conquering the desert. Order #83008. $100. *Global Showdown Escalates: The Berlin crisis, the zero option, and beyond. Order #87003. $250. The Implications of Beam·Weapon Technology for the Military Doctrine of Argentina. Order #83015. Was $250. Reduced price: $100. The Design of a Leibnizian Academy for Morocco. Order #83016. Was $250. Reduced price: $100. IN:TERNATIONAL Mathematical Physics From the Starting Point of Both Ancient and Modem Economic Science. Order #83017. TERRORISM Was $250. Reduced price: $100. The Development of the Indian and Pacific Ocean Bas­ The Jerusalem Temple Mount: A Trigger for Fundamen­ ins. Order #83022. $100. talist Holy Wars. Order #83009. $250. Narco-terrorism in Ibero-America. The dossier that sent the Colombian drug-runners and their high-level protectors through the roof. Order #84001. $250. The Terrorist Threat to the 1984 Los Angeles Olympics. MILITARY AND An analysis of the U.S. terrorist underground-the informa­ tion the FBI has repeatedly suppressed. Order #84005. Was ECONOMIC SCIENCE $250. Reduced price: $100. Soviet Unconventional Warfare in Ibero-America: The Beam Weapons: The Science to Prevent Nuclear War. Case of Guatemala. Issued August 1985. Order #85016. The year before President Reagan's historic March 23,1983 $150. speech announcing the Strategic Defense Initiative,this ground-breaking report detailed the feasibility-and neces­ European Terrorism: The Soviets' Pre-war Deployment. sity-for beam defense. Order #82007. $250. The dual control of terrorism: Europe's oligarchical families and the Russian intelligence services. The case of Germany's Economic Breakdown and the Threat of Global Pandem· Green Party, with profiles of the top families of the interna­ ics. Order #85005. $100. tional oligarchy. Order #85001. $150. An Emergency War Plan to Fight AIDS and Other Pan· Germany's Green Party and Terrorism. Issued Novemb r demics. Issued February 1986. Order #85020. $250. � 1986. Order #86009. $250.

THEWESTERN THE MIDDLE EAST OLIGARCHY AND AFRICA The Trilateral Conspiracy Against the US. Constitution: Anglo-Soviet Designs on the Arabian Peninsula. Order Fact or Fiction? Foreword by Lyndon LaRouche. Order #83002. Was $250. Reduced price: $100. #85019. $250. The Military, Economic, and Political Implications of Is­ Moscow's Secret Weapon: Ariel Sharon and the Israeli rael's Lavie Jet Project. Order #83010. Was $500. Reduced Mafia $250. April 1986. Order #86001. price: $250. The Libertarian Conspiracy to Destroy America's Moscow's Terrorist Satrapy: The Case Study of Qadda­ Schools. Order #86004. $250. fi's Libya. Order #86002. $100. White Paper on the Panama Crisis: Who:s Out to De­ stabilize the us. Ally, and Why. Order #86006. $100. A Classical KGB Disinformation Campaign: Who Killed Olof Palme? Issued November 1986. Order #86010. $100.

*Project Democracy: The 'parallel government' behind· *NEW the Iran-Contra affair. Order #87001. $250. * First two digits of the order number refer to year of publication.

Order from:

EIR News Service P.O. Box 17390, Washington, D.C. 20041-0390.

Please include order number. Postage and handling included in price. Founder and Contributing Editor: Lyndon H. LaRouche, Jr. Editor-in-chief: Criton Zoakos Editor: Nora Hamerman Managing Editors: Vin Berg and Susan Welsh From the Editor Contributing Editors: Uwe Parpart-Henke, Nancy Spannaus, Webster Tarpley, Christopher White, Warren Hamerman, William Wertz, Gerald Rose, Mel Klenetsky, Antony Papert, Allen Salisbury Science and Technology: Carol White Special Services: Richard Freeman Book Editor: Janine Benton t has been a "record" week as we go to press on Oct. 24. First, on Advertising Director: Marsha Freeman I Circulation Manager: Joseph Jennings Monday, there was the crash of the New York stock market, and its reverberations around the world, which only a total fool would imag­ INTELLIGENCE DIRECTORS: Africa: Douglas DeGroot, Mary Lalevee ine have ended. Agriculture: Marcia Merry Asia: Linda de Hoyos Then, on Friday, Oct. 23, there was the shock of the announce­ Counterintelligence: Jeffrey Steinberg, ment that George Shultz had failed to obtain in Moscow the expected Paul Goldstein Economics: David Goldman agreement on an INF treaty, a Reagan-Gorbachov summit, and the European Economics: William Engdahl, Strategic Defense Initiative. Laurent Murawiec Europe: Vivian Freyre Zoakos In between, occurred the bizarre events of Boston, Massachu­ Thero-America: Robyn Quijano, Dennis Small setts, where the trial of U.S.A . v. The LaRouche Campaign, et al., Law: Edward Spannaus Medicine: John Grauerholz, M.D. had been expected to begin on Oct. 20. Suddenly during the course Middle East: Thierry Lalevee of the week the issue of the CentralIntelligence Agency's relation to Soviet Union and Eastern Europe: Rachel Douglas, Konstantin George the political vendetta against presidential candidate Lyndon La­ Special Projects: Mark Burdman Rouche, emerged forcefully into the center stage'of the case, as the United States: Kathleen Klenetsky article on page 63 develops. And the trial of LaRouche and his INTERNATIONAL BUREAUS: Bangkok: Pakdee and Sophie Tanapura associates, severed from the case of Roy Frankhauser, was post­ Bogota: Javier Almario poned. Bonn: George Gregory, Rainer Apel Chicago: Paul Greenberg We don't know the connection among these events. One thing is Copenhagen: Poul Rasmussen clear, and that is that LaRouche's leadership is urgently needed by Houston: Harley Schlanger Lima: Sara Madueiio the United States, and the West as a whole. In his 1984 presidential Los Angeles: Theodore Andromidas campaign, which certain "Olympians" never wanted him to run, he Mexico City: Josefina Menendez Milan: Marco Fanini warnedof a threefold crisis: economic/monetary, strategic, and mor­ New Delhi: Susan Maitra Plris: Christine Bierre al. The evidence of that crisis can no longer be denied by anyone. Rio de Janeiro: Silvia Palacios Not surprisingly, this week we have far exceeded our usual Rome: Leonardo Servadio, Stefania Sacchi guideline Stockholm: William Jones of devoting at least one-third of each number to the econ­ United Nations: Douglas DeGroot omy. We refer readers first to the three articles by contributing editor Washington, D.C.: Nicholas F. Benton Lyndon Wiesbaden: Philip Golub, Goran Haglund LaRouche on the October financial crisis, in the Feature, Economics, and National, written on Oct. 17, 21, and 23, respec­ ElRIExecutive Imelligence Review (ISSN 0273�314) is published weekly (50 issues) except for the second week tively. ofJuly and last week of December by New Solidarity Imernational Press Service P.O. Box 65178, Washington, With respect to the moral crisis which underlies the other two, DC 20035 (202) 785-1347 we are pleased to point out three special contributions touching on EuroptJlIIJ H.llllqlUlrlers: Executive Intelligence Review Nachrichtenagentur GmbH, Postfach 2308, the theme of political and scientific leadership: the interviews with Dotzheimerstrasse 166, 0-6200 Wiesbaden, Federal Republic of Germany Dr. Robert Moon, one of America's pioneer fusion scientists, and Tel: (06121) 8840. Executive Directors: Anno Hellenbroich, Michael Liebig with retired Gen. Paul Albert Scherer, formerly of West German In Donlllllrlc: EIR, Rosenvaengets Aile 20, 2100 Copenhagen OE, Tel. (01) 42-15-00 military intelligence; and the centerfold tribute to the late Prime In Muieo: EIR, Francisco Ofas Covarrubias 54 A-3 Minister Indira Gandhi of India, on the third anniversary of her Colonia San Rafael, Mexico OF. Tel: 705-1295. J... subscriptioll sales: O.T.O. Research Corporation, outrageous assassination. Takeuchi Bldg., 1-34-12 Takatanobaba, Shinjuku-Ku, Tokyo 160. Tel: (03) 208-7821. Copyright «:J 1987 New Solidarity International Press Service. All riJhIs reserved. Reproduction in whole or in part without permission strictly prohibited. Second-class postage paid at Washington D.C., and at an additional mailing offices. 3 months-$125, 6 months-$225, I year-$396, Single issue--$\O Academic library rate: $245 per year PoItmuter: Send all address changes to EIR, P.O. Box 17390, Washington, D.C. 20041-0390. •

TIillConteDts

InteIViews Departments Economics

31 Dr. Robert Moon 15 Dateline Mexico 4 Preparing for the next The nuclear physicist, who played The 'devalued' candidate. shoe to drop a leading role in the Manhattan The economic ayatollahs are doing Project, describes his early 54 Northern Flank exactly what will guarantee a development. Part I of a two-part repeat 'of the events of The spy who went back into the 1929-3l. interview on the method by which cold. he came to an exciting discovery 6 Establishment Olympos regarding the structure of the Report from Bonn defies God in stock-market atom. 55 North Gennan anns mafia hoax exposed. Lyndon H. LaRouche, Jr. analyzes Brig. Gen. Paul Albert 46 the psychological warfare approach Scherer (ret.) dominating economic policymaking. The fonner chief of military 56 Report from Rio Locust plague hits Brazil. intelligence for the West Gennan 10 Stock crash promotes Bundeswehr discusses the pivotal revival of Ibero-American importance of Lyndon LaRouche's Andean Report 57 debtor unity leadership of the West. CAP wins in Venezuela. 12 Currency Rates 67 Books Received 13 Foreign Exchange Book Reviews Editorial 72 Baker at Canossa. A man for trough times ahead. 66 'Attend your own funeral, arrange your death 14 Gold now' -this book tells how A de facto gold standard? Linda Everett sees consummate Science & Technology Nazi propaganda in Andrew H. 16 Peru's narco-banks: a case Malcolm's This Far and No More, study-Banco de Credito New hypothesis shows A True Story. 26 geometry of atomic Arrests 'traumatize' City nucleus 17 of London A summary of recent work by Dr. . Robert J. Moon, adapted from an AIDS Update New way to loot debtors: article by Laurence Hecht in the 19 swapping 'junk debt' for April 1987 Gennan-language Dannemeyer AIDS 68 magazine Fusion. 'oil bonds' amendment approved 'We grew up confident we 20 Zaire River Diversion 'AIDS could kill million 31 69 25 could solve any problem' Project: a plan that can Americans' Part one of an interview with Dr. unify Africa and introduce Moon, by Carol White. limitless growth potential

22 Space budget cuts provoke angry protests in British defense circles

24 Business Briefs Volume 14 Number 43. October 30. 1987

Feature International National

44 'A thing that no fish would 60 Ronald Reagan press bite on' conference flops; paralysis George Shultz said it of reigns Gorbachov's offer-and it looks Inevitably, Mr. Reagan is being like superpower "cooperation" will made the scapegoat for the crash soon be replaced by superpower by some influential European and confrontation. congressional leaders whose blunders contributed much more to the crisis than anything actually Anxious Americans monitor the ticker tapes in scenes 48 Thanks to superpower like this one, on Oct. 20, 1987. deals, Qaddafi survives done by the President. . . . for now 62 Eye on Washington 50 Results of surprise Soviet 'They tell me it's just a plenum are shrouded in correction.' October financial crisis 38 secrecy happened on schedule 63 Frankhauser-CIA link Lyndon LaRouche summarizes the Referenda steer Italy exposed most important facts about the 51 toward shoals Declassified portions of a Oct. 6- 16 crash in the Dow Jones document delivered to the court in Index; a statement released by the Boston's "LaRouche trial" prove candidate on Oct. 17. 52 Colombia terror traced to Moscow the connection.

LaRouche trial postponed 53 Hans Holmer: first rate 64 In Memoriam cover-up artist several weeks • . . again

65 Elephants and Donkeys 37 Indira Gandhi 58 International Intelligence Stock market plunge dooms GOP From Congress Varnika, the hopefuls. journal of the ruling Congress Party of India: a poem by Kenneth Lewis Kronberg in honor of the 68 Congressional Closeup Indian prime minister, who died on Oct. 31, 1984. 70 National News �ITillEconomics

Preparing for the next shoe to drop

by Chris White

The wipe-out of some one-and-a-half to two trillion dollars teams, for doing the kind of things that the Federal Reserve worth of equity in U. S. markets over the period since Aug. and regulatory agencies have insisted become routine in the 25 hasn't been enough to teach the ayatollahs of U.S. eco­ days since the crash. Lawsuits, whose subject will be that nomic policy, including Alan Greenspan at the Federal Re­ kind of criminal fraud, are already being flIed against trading serve, or James Baker at the Treasury Department, too much houses and regulatory agencies, for the indicated type of of anything. The two hated hatchetmen are now exhibiting money-losing malfeasance. the same kind of obsessional psychosis as Iran's mullahs, Indexes like the fabled Dow Jones, are being routinely following the prescripts in their sacred texts, and preparing rigged to create the appearance of recovery. Whole markets for further, greater disasters to come just ahead. are routinely shut down for hours at a time. Stocks of major Thatgreater disaster may, according to U. S. Democratic corporations, appearing as sales, are routinely kept off the candidate for President Lyndon LaRouche, be another 6.5 markets, until buyers are found, or as a last resort, the issuing quake on the financial Richter scale, as was Wall Street's corporation is persuaded to swallow the sale itself. The Fed­ more than 500-pointcollapse on "Black Monday," Oct. 19, eral Reserve, implementing Greenspan's Oct. 20 promise or, depending on how stupidly they insist on continuing to that the Fed would make credit available, is purchasing such act, and other political circumstances, it could also be the corporations' bond issues to make such repurchases possible. projected "Big One"-the 8-10 shock on the scale, that would That is beyond the dipping into operating funds, which ac­ bring down approximately half of the remaining $15 trillion cording to brokerage houses, is also going on. worth of debt obligations, of one sort or another, floating Overall, that technique, �ell-known to New York elec­ around in world markets. tion officials in cases of disputed results at the polls, the LaRouche, who in late May predicted the October devel­ "FUBAR" principle, has been brought into play to cover up opments, thinks the "Big One" could erupt in early Novem­ the trail. By the end of the week, it was being said that no ber, but could also be delayed, perhaps into December or one really knew what had happened earlier. The volume of January, but certainly not beyond the end of March. sales had outstripped the clearance system's capacity. Deal­ ers were not able to say who had sold what to whom, or what Routine official malfeasance prices had been at thetime of the transaction. The typical knee-jerk reactions that have prevailed within the United States since Black Monday would lead one per­ In the footsteps of Herbert Hoover haps to select theearlier partof that timeframerather than the Thishas allbeen seen before, in the finalweeks of 1929. later. But there again, the obsessionalfe atures of theBaker­ So has the equally insane political so-called reaction to the Greenspan approach aren't the only functions at play. crash. The administration's insistence that economic funda­ The knee-jerk was the psychological warfare reaction mentals remained sound, even if Joe Biden was not involved, known as a cover-up. U.S. markets, since Black Monday, was still lifted almost word for word fromthe speeches of the haven't been quite the same. Only one year ago, "insider Herbert Hoover. Demands from financialcir cles, in Europe, traders"were routinely being dragged in handcuffs fromtheir Japan, and the United States, for "structural adjustments," tradingoffices by U. S. AttorneyRudolph Giuliani's arresting including deep budget cuts andtax increases, overlooking

4 Economics ElK October 30, 1987 the reality that about $100 billion was knocked out of the rates, and an actually falling dollar, set off a chain-reaction Treasury's revenue stream for the current fiscal year, also liquidity squeeze, in which collapsing bond markets effi­ echo the same insanity that was implemented between 1929 ciently began to vacuum available funds out of equity mar­ and 1931. Even the announcement by poor old President kets. The results were seen in the second and third week of Reagan, of the formation of an independant commission, October. under George Bush's associate Nicholas Brady from Dillon, The economic ayatollahs learn from their sacred texts, Reed, was a repeat of a commission formed by Congress among them Milton Friedman's contribution to the National afterBlack Friday in 1929. That competition to emulate the Bureau of Economic Research's study of the 1929 crash, that ill-fated Hoover will produce just what it did before: disaster. the Federal Reserve did not respond to that crash quickly Except this time it will be worse. In 1929, the United enough, or with a sufficientvolume of credit. They therefore States still exported net some 10% of its total output on an make hyperinflationary volumes of credit available to the annual basis. Now, the United States is dependent on imports banks and corporate customers whose demise would indeed for some 25% of the combined consumption of its industries signal to the world what economic fundamentals in the United and households. States are really like; thereby doing what the textbooks say Those who insist on following in the footsteps of Hoover has to be done to avoid a repeat of 1929. are blind to the simple reality that the Reagan administra­ And they thereby ensure that it does happen. The lower­ tion's touted economic recovery never happened. It was pro­ ing of interest rates will not set off a rally in bond markets, it duced by the application of the same ruthless methods of will increase the volume of paper in circulation chasing di­ fraud , deceit, and psychological manipulation that have been minishing returns. It merely functionsas a prelude to the next employed since "Black Monday" to create the appearance level of unraveling of the financialsystem , a prime target for that all is returning to normal . which would be the Eurobond market, centered in London. It isn't. The United States has been leading the world into That's where the banks and investment houses go to buy and a new great depression since 1980: 1) Industrial production, sell the paper known as off-balance-sheet liabilities, and play in market basket terms, is below the levels that prevailed in on the interest rate differences between London and other the late 1960s-early 1970s; 2) household consumption levels markets to do so. have fallen correspondingly; 3) infrastructure suffers an es­ Effectively, bond market interest rates in London set a timated $3 trilliondeficit accumulated since the early 1970s. floor below which U.S. interest rates cannot fall, without The cultivated hedonistic lifestyle of the "yuppie" gen­ triggering a massive capital outflow from the United States eration has appeared to disguise the second of these. The and a dollar crisis to boot. Actually, U.S. interest rates do proliferation of service industry employment, subsidized by not have to fall to that level to accomplish the same. loot and tribute extorted from U.S. trading partners in the It may well be that the fallout of the disaster around the developing and advanced sectors, has offset the decline of world, centered in the collapsed option-indexed futures mar­ the first. kets of Hong Kong, Amsterdam, London, and Chicago, has Since 1980, the United States has economically func­ already destabilized a sufficient volume of funds to ensure tioned at below the break-even levels necessary to ensure that as settlements come due , the collapse begins to spread continued economic activity. There has been no net profit rapidly to the money markets, and then to the real estate accruing to productive U.S. economic activity. Onto that markets, which effectively, if indirectly, underlie the money collapse has been added, at an accelerating rate since the markets. In the United States, the futures markets fell about summer of 1982, some $14-15 trillionof debt, the by-product 20% more than the equity markets, to a level of about 1200 of Donald Regan's "innovative" financial practices. This is on the old Dow . And the United States is probably not atyp­ reflected in the approximately $7 trillion of "securitized" ical of the cited collapsed markets. banks' and investment houses' off-balance-sheet liabilities, In that case, the Big One, so-called, would most likely the proliferation of all forms of consumer-related debt, and come earlier. Or it may be that that hole can be filled by the of course, the growth of the so-called "twin deficits," the methods adopted so far by the Baker-Greenspan team. The federal government's deficit, and thetrade defic it. "Big One" might be delayed. As far as the powers that be are concerned, this has Either way, if people, inside or outside theUnited Stat es, nothing to do with anything. Until "Black Monday," it continue to act out the intent of the psychological warfare couldn't even be discussed, withoutdire threats of horrible coming from the Baker-Greenspanteam, and thereby choose consequences directed at whoever happened to bring it up . to follow in the footsteps of Hoover, they will also be choos­ Hoover's mind didn't stretch so far either. ing the course which makes the advent of the "Big One" more The debt bubble began to burst in early August, when, or less a certainty, whenever, in the period between now and under the direction of the Bank for International Settlements, March, it does actually hit. The old prescriptions and texts central banks began to selectively increase rates of interest are capable of producing nothing else, no matter who de­ on certainclasses of paper. The combination of rising interest mands they be implemented.

EIR October 30, 1987 Economics 5 Establishment Olympos defies God in stock-market hoax by Lyndon H. LaRouche, Jr.

On Oct. 20, although the New York stock market joined Reagan economic policy as 'psy-ops' markets around the world in plunging to new lows, the Dow Walter Lippmann's famous and influential Public Opin­ Jones Index rose by a reported 102 points. The rise was ion illustrates the point; "psychological warfare" techniques caused by Fed!!ral Reserve chairman Greenspan's pouring for manipulating popular opinion were already in progress uncounted billions of printing-press money into banks, bro­ during the 1920s. Over the post-war period, especially the kerage house, and blue-chip corporations . The 30 stocks used recent 25 years, U.S. policy-shaping has been dominated by to compute the Dow Jones Index rose, and a few other se­ the increasing perfection of techniques of "psy-ops." lected blue-chips as well, while the market as a whole ac­ Television broadcasting reduced the portion of advertis­ tually fell. ing income flowing into the print media. The effectiveness This sort of cosmetic cover-up has been typical of Reagan of "psy-ops" manipulation of �ews media was increased by administration response to problems of the U. S. economy near elimination of political competition in news coverage. since the end of 1982. The entirety of what the President has The depth of journalistic work by news media was cut back called "59 months of recovery" is based upon nothing but the heavily. The wire services, television news coverage, and a same kind of manipulation of economic indices seen on the handful of major dailies came to exert a monopoly over press New York Stock Exchange on Oct. 20. opinion on major areasof national and foreign developments. Some might call this continuing use of calculated decep­ A handful of witting figures placed in key positions could tion "a corrupt practice." Unfortunately, something worse shape the editorial policies of thousands of local print and than corruptpolitical motives is involved. The administration electronic media, even without the local media being aware actually believes, as do many so-called economic experts, of the fact that their editorial policies were being controlled that "psychology" is the dominant factor in shaping the ups in this way. and downs in not only the stock market, but the economy as The news and entertainment media were enabled to se­ a whole . The administration actually believes that "talking cure almost fine-tunedcontrol over what was called the "free up prosperity" will cause prosperity, and that depressions are public opinion of a democratic society." To that degree, prevented by concealing anything which might be read as Orwell's 1984 was becoming an ugly, utopian reality. "bad economic news." I know how our media are controlled so, through my own For that reason, the administration might sincerely be­ involvement in intelligence work internationally, throughmy lieve that its worse-than-useless manipulation of the Dow knowledge of the decisive breaking events on a national and Jones Index on Oct. 20 will "cause a recovery." world scale, and through tracing out the way in which cov­ This sort of bungling must be rooted out of our govern­ erage of my activities has been the victim of a centrally ment, urgently. It is important that we not be so simple­ orchestrated falsificationfor more than 15 years . minded as to imagine that the Reagan administration invented During the summer of 1986, I was called a "political the deluded practice under which it has been operating. We extremist" as a result of my fight with Hollywood liberals must locate the roots of this sort of practice, and uproot them; such as Elizabeth Taylor over the issue of applying existing otherwise, we are unlikely to find a cure for the economic public-health law to AIDS . From that time on, nearly every collapse which is overtaking us . news outlet in the United States put the label "political ex­ Our institutions and citizens would not tolerate that sort tremist" in front of my name . Similarly, nearly every news of manipulation for an instant, except for the postwar condi­ channel, since October 1979, has devoted the largest portion tioning of our people, to accept the idea that whatever popular of its coverage of me to repeating the lurid charges copied opinion believes is true, is true . ritually from the pen of drug-lobby spokesman Dennis King.

6 Economics EIR October 30, 1987 This is by itself conclusive proof of broad news-media com­ plicity in a centrally coordinated "psy-ops" operation. A majority of the U.S. citizenry has been quite literally "brainwashed" by a corrupt, controlled news media. More and more , the quality of the journalistsemployed by the news media are younger persons turned out bycenters such as the Columbia University School of Journalism, persons whose lack of traditional moral standards suits them to employment by what the news media have become during the past 20 years . This has become the chief instrument through which manufactured real and fictitious scandals have been the means to orchestrate elections, manipulate governments, and cor­ rupt the processes of justice at the federal, as well as state and local levels. Successful politics has become the art of becoming part of this "psy-ops" system built up around the controlled news and entertainment media. The Reagan administration is not to be singled out for blame, when it plays this game in the way it responded to "Black Monday's" worldwide stock-market crash.

When will it end? From his grave, the great tragedian Aeschylos is laugh­ ing, while the chief character of his most famous drama, Supporters of Lyndon LaRouche at a "Prometheus," nods agreement. Seeing the way in which 1987. officialWashington has reacted to "Black Monday," Aeschy­ los and Prometheus comment: "So do the mighty gods of There is a monopoly on world trade In, and prices of food, Olympos fall , as the price of their long defiance of the Crea­ run chieflythrough Switzerland, as ne branch operation of tor." this complex offondi . For the past 3D-odd years, this food There is aninternational concert ofvery wealthy families, cartel has run the U.S. Department of Agriculture, for ex­ which is the most powerful component of the ruling U. S. ample, as it does under such accomplices of Cargill, Armand liberal establishment. These include the royal and aristocratic Hammer, and Dwayne Andreas as Secretary Richard Lyng families of Europe; they also include untitled sorts of noble today . I financierfamilie s, in the U.S.A. and Europe , modeled upon Of course, the biological heirs of these fo ndi are highly the noble families of Venice . mortal, and have become more m01al than usual since the The biological members of these families play less and AIDS epidemic discovered the sexual practices common less a policy-shaping role in the destiny of nations. The ef­ among the international chic set. The personality of the fam­ fective power lies less with vast, interlocking financial cor­ ilies lies in the corporate form of the amilies' existence, the porations, such as family trusts and foundations, all modeled fondi-like institutions. It is thefondi. juridically the Roman­ upon the Venetian institution known as thefondo. style pater fa milias of the family, which is the true person­ These fo ndi are administered by a combination of elite ality of the family as a power. It is the managers of the fo ndi' s law firms and financial-management organizations. The interests, who are the center of powe . leading figures in such legal and management enterprises are The corporate form of these families is an aristocratic the ones who actually shape the policies of the families' ruling class, sitting above the goverhments of Western Eu­ fo ndi. rope and the Americas. As a clas�r it is a distinct social The hierarchy of power is organized in financier syndi­ species; but, except in matters it sees as representing the vital cates, for which the vastly powerful reinsurance cartels of interests of its social-class species ks a whole, it is often Venice are the top-most ranking power today. The power divided in its policies. The variou factions and families runs through lesser, but vastly powerful reinsurance cartels. within the class tear and bite one another routinely, with theft Under all normal conditions, these reinsurance cartels take and murder commonplaces of inter-f�mily dealings. In these no capital risk, and therefore enjoy an infinite rate of return and related respects, this social clas is a real-life imitation on their net operating and capital-gains incomes. of the mythical gods ofOlympos. Below these lie the ordinary major banking cartels, co­ Contrary to the socialist propagandists, this is not a cap­ ordinated through powerful investment-banking institutions. italist class. It is traced directly to tHe ruling social class of

EIR October 30, 1987 Economics 7 ancient Mesopotamia, the social class against which the ufacturing were deliberately collapsed, to enrich speculators. American Revolution was fought. The system of political­ The basic economic infrastructureof the United States, upon economy which this social class has sought to impose and which the productive power oflabor depends, has been rotted defend, since the ancient Chaldeans and Phoenicians, is based away. In sections of our cities looking more like the bombed­ on a system of usury firstknown to have been established in out cities of 1945 Europe, people driven into the depths of ancient Mesopotamia and Phoenicia. wretchedness, fightfor existence with rats, roaches, and dis­ It divides society between ordinary people, as subject ease. Similarly, these same policies have crushed the econ­ nations and individuals destined to pay usury to the /ondi­ omies of the traditional trading partners of the United States, like family class, and the ruling aristocrats and Tyre-like, especially since October 1982. Venice-like financier-nobles, who collect the proceeds of The ability ofthe average person to survive on this planet, usury in such forms as ground-rent, speculative profits on and within the United States itself, has been savagely deplet­ trading monopolies in raw materials, and financial usury. ed, for sake of what the Reagan administration has regarded The system of usury is not only an economic relationship as the desirable greater paper profits of a relatively small between the ruling class and the ruled; it is also a social and gang of rentier-financierinter ests. The President has ignored a political relationship. the plight of the many, to praise the nominal wealth of the Although the American Revolution was accomplished by few as "59 months of unbroken prosperity . " those who sought to create the United States as a republic The Reagan administration expresses this as a commit­ freed of the grip of such an aristocratic social class, by the ment to a set of adopted policies. Whoever supports these time of the 1776-83 War of Independence, the families of policies is considered "loyal," and "one of the good guys." American Tories associated traditionally with Harvard, Yale, Whoever casts doubt on these arbitrary choices of ruinous and Princeton today, families allied with the British and policies, is treated as an adversary, "one of the bad guys." Dutch East India Company then, were a powerful minority. Meanwhile, I, like Aeschylos' Prometheus, have warned Through a series of onslaughts, aided by great wealth ac­ that these policies are leading to precisely the sort of doom quired in the Africanslave-trade and the China opium-trade, of Olympos which exploded on "Black Monday." As early this class of former American Tories of the 1763-1815 con­ as May 1987 I even supplied what is now proven to have flictswith the British House of Hanover became, by the time been the correctdate for the firsteruption of a general collapse of President Theodore Roosevelt, a ruling social class of of the internationalfinancial bubble , the biggest international "patricians" viewing themselves as a ruling class of the Ro­ financialcrash in history . manimperial type. How did the President respond? Week after week, he They became, together with their like in WesternEurope , delivered nationwide addresses, not naming me , but de­ a real-life aristocratic social class in the image of the doomed nouncing as "doom-sayers" those who issued statements mythical gods of Olympos. unique to me. When the crisis struck, his administration still refusedto The doom of Olympos face reality. Instead, he responded in the worst possible way, In Aeschylos' famous tragedy, Prometheus' warning to ordering the Federal Reserve System to unleash the forces of the gods of Olympos, his oppressors, is that they have set potential hyperinflationaryexplosion. themselvesup as gods, ignoring and defying the real God the The President does not believe that the laws of physical Creator. Since the Olympians have had great success in play­ cause and effect operateto governthe amount of useful goods ing their dirty tricks upon nations and persons, the ruling produced and consumed per capita. While the real economy families of Olympos have come to imagine that there is no has been collapsing, because of his policies, he has seen the power over man and nature greater than the power of their growth of a pure financial bubble on financial markets as a own capricious whims. measure of "economic growth." In other words, he has served Prometheus warns: By acting in defiance of the laws of the arbitrary whims of the rentier-financier gods of Olympos the Creator, you would-be gods of Olympos have set your in defianceof the Creator. wills into defianceof the laws which the Creator has embed­ All "psy-ops" is based on the same defianceof the Crea­ ded in the universe. The resultof such defiance will always tor. "psy-ops" is a technique for brainwashing popularopin­ be, that those who set themselves up as gods in this way, will ion into believing that something unreal is true, in order to be destroyed. The destruction of Olympos will occur, not as prevent popular opinion from reaching conclusions based on an arbitrary act of will by an angry Creator; the destruction the simple realities of experience. The object is to make will be wrought automatically, through the efficient laws people the kinds of utopian slaves Orwell describes in his which the Creator has built into the design of the universe. famous 1984, by inducing people to accept the habit of be­ That is the significanceof "Black Monday." The Reagan lieving what the news and entertainment media tell them to administration's monetary and economic policies have been believe, and to reject as incredible any facts which are in in defiance of the laws of nature. U. S. agriculture and man- contradiction to such psy-ops-manufactured popular opin-

8 Economics EIR October 30, 1987 National Chairman,in a statement in theNew York Times: "Prudent investors are now buying stocks in huge quan­ Black Thesday 1929: tities and will profit handsomelywhen this hysteria is over and our people have opportunity in calmer moments to justa 'correction' appreciate the great stability of business by reason of the sound fundamental economic conditions in this great Even a cursory look into the archives of the 1929-33 pe­ country of ours. " riod,following the crash of the stock market in October Nov. 18, 1929. William Green,president of the Amer­ 1929, reveals some striking parallels to the responses of ican Federation of Labor: "The Federal Reserve System is today's elected officials and "financial analysts ": operating,serving as a barrier against financialdemorali­ Oct. 22, 1929. Professor Irving Fisher of Yale: "Even zation. Within a few months industrial conditions will in the present high market the prices of stocks have not become normal,confidence and stablilization in industry caught up with their real values. Yesterday's break was a and finance will be restored." shaking out of the lunatic fringe that attempts to speculate Mass unemployment then struck American labor. on margin." Banks collapsed throughout the world. Oct. 23, 1929. Stocks fell sharply. Oct. 22, 1932. Detroit,Michigan. Speech of Presi­ Oct. 24, 1929. Charles E. Mitchell of National City dent Herbert Hoover: ". . . the tide has turned and the Bank: "This reaction has badly outrun itself." gigantic forces of depression are in retreat.Our measures Oct. 24, 1929. New York Times: "Confidence in the and policies have demonstrated their effectiveness.... soundness of the stock market structure notwithstanding Recovery would have been faster but for four months of the upheaval of the last few days was voiced last night by paralysis during the spring months while we weredefeat­ bankers and other financial leaders. " ing proposals of the DemocraticHouse of Representatives Oct. 24, 1929. Thomas W. Lamont of J.P. Morgan to increase governmental expenses by $3.5 billion.... and Co.: "Prices of many important issues had been car­ "Manufacturing production has increased by ten per­ ried down below the levels at which they might be fairly cent. . . .The Departmentof Commerce shows that over expected to sell." 180,000 workers returned to the manufacturing industry Oct. 25, 1929. President Herbert Hoover: "The fun­ in August,360, 000 more in September.... " damental business of the country,that is,production and 1932. Campaign slogan of President Herbert Hoover: distribution,is on a sound and prosperous basis." "Prosperity is just around the corner." Oct. 26, 1929. Stocks again fell sharply. The Great Depression increased inits fury,continuing Oct. 29, 1929. Stocks plunged wildly.John D.Rock­ until 1939. Then President Franklin Roosevelt,in defense efeller announced that conditions were fundamentally preparations,geared up the peacetime economy,deliber­ sound,and he was buying stocks. ately promoting industrial developmentwith cheap credit Oct. 30, 1929. John J. Raskob, Democratic Party and government contracts.

ion. of-hand tricks of manipulating opinion expressed by the "All my friends believe," becomes the means by which nightly news media dispatches. the credulous, half-brainwashed citizen argues against any So,"whom the gods would destroy,they firstmake mad." facts which contradict a psy-ops-manufactured "popular Prometheus' warningnow stares us in the face. opinion." It might still be possible for some of the establishment to The President believes that "Black Monday " was not come to its senses,and rally behind the emergency measures caused by anything real,but only by "bad psychology." So, of reform I have proposed. In that case,they and the nation he considers it perfectly proper to fake the Dow Jones statis­ would survive this crisis. In that case,they would survive, tics by inflationary manipulation of markets,to cause a cor­ not as gods of Olympos,but as a part of a revived American rection of "bad psychology." System of political-economy. Otherwise,Olympos and the "We will not lose the war,as long as we continue to rest of us are likely to be carried deepinto the pits of crisis. believe we are winning it," is the famous policy of Nazi If we wish to survive, we had better quickly recognize Propaganda Minister Josef Goebbels,from the beginning of that President Reagan's present policy,like George Bush's 1943 onward, almost to the end. So, the White House be­ presidential campaign,is a delusion; we had betteract quick­ lieves that the inevitability of the biggest internationalfinan­ ly to ensure that we do not come down together with our cial crash in history can be prevented simply by a few sleight- modern would-be gods of Olympos.

EIR October 30, 1987 Economics 9 Stock crash promotes revival of Ibero-American debtor unity by Mark Sonnenblick

The countriesof South and Central America have often been by Baker, and his predecessor Donald Regan, of stringing devastated by earthquakes.But the quake which hit the world along debtors with promises the United States would buy stock markets on Oct. 19 may shake loose a solution for the more of their exports and "threats to lend " by the banks. If Great Depression those countries have suffered since 1982 the banks were reluctant to lend new money to pay old prin­ because of their $385 billion foreign debt. cipal and interest before, they are now both unwilling and They have oftenhad to listen to Treasury Secretary James unable.And-everybody knows it! Baker III, bankers, and other characters sanctimoniously lec­ Mario Henrique Simonsen, the Citibank international vice ture them that they had no option but to "restructure your president (who as Brazilian finance and planning minister economy so as to create investor confidence."Most countries borrowedmuch of its $112 billion debt) was reached in New have applied International Monetary Fund (IMF) austerity York Oct. 19 by the Brazilian daily Folha de Sao Paulo. He prescriptions, which have never restored "investor confi­ commented, "What is really happening is a great panic that dence, " much less brought needed economic growth. will inevitably lead the United States to inflation and reces­ "The strategy designed by creditor countries and banks sion; and that will be harmful for Brazil, dragging it, too, to solve the debt problem has failed, " declared Carlos Perez into recession." Castillo of the Latin American Economic System (SELA). If the United States were to follow IMF-style advice to He calculated that the "unprecedented industrial recession " cut the budget and reduce imports, it would guarantee that caused by debt policies, shrinking internationalmarkets, and all theThird World debtors default, just as they did in similar lack of access to advanced technology has cut the region's circumstances in 1930-33. industrial production by $50 billion from what it would be, And why not? "In 1980, the total Ibero-American debt ifthe 5.7% annual growth which prevailed from 1975 to 1980 was $250 billion; Ibero-American countries have paid the had been continued. North $150 billion since then, but the debt is now $400 The prices received for Ibero-America's exports (exclud­ billion, " Peruvian ambassador Carlos Alzamora observed to ing oil) are lower in real terms than in 1932,the nadir of the the United Nations Oct. 9. He concluded, "That strange GreatDepression. Those prices dropped 12% in 1986 and by arithmetic cannot be accepted by our population, because 9% more this year, before the stock market crash sent prices when theydiscover that 250 minus 150 equals 400, they feel for metals and other commodities consumed in the developed they have been tricked and mocked." The floating interest countries tumbling.That puts debtors trying to earn dollars rates theypay went up 1.5% fromAugust to October, adding to pay debt on a treadmill.Even Peru, which has bucked U.S. another $6 billion annually to Ibero-America's already un­ Treasury Secretary James Baker III by limiting debt pay­ bearableinterest burden. ments, is now finding it hard to shield its people from the crisis.The Mexican and Argentine governments,in contrast, Brazilian debt showdown arestill banging their heads against the wall with one program On or around Oct.26, the Interagency Country Exposure after another to reduce consumption and starve their popula­ Risk Committee, will meet in Washington to decide whether tions in order to export enough to pay part of their interest American banks have to downgrade the $25 billion worthof bills. Brazilian debt in their portfolios.Brazil declared a morato­ Now, confidence in the United States economy has been rium on interest payments on more than $70 million in me­ irredeemably shattered,even if the stock marketbubble were dium-termdebts to foreignbankers Feb. 20. That interesthas pumpedup again.It will be difficultto repeatthe gambit used beenpiling up at therate of $450 million per month in blocked

10 Economics EIR October 30, 1987 accounts at Brazil's central bank. Under U.S. banking regu­ to get Bresser's job so he could practically sign a debt agree­ lations, a debt not serviced for six months becomes "non­ ment with himself. performing." If those regulations were enforcedOct . 26, the Brazilian patriots are pulling in the other direction. For­ major U.S. banks would have to charge losses of over $2 mer Finance Minister Dilson Funaro wrote an answer to billion on their fourth quarter balance sheets . Simonsen, in which he said, "The creditor banks and their The bankers were suffering the jitters even before the innumerable internal spokesmen base their campaign for a value of their stocks fell by a third in mid-October. A senior symbolic payment on the argument it will cause a climate of New York bank executive told UPI Oct. 20, "The bankers good will.' ...There is no evidence that concessions Brazil more than ever need Brazil to suspend its moratorium. If [the has made in negotiations with the b�nks have brought any banks] have to reclassify their loans , their stocks will fall more 'good will'. . . . On the contrary, concessions made more ." The banker warned that if Brazil tried to "take advan­ by the debtor are followed by new and more severe demands tage of the situation," the banks could retaliate by taking by the creditors." measures such as "cutting off credits in the future ." The Funaro insisted, "We must defend the moratorium.... bankers cut offall new lending to Thero-America for produc­ No matter how big our political difficulties are , the Brazilian tive purposes in 1982. government has no right to retreat on the positions taken and An officer on the 14-bank Brazil Bank Advisory Com­ again delay the solution to a problem"-the debt-"which mittee, which has been meeting at Citibank, and the Arnold has blocked the development of the Brazilian economy dur­ and Porter law firm with Brazilian negotiators , asserted, ing this decade." "There has to be a substantial payment, and we stress the A group ofsenators from the majority Brazil Democratic word substantial. . . . It should be $600 to $900 million; and Movement Party told central bank president FernandoMilliet Brazil has the money now ." Japanese banks gave similar that the Wall Street collapse "is another reason not to resume ultimatums, but their Sept. 30 deadline passed with no pay­ debt payments now; we have to maintaino ur reserves in case ments. They are now writing off part of their Brazil debt. the international crisis becomes worse." The same group Brazilian Finance Minister Luiz Carlos Bresser Pereira commented that a symbolic payment "would be like giving responded in Sao Paulo Oct . 16, "Those bankers who think the gold to the bandits." They are conscious that Brazil has the token payment would be the same as suspending the 36 million undernourished childrell, that the majority of moratorium are fooling themselves. There are banks which housing units do not have clean water and adequate sewage, are considering the hypothesis that Brazil would pay two and that most of the workforce earns under $90 a month. months of interest, equivalent to $900 million, and that it Bresser is trying to "pay the debt with the hunger of the would start to pay interest monthly. That is not a symbolic people." He will probably succeed in having Brazil export payment, but the normalization of payments; and that is not $10.3 billion more than it imports thili year, $1.6 billion more what the country intends . Suspension of the moratorium will than Funaro had planned. He did this by diverting food prod­ only be decided after an agreement with the creditor ucts and manufactures Brazilians should consume tothe world banks ...." markets. Since he took over from Funaro in April, he cut Bresser is asking for $10.4 billion in new money to refi­ worker consumption by 15-20% from last year's levels. Sao nance all the interest due this year since the moratorium and Paulo industry fired 73,400 workers from April to August. a bit more than half of the interest anticipated for 1988 and The capital goods industry which, pnder Funaro, had been 1989. A second part of the agreement would require long­ operating at almost fullcapacity , now has 60% of its potential term refinancing of the $70 billion at no premium over U.S. unused. In the past three months, t�e productive sector has : prime or London LIBOR interest rates. "After hearing that, triaged its planned investments , the private Banco Bamerin­ I left here more scared than when 1 arrived," confided Libra dus reported Oct. 14. The National Economic and Social Bank president Igor Cornelsen. Development Bank implicitly confiI'medthis when its budget According to the Brazilian press Oct. 23, Bresser had for co-financingindustrial projects allocatednothing for 1987. agreed to a U.S. Treasury proposal to deposit the "symbolic payment" in the Bank for InternationalSettlemen ts, the Basel Argentina plays the IMF ga�e institution which protected the Nazi gold hoard . The money Argentine President Raul Alfonsfn has tried and failed would be disbursed to the creditor banks only when the final with so many varieties of "economic shock," that there were agreements were signed some time next year. In the mean­ rumors in early October he would resign. Instead, he deval­ time , U. S. regulators would look the other way, as they have ued his currency, the austral, by a third, raised taxes by $2 done since Aug. 20. billion, and gasoline and public service prices by 15%. To Citibank's Simonsen is, logically, among those demand­ forestall a general strike , he gave private employees small ing Brazil give up its trump card, the moratorium, blaming it wage increases . But he again cut wages of public-sector for Brazil's current economic downturn . Simonsen is angling workers , who had already lost 30%. of their buying power.

EIR October 30, 1987 Economics 11 Alfonsfn's program is recessionary and shrinks the tax base,while raising tax rates. The economy produced 4.2% urr less during the first half of this year than the first half of last. C ency Rates His real intent was to cut imports and raise exports,because he projected that a $900 million trade surplus for the year The doUar in deutschemarks would not pay Argentina's $4 .4 billion interest bill, $700 NewYork late aner-1IxiDa million higher thanks to U. S. rate increases. Argentines groaned on hearing of the tax increases,but 2.10 the World Bank was ecstatic and the U.S. Treasury an­ nounced it would join in a $500 milllion bailout loan, so 2.00 Argentina could pay overdue interest. "The willingness of 1.90 the United States to participate in this multilateral effort in­ dicates strong support for Argentina and its economic reform ..- 1.80 - ...... efforts," declared the Treasury. r-- 1.70

New options for debtors 9/1 9/8 9/15 9/22 9129 10/6 10/13 10/20 On Nov. 26, the Presidents of Ibero-America's major democracies will hold their first regional summit since 1825. The dollar in yen New York late afternoon fixing It was expected that the meeting would be dominated by the disastrous policies of the three biggest debtors-Brazil, 170 Mexico, and Argentina-of subordinating their economic policies to the will of their creditors. Now,the creditors have 160 lost their magic powers,and their "threat not to lend " has less credibility than ever. Prospects for exports to the United ISO States are dim. - oJ --- In this context,the ideas proposed by Lyndon LaRouche I � in 1982 for refinancingthe debt long-term and at low interest, while financing $500 billion annually in exports from the 130 9/1 developed countries to develop the South,could replace the 9/8 9/ 15 9/22 9/29 10/6 10/13 10/20 no-win debt strategy all countries but Peru have followed. The British pourld in dollars Peruvian President Alan Garcia,in an interview Oct. 10, New York late afternoon fixing called for the creation of a common market to unify the economies of the continent. Garcia reiterated,"Only the con­ 1.70 struction of an Economic Market can allow Latin America to ".- � assert itself on the world scene,and give it instruments with 1.60 "- � which it can develop its potentialities. " 1.50

1.40

1.30 SILVER 9/ 1 9/8 9/ 15 9/22 9/29 10/6 10/13 10/20 SHORT SQUEEZE The dollar in Swiss francs • WHO? • WHAT? . WHY? New York late afternoon fixing Not what you think! Dailylimits soon . Exchange 1.80 cannot .. stoP . this one because it . is different . Send SS to SIBBET for informiJtion. "e i_ " 1.70 one advisor. . who predict:ed tile other '· _0 squeezes. Make S.50 per oz.! 1.60 SIBBET · PUBLICATIONS 109 1 E. WOOOBURY RD., PASADENA. CA 91 104 -- 1.50 1""00... Nams ____. __

Address ___ ______. 1.40 9/1 9/8 9/15 9/22 9/29 10/6 10/13 10/20 Zip ______. __ . __ �__

12 Economics EIR October 30, 1987 ForeignExchange by David Goldman

Baker at Canossa markets toppled the stock market. What did the United States Treasury offe r in returnfor the West The drastic reduction in interest rates brought about by the Fed starting German bailout? Oct. 16 did not avert the Oct. 19 crash, but it did support fixed-income bond markets in a big way, temporarily sus­ taining the liquidity of the banking system, which depends on its security reasury Secretary James Baker the markets. that Baker had precipi­ portfolios. IllT's visit to Bonn the morningof Oct. tated the plunge deliberately, in order Once thesmoke clears, Europewill 19 turned into a barefoot pilgrimage to scare the Germans into cooperat­ watch Washington closely. The 6% to Canossa, as bankers blamed his ing. decline of the London stock exchange German-bashing speech the previous The more important question is, and the 9% decline of the Swiss ex­ day for the Black Monday panic on how are they cooperating, and in re­ change Oct. 22 was a bad omen; Eu­ stock markets. Baker had threatened turnfor what? ropean institutions voted "no confi­ America's trading partners (and cred­ Wall Street blew out after the Ger­ dence " in Alan Greenspan's money­ itors) with a new round of competitive mans and Japanese central banks de­ printingexercise. devaluation, hurting both Western clined to continue buying U.S. Trea­ If Washington produces more pre­ European exports and the foreign-cur­ sury debt at 1987's first-half rate of election hot air, rather than brutal aus­ rency value of their U.S. debt hold­ $160 billion per year. They neither terity measures, the creditors' com­ ings. wanted to, nor could afford to, main­ mittee won't give Washington a third The stock market panic, however, tain it , without putting their own mon­ chance. persuaded the repentant Baker to pros­ etary systems into the same sinking Apparently, theBa nk of Japan and trate himself before the toughest of his boat with Wall Street. Bundesbank have not considered the creditors, asking for leave to bring Sources close to Japan's Finance consequences of their own recom­ down U.S. interest rates, and stem the Minister Miyazawa emphasize that mendations, not much different than tide of financial panic. Japan intends to maintain investments the standard International Monetary The Germans assented, but grudg­ in the United States, in order to give Fund ultimatum to developing-sector ingly: Rather than lower interest rates the next President a chance to straight­ debtors. A collapse of consumer and sharply, as Baker had demanded on en things out-but that Black Monday government spending would wipe out Sunday, and then begged on Black gave Wall Street precisely what it de­ the last props of nominal economic Monday , the Bundesbank lowered its served. "Baker is stupid, " snorted one activity in the U.S. , along with their key repurchase rate a mere 1120 of a well-placed Japanese analyst. "What export markets. percentage point, to 3.80%. How­ he said on Sunday was ridiculous. " "The problem in Tokyo is that we ever , the Bundesbank made heavy The turning-point for the stock do not have any far-sighted leader­ purchases of dollars, bringing the U.S. market came Oct. 14, with the an­ ship. Our own government is still re­ currency up from its near-record low nouncement of another monster U.S. lying on America for leadership," of DM 1.77 Monday morningto close monthly trade deficit. "This putsenor­ commented a senior Japanese analyst. to 1.80 during the course of the week. mous pressure on Greenspan and the Tokyo and Bonn continue to follow However, German and Japanese Fed to raise interest rates, " a London the same monetarist criteria thatcaused reluctance to continue financing the analyst warned at the time. "He will the depression in world trade after the U.S. deficit has not given way to un­ have to, one way or another, tighten 1980-82 Third World debt crisis. limited charity. Rather, the Bundes­ interest rates. He will likely hesitate, The major German and Japanese bank and Bank of Japan have granted maybe for even one or two weeks. But institutions have stood behind the val­ Washington a respite, on the condi­ the longer he waits, the further the ue of stock prices, preventing the sort tion that it adopt drastic austerity mea­ dollar will fall. " of uncontrolled panic seen in New sures, including sharp reductions in Germany and Japan both took the York. In the short run, they may in­ federal spending, and a rise in taxes. occasion to raise interest rates, forcing sulate themselves. But their policies Well-informed European analysts the Federal Reserve's hand; and the push the United States down the fast­ discount as silly a report circulating in subsequent rise in interest rateson U. S. est path toward depression.

EIR October 30, 1987 Economics 13 Gold by Montresor

A de facto gold standard? banks bought $78 billion of unwanted Apparent intervention in the gold market by central banks dollars during the firsthalf of the year, underwrites the Federal Reserve's re­ suggests ajorced return to gold. course to the printing presses . The gold sales demonstrate that a general crisis of confidencein the dol­ lar might erupt at any moment. Nei­ ther Baker, nor America's creditors, are confidentthat their bravado of Oct . 19 will dissuade foreign holders of n Thursday, Oct. 15, as Wall calmer than they were. dollars from stampeding.Almost cer­ StreetO had barely begun its big slide, In effect, the United States is tainly,official gold sales were speci­ Treasury Secretary James Baker sat in stumbling backward into the remone­ fied in the Bonn meeting between his Washington office, listening to a tization of gold,but in the worst of all Baker and his German counterparts visitor's advice that the Treasury sell possible ways. Less than 300 million Oct. 19. Possibly, the Bundesbank gold on theopen market as a means of ounces of gold at Fort Knox can do made Americangold sales a condition maintaining market confidence. Bak­ little to support America's combined for renewing support for the dollar. er made no response to his visitor's public and private debt of $9 trillion, Gold sales to support the Wall suggestion.However, market observ­ much less underwrite an annual trade Streetbubble will do much more harm ers from Johannesburg to Tokyo be­ deficit approaching $200 billion per than good. The bubble itself is unsup­ lieve that the hand of the U. S. Trea­ year. Indeed,the faintest harbinger of portable. America's gold reserves are sury,and perhaps the European cen­ America's present financial condition trivial relative to its foreign obliga­ tralbanks, was in the market,depress­ persuaded President Nixon to stop tions. Mere confirmation that the ing the gold price,after "Black Mon­ paying America's foreign official lia­ Treasury has sold gold to maintain day," Oct. 19. bilities in gold in 1971. It were the confidence will undermine confi­ Contrary to all expectations, the greatest of absurdities to employ the dence. Should Washington, in its gold price fell sharply from its Mon­ gold reserve to support the present fi­ madness, sell gold in public, a run day high point, by about $20, to nancial bubble. would ensue exceeding Nixon's worst roughly $464 late in the week of Oct . Yet that is what Baker proposed at nightmares of 1971. 19. Conditions of global financial the International Monetary Fund Remonetization of gold becomes panic, combined with a drastic loos­ meeting,and it appears thathe is doing essential at the point that Washington ening of monetary policy by the Fed­ precisely that. The notion of a com­ is prepared to use gold-backed curren­ eral Reserve, would normally have modity basket including gold,whose cy to finance an expansion of exports sent the gold price through the ceiling. price would determine monetary to traditional American markets in the The market price of demonetized growth,represented Baker's promise developing sector,and permit the col­ gold has no direct bearing on the li­ to America's creditors that he would lapse of the securities-market bubble quidity of the banking system,let alone not devalue the dollar in order to re­ to reflect the modest circumstances of the stock exchanges. Yet the U.S. duce America's debt burden,either on the U.S. economy. Once the bubble monetary authorities were sufficiently the foreign exchange markets, or bursts,and both domestic and foreign fearful of the consequences of a rapid through inflation. investors have absorbed the inevitable rise in thegold price,to take the risky Following "Black Monday," the losses intheir U.S. portfolios,the U.S. and wasteful step of selling gold creditors' committee, headed by the could (and must) restoregold backing (through intermediaries) on the open Bundesbank of West Germany and the to the dollar's foreign official liabili­ market.Why? Bank of Japan, declared a respite to ties,as the reserve for a general reor­ It appears that among the other the tight-money regime which it had ganization of themonetary system. "confidence-building measures " imposed upon the United States at the Now the Treasury has been thrown adopted by Washington in order to Oct. 1 International Monetary Fund back onto its gold reserve haphazard­ support Wall Street's confidence annual meeting. Supposedly,the re­ ly, in its vain effort to postpone the game,the Treasury sold gold in order newal of the February "Louvre Ac­ crisis of confidence,the worst of all to make the markets appear much cord," under which foreign central possible alternatives .

14 Economics EIR October 30, 1987 Dateline Mexico by Hugo L6pez Ochoa

The 'devalued' candidate the entire country. " If that be the case, Since he is the architect of Mexico's economic policies, Salinas then it is Salinas who turns out to be the most seriously devalued Mexican de Gortari may now see his political stock wiped out. "stock " following Wall Street's "Black Monday. " One day before the initial Oct. 6 he Mexican stock market was the ume of Mexican corporate stocks par­ panic in New York,Mexico 's Nation­ onlyT one in Thero-America to be ticipating in the New York market is al Exchange Commission had to sus­ dragged into the maelstrom of "Black minimal. But the mere fact that Mex­ pend activity on the Mexican stock Monday " in New York and other stock ico is the "pampered child " of Wall exchange for one hour. Ironically,the exchanges throughout the world. In a Street as faras the foreign debt is con­ danger of a market collapse stemmed single day, it lost 16.5%. Combined cerned, establishes a link stronger than from the dizzying climb of Mexican withthe 15% it had lost in the previous any stocks. It was,in fact,Mexico 's stock prices triggered by "investor two weeks, it is calculated that be­ groveling submission to the Interna­ confidence " in the Oct. 4 nomination tween Oct. 6 and Oct. 20,more than tional Monetary Fund, beginning in of Salinas. $14 billion evaporated into thin air­ 1982, that served as a key factor in Why? Although it is true that the equivalent of nearly the entirety of preventing New York's "Black Mon­ Mexico's flight-capital artists,dirty­ the international reserves accumulat­ day " from occurringbefore now. money launderers,and narco-bankers ed by Mexico in five years of brutal The primary link between the two garnered enormous profits on the ex­ self-looting! stock exchanges lies in the fact that change over the" past six months due On Oct. 21, Finance Secretary the financial methods of Mexico's to protection granted under the IMF Gustavo Petricioli publicly claimed: economic cabinet,headed by Budget agreements,the truemotor behind the "There is no link between the New and Planning Minister Pedro Aspe,are artificial rise of the stock market was York and Mexican stock markets. " identical to those of Wall Street. It is the Treasury Certificate (CETES), Everything in Mexico was being not coincidental that they all studied government paper which, through caused by mere "psychological reac­ at Harvard. The similarities are so mid-September, represented 80% of tions" to New York developments. strikingthat, just as Wall Street hopes thetotal value of theexchange. It was "The economy is recovering as antic­ to postponeaU . S. financialcrash un­ with CETES that the public deficit of ipated," he insisted. til after a Republican triumphin 1988, the last quarter was financed,at the Petricioli,of course,waited to give so too has Mexican President Miguel cost of a soaring public debt. his pitch until after the Mexican mar­ de la Madrid allowed the Mexican On Oct. 5,the rise was so dispro­ ket decline had shown a reverse,the stock exchange to continue to inflate, portionate that thegovernment ran the result of the government's interven­ giving the appearance of an economic risk of being unable to pay bondhold­ tion through the Nacional Financiera recovery to facilitate popular accept­ ers,and was forced to intervene,trig­ (one of the largest government-run fi­ ance of the very unpopular PRI presi­ gering nervousness that turned into nancial agencies) to push up the value dential candidate, Carlos Salinas de full-scale panic with theOct. 6 events of certain stocks. It was only after the Gortari. in New York. Stock market leaders, Mexican government had poured its De la Madrid's hope is that Sali­ who at first bitterly protested the Oct. already scarce resources into the mar­ nas-the true architect of Mexican 5 intervention,retreated and demand­ ket that Mexico's narco-bankers threw economic policies over the past five ed governmentintervention to halt the in their own emergency funds of ap­ years,Aspe ' s former boss at Planning "invisible handj " but that "hand " had proximately $1.55 billion. and Budget,and also a Havard alum­ already wiped out any fanatic world­ As elsewhere in the world, no one ni-will preside over said "recov­ wide who had allowed himself to be knows for certain what is going to hap­ ery," and thereby retain bank confi­ guided by it. pen to the Mexican stock market in the dence. Mexican stock market presi­ Thereinlies the New York-Mexi­ short term. What is certain,however, dent Manuel Somoza told reporters co "connection;"The government in­ is that its behavior is more linked to Oct. 20: "The Mexican exchange is tervened, enabling the market to sur­ that of Wall Street than Petricioli is the letter of introduction not only for vive,at least for now. The question is, willing to admit. It is true that the vol- the PRI presidential candidate,but for will Salinas's politicalstock survive?

EIR October 30, 1987 Economics 15 under its owner's eye. " This would presumably explain why Peru's Narco-Banks Dionisio Romero has a summer home on the outskirts of Tarapoto,in the middle of the Alto Huallaga jungle,where he periodically holds conferences with his lieutenants who run Banco de Credito's local branches. Equis X is a notoriously dirty operation in its own right, and is apparently going after Romero for suspect reasons. Neither is the source of its information stated,nor the evi­ dence in its possession revealed. Nonetheless,this writer­ a former deputy attorney general of Peru responsible for investigating drugs and terrorism-has plenty of indepen­ A case study­ dent documentation on the participation of the Banco de Banco de Credito Credito's owners in the illicit drug trade. A criminal 'modus operandi' The cover for the drug mafiaoperations headed by narco­ Ricardo MartinMora by banker Dionisio Romero, through the Banco de Credito's officesin the central Peruvian jungle, is the Company for the Peru's private banks are in open, total insurrection against Development and Exploitation of Palm Oil (Endepalma, the elected government of President Alan Garcia. Over the S. A.),which has 6-8 hectares of palm stands near the jungle recent period,these banks have used every dirty trick­ city of Tocache. Endepalme,S.A. has a second operation of including flouting the law-to forestall the nationalization 14 hectares of palm in the Amazon Basin area of Santa Ce­ of the country's financial system, proposed by Garcia and cilia,between the rivers Maniti and Amazonas. At the To­ approved by Congress on Oct. 2. Behind the bankers' des­ cache plantation,Endepalma bas an illegal airport,despite perationis more than a fightin defense of "private property," the fact that it is but 3-5 kilometers from Tocache itself, as they so earnestly contend. It is drugs. And given the which has an official airport,complete with police force and billions at stake,it can be expected that the bankers will go the Corporation of Civil Aeronautics. to any and all extremes to defend their interests. It is this clandestine airport of Endepalma-owned by One of many examples of narco-banking operations in the Romeros-which is used by Colombian light-plane pilots Peru is the case of the Banco de Credito, Peru's largest to transport vast quantities of basic coca paste (PBC,the raw commercial bank. The October issue of the magazine Equis material of cocaine), for which they pay U.S. dollars then X accuses Dionisio Romero,owner of the Banco de Crt!dito laundered through the Banco de Credito branch at Tocache prior to the nationalization,of direct links to the drug mafia, (see EIR , Aug. 21,1987). boththrough illegal money-laundering and by running cover This writer personally took part in operations against the for drug trafficking itself. drug-trafficking organizations that used the Endepalma air­ Equis X asserts, "The Romero family owns palm tree port, such as in the case of the arrest of international drug crops in the Peruvian jungle, and these have allegedly served trafficker Phon Clark Perez Rengifo, at the Endepalma air­ as a cover for its drug-trafficking activities."Equis X explains portinstallations in September 1983. The raid was conducted that "in the environs of said crops,the Romeros have clan­ by the Umopar, the mobile unit of the Civil Guard rural destine airports for the export of semi-processed narcotics," police. Perez Rengifo was snared just as he was storing some and insists that "the origin of the Romero fortune, before 500 kilos of basic coca paste on board a Colombian narco­ assuming ownership of the bank,was the drug trade. " plane. Equis X also charges that the Romeros "have allegedly There also exist numerous affidavits in the files of the worked closely with two of the seven principal mafia gangs Peruvian judiciary, such as the case of Raul L6pez Villar, that operate in the Tingo Marfa jungle," and that this report­ who laundered more than $6 million through the Banco de edly represented "a true society of interests, in which the Credito (Tocache) in less than one month. One such affidavit mafiosihave also allegedly been something like fronts of the states,"On approximately September 10 or 12, 1982,I gave Romeros,in charge of the dirty work. " The mafia agents of 400 kilos of basic coca paste and four days later another 430 the Romeros,according to the magazine,were drug traffick­ kilograms of PBC,to Erencio Malpartida L6pez at the airport ers Marcial Perez Aliaga and Pablo del Aguila,the heads of of Tananta [name of the Endepalma airport site], where a two criminal organizations linked to the international drug Colombian light plane landed at least twice. " trade. Another of the more notorious cases involving the En­ There is a popular saying in Peru that "the horse fattens depalma airport is that of the palm oil transport company run

16 Economics EIR October 30, 1987 by the infamous gangster Arturo Pacheco Giron (alias "Bu­ falo Pacheco," a former member of the ruling APRA party expelled from its ranks in the late 1970s). Pacheco's com­ pany, which possesses approximately 200 tank trucks, was caught in flagrante on several occasions transporting PBC. One such instance occurred on Christmas 1978, when one of his Volvo trucks returning from the Endepalma installations was pursued by the police, and finally seized after a furious Arrests 'traumatize' gun battle on the outskirts of Lima, literally at the doorstep of Pacheco's residence. Inside the truck was found approxi­ City of London mately 400 kilograms of PBC. Yet another case is that of the drug-traffickingorganiza­ Mark Burdman tion of Colombian Carlos Correa Perez, who was captured by by an Umopar unit at the Endepalme airport, just as he was loading a huge cargo of PBC onto four Colombian light At the outset of October, a new phase of Britain's "Guin­ planes. Later, the members of this band escaped from a prison nessgate " scandal opened with a vengeance. By mid-month, at Tarapoto, with the complicity of the corrupt Judge Wash­ fiveleading City of London financialfigures had been arrest­ ington Castillo. Correa Perez's organization was also linked ed by the City's Fraud Squad, and rumors of new arrestswere to the operations of the notorious Peruvian assassin and drug spreading like wildfire. British dailies are already calling it trafficker Catalino Escalante Calvo. the biggest shakeout of the British iEstablishment since the bursting of the South Sea Bubble in the early 18th century. Complicity in laundering The Sunday Times of London Oct. 18 labeled it "one of the The participation of the narco-banker Dionisio Romero most traumatic events ever to hit the City of London. " and his Banco de Credito in the laundering of the proceeds of The Guinnessgate charges derive froma wild "share sup­ the drug trade is fully demonstrable, and goes a long way port scheme " engineered in early 1986 by Ernest Saunders, toward rebutting those who suggest that Romero "didn't then chairman of Guinness PLC, the brewer. During fiercely know " his Endepalme airport was used for drug trafficking. fought competitive bidding between Guinness and another The proof exists in the form of affidavits obtained by the firm , Argyll, to take over Distillers, the whisky giant, Saun­ Peruvianpolice and court authorities from various confessed ders allegedly set up an "inducement fund " of some £25 drug traffickers, all of whom confirmedtha t it was the Banco million, which went to various financial and business entities de Credito's owners who had solicited their collaboration to around the world. These entities used the money to buy carry out the laundering of "coca-dollars. " Guinness stock, shoring up Guinness PLC to enable it to We could, for example, refer to one which states that "the prevail over Argyll in the bidding for Distillers. deposits in his dollar account, at the branch of the Banco de Saunders resigned in late 1986, when the scandal first Creditoat Tocache, arethere because he had lent said account broke, but little was heard thereafter, until October 1987. to the administrator of that branch, at his request, who had The new wave of arrests began 'with Anthony Parnes, a

indicated that he would receive a commission of 50¢ per stockbroker associated with the ! Alexander, Laing and dollar, for each dollar deposited, and that he didn't know the Cruickshank brokerage house. Nicknamed "the Animal " be­ names of the individuals who had used his account. " (Police cause of his wild selling habits in the City, Parnes had been file No. 679-DIE/DINTID, dated 9/23/1983; declaration of the broker in the illicit deals of several other Guinnessgate one Juan del Carmen Barrantes.) figures. He was arrested by the FBI in Los Angeles, on A similar statement is offered by drug traffickerAlfonso request of British authorities, and, as' of this writing, is await- PereaPandu ro, who writes: "In the month of June ...in the ing extradition back to London. afternoon hours, Don Miguel Tenorio Ballon, the adminis­ During the same week , police arrested millionaire busi­ trator of the Tocache branch of Banco de Credito, came to nessman-financier Sir Isidore "Jack " Lyons, on charges of me and proposed the use of my current account to deposit stealing £3.25 million from Guinness. The 71-year-old Lyons dollars, without mentioning the quantity involved, for which is well-known in London as a patron of the arts and funder of operation Tenorio Ballon, I, and the Banco de Credito ac­ Israeli causes. countant Joel Hidalgo Sanchez would earnone-half of 1 % of On Oct. 13, Gerald Ronson , owner of Britain's second­ the total quantity thus changed ....After eight days, I .vas wealthiest private company, Heron International, was arrest­ approached by Joel Hidalgo Sanchez, who told me there ed while visiting Fraud Squad offices. He was charged with would be another 'little client.' " (Police report No. 42 eight offenses, including the theft of almost £6 million from DIDRF, PIP, Plan of Operation Zancudo, of 9/23/1983.) the company , conspiring to create a falsemarket in Guinness

EIR October 30, 1987 Economics 17 shares,false accounting,and others. and that Rowland provided some money for the buy-up of The Heron empire includes gasoline stations,large prop­ Distillers. erty holdings in Paris,Geneva, and Madrid,and "entertain­ Row land's meteoric rise to Lonrho chief was patronized ment " operations. The latter includes a video company,Me­ by Mr. Angus Ogilvy,a member of the British Royal Family. dia Home Entertainment,based in Culver City,California, Row land has been an important figure in the U. S. "Iran­ that markets pornography. Ronson is also a top funder of gate " complex. Sometime during mid-August of this year, Israelicauses. Rowland reportedly visited Iran,in the company of Lonrho On the same day, former Guinness chairman Saunders chairman Sir Edward duCann, supposedly to arrange a deal (who changed his name from Schleyer) was arrested and whereby Iran would aid in securing the release Western hos­ formally charged on 37 counts,including the theft of £24.2 tages in the Middle East, in exchange for Iranian oil being million from Guinness,which was allegedly used to bankroll refined and marketed in Europe. his share-support scheme. After thisvisit, duCann issued a statement Aug. 24 prais­ By mid-month, the arrest wave had extended to Roger ing the "popularity " of the Khomeini regime,and insisting Seelig of Morgan Grenfell, a 42-year-old who had built a that the West had to "come to terms with it. " reputation in the City as a whiz-kid in corporate takeover Rowland's family hails from Hamburg,Germany and he fights. maintains close relations with the "Hamburg Trust," the old Investigators are now tracking shady financial transac­ trading and banking families of that port city,in part through tions into Zurich,Geneva , Vienna,the Netherlands Antilles, Lonrho's ownership of the Kuehne and Nagel trucking con­ and elsewhere. glomerate. The Oct. 18 Sunday Times of London headline on the The Irangate complex also features in two other U.S.­ scandal,was, understandably, "How the Mighty Are Fall­ based protagonists in the GuilUlessgate affair: Wall Street en." arbitrageur Ivan Boesky and Rapid American Corp'/Schen­ ley magnate Meshulam Riklis. ' Across the Atlantic It was Boesky's confessions to the U.S. Securities and City of London sources tell EIR that the fun has just Exchange Commission in 1986, which provided the infor­ begun. More arrests are expected imminently. Moreover, mation leading to the November 1986 raid by the British some of the fun will take place across theAtlantic. Department of Trade and Industry on Guinness PLC. Not Among those believed to be in the "not-yet-arrested " only was Boesky involved in putting up money for the Guin­ category, is Thomas Ward, of the Washington, D.C. law ness buy-up of Distillers,but, in exchange,Guinness put up firmWard, Lazarus, Cihlar, a former board member of Guin­ substantial sums for a Boesky investment trust in the United ness.Reportedly, Ward's law firmis close to high-level U.S. States. According to the Sunday Times. Fraud Squad officers RepublicanParty circles. are hoping to interrogate Boesky further. Should arrange­ Another U. S. -based target of investigation is the Boston­ ments be made for his immunity,it is expected Boesky will based Bain management-consulting firm,reputedly the sec­ provide a wealth of important new information. ond largest such firm in the world after McKinsey. During U.S. intelligence sources estimate that an unspecified Guinness's rigged takeover of Distillers,the so-called cor­ amount of money from Boesky's notorious insider-trading poration "war cabinet " of Saunders et al. was under the ad­ arbitrage deals,went into the pools of money used for Iran vice of Bain's Olivier Roux,a Frenchman by birth. The head arms deals.Boesky was one of several "junk bond " operators of Bain-U.K ., its British affiliate,has been Sir Jack Lyons. working with the Belgium-based Banque Bruxelles Lambert, Reliable reportsare that Roux is being offered some form which has also been named for involvement in Iran arms of immunity,in orderto become the key governmentwitness deals. in the affair. According to the Sunday Telegraph of London Another of the same breed is Meshulam Riklis, who, Oct. 18, Britishlaw-enforcment officersare sending a special during the crucial period of the fight for Distillers,bought teamto Boston to investigate Bain. over 5% of Guinness shares,in violation of British law. In return,money from Guinness was put into Riklis's Schenley Rowland, Boesky, and Riklis operations. Soon after Morgan Grenfell's Seelig had been There is indication that Guinnessgate will soon engulf arrested,leaks appearing in the British press said that Riklis even higher levels of the British Establishment, including would be the next target of investigation. some associated with the House of Windsor. For example, Riklis,too, has been at the center of arms smuggling to there is the reputed involvement of Tiny Rowland, chief Iran. He is the patron of top Israeli politico-mafioso Ariel executive officerof the Lonrho,Ltd. conglomerate. Sharon. One London source reports thatRiklis, Ronson, and Rowland was the individual who put up bail money for Saudi arms-runner Adnan Khashoggi have been involved Saunders after his Oct. 13 arrest. Reports from Britain say together in ventures in the Middle East,through a London thatRowland and Saunders built up an association over years, entity called Gulf Investments,Ltd.

18 Economics EIR October 30, 1987 into an investment in oil; they get rid of the risk involved in New Way to Loot Debtors the debt and guarantee that their interest will get paid. Best of all, they get their paws on Mexico's oil. As the New York Times commentator recognized, the scheme is really a means devised by the bankers to convince thosewho still resist turningover entiresectors of their econ­ omies to pay foreign debt. "Innovations such as debt for Swapping 1unk debt' equity," says the newspaper, "are a business with very little for ' oil bonds' potential," given the political resistance they have run into. Venezuela, Colombia, Mexico targeted Venezuela is the firstcountry wherethe scheme has been by David Ramonet publicly discussed. Diario de Caracas reported on Oct. 6 that the state firm Petr61eos de Venezuela, S.A. (Pedevesa) An important group of U.S. bankers is now preparing to is studying the possibility of "acquisition or purchase of 50% implement Phase 2 of the looting scheme known as "debt for of the obligations" of the foreign public debt, to "later nego­ equity," or, the notion of paying the foreign debt with shares tiate them with any international company or financial insti­ in productive enterprises. The new ploy is to convert debt tution, either directly or by means of bonds." The same into stock in companies which are productive and still prof­ newspaper adds that this would "force" Venezuela "to trans­ itable. form the country's obligations." There is still a faction fightamong the creditors. They do For Colombia, a group of leading international banks is not all agree, since part of the scheme involves the debt being reportedlyputting thefinishing toucheson a hefty loan, dubbed sold at the prices of the so-called secondary markets, where the "Concord," by the press, of $1.06 billion. The credit is the debt packets are quoted at only 40-60% of their face destined in part toward payment of old debts; specifically, value. But the promoters of the scheme assume that the debt financing the sale of the debt of the state coal company, is unpayable as things stand. In exchanging debt for bonds, Carbocol, by the oil company, Ecopetrol. the banks shed the risk and assure themselves of punctual In fact, part of the Concord loan is for Ecopetrol. Re­ interest payments. cently, Ecopetrol bought from the creditor banks a large Since most of the debtor countries' economies are depen­ chunk of the Carbocol foreign debt, some $600million worth; dent on a single export product, certain firms in particular then it exchanged the debt for shares inCarba col. have been the source of crucial foreign revenues for each of This year, Colombia will pay $2.9 billion in debt service, the indebted nations. Withthe new scheme, all the revenues which represents more than 50% of what the country expects of these companies would be channeled to the payment of to receive through exports. In the last year, the foreign debt interest on these bonds. increased by $2 billion to a total of $15 billion. With the new The creditors' scheme is copied in part from the fraudu­ loans, the "Concord" and others which are anticipated, the lent example of the so-called junk bonds, in which bankrupt debt will reach $19 billion in a few months, which implies companies generate enormous "capital earnings"on the New that shortly, Colombia will have to pay $2 billion in interest York stock market. Of course, junk bonds are worthless, alone, and that the annual debt service will surpass $4 billion, while these new "equity" bonds would be hooked directly or almost 100% the value of its exports. into Third World wealth. The person who has pushed this Faced with this prospect, the creditors are pinning their idea publicly is none other than Michael Milken-, who created hopesfor repayment on Colombian oil, i.e., on Ecopetrol. In the junk bond market for the Drexel Burnham Lambert in­ the beginning, the Colombian governmenthad expected that vestment house. coal would earnhard currency, but it is selling at $30 per ton, Milken explained how the scheme would function to a instead of the anticipated price of $90 per ton. So the creditors New York Times editorial writer, on Sept. 13: The debtors have succeeded in converting the coal company's debt into would issue bonds for an amount equivalent to part of the oil company debt. The next step is to,get Ecopetrol to "buy" debt. With these bonds, the debt would be bought at a dis­ still more debt from the banks, and then issue bonds. count on the so-called secondary market. Colombian President Virgilio Barco, whose personal for­ He offers Mexico as a hypothetical case of how the scheme tune comes from oil and who is a favorite of the U . S. creditor would function: The state firmPetr61eos Mexicanos (Pemex) banks, is not apt to stand in the way of such a looting scheme. would issue a series of bonds to buy Mexico's debt at 50¢ on And with the likelihood of Carlos Salinas de Gortari becom­ the dollar. The 8.5% annual interest on the Mexican debt's ing the next President of Mexico in 1988, talk has already face value would thus be converted into a 17% profit for the begun among some of Mexico's creditors that the time has bondholders. In this way, the creditor banks convert thedebt come for Pemex to start taking over the Mexican public debt.

EIR October 30, 1987 Economics 19 Zaire River Diversion Project

A plan that can unifyMr ica and introduce limitless growth potential by Nicholas F. Benton

The fo llowing proposal has been prepared fo r consideration broad vision for the potentials of the continent and an opti­ by member-nations attending the special meeting of the Or­ mism about the ability of nations to work together in harmony ganization of African UnityNov. 30. when their objective is a common good. What must be achieved is fundamental: to bring the abun­ Development of a plan over the next few years to divert dant water resources and the abundant arable land together. water from the upper Zaire River into the Lake Chad basin Looking over a map of Africa, we see the following for purposes of irrigating the arable agricultural lands of the components for achieving this: Sahel,can unify the interests of every nation of sub-Saharan • The ZaireRiver. The Zaire River is among theworld's Africa around a concrete project of mutual benefit to all. It most powerful. Its flow is so intense that it retains fully 19% takes man's indispensable natural resource-water-and puts of the world's hydroelectric power generation potential. This it where it can do the most good: in an abundant, well­ is fresh water which can be harnessed for use in irrigating managed flowonto arable land,enabling exponential increas­ arable land. es in agricultural production. • The Sahel. The Sahel,extending almost 3,000 miles Regional,cultural, and ideological differences are over­ from Dakar to Djibouti is the largest unbroken region of come by the pursuit of a common benefit. This primary infra­ arable land in the world. structural improvement creates the preconditions for long­ • Lake Chad. Positioned directly in the center of the term,limitless economic expansion through augmentation of Sahel,today's Lake Chad is a tiny remnant of what was once the agricultural,transportation, and energy infrastructure of a much largerlake, and sits in a geological formation capable the continent. of holding a volume of water many times greater than that This Zaire River diversion is readily feasible from an currently in Lake Chad. engineering standpoint,although a detailed study has yet to The task is to bring the waters of the Zaire River across be done to establish the optimal set of alternative plans to the land which separates it from the Sahel,and into the Lake achieve it, the cost factors, and its precise impact on the Chad basin, where it can be held,before being disbursed in regions involved. It is proposed that a regional authority of an orderly,useful form through a network of irrigation canals cooperating African nations be constituted to obtain funding across the Sahel. Dams on both the Zaire River and Lake for,conduct, and routinely evaluate such a detailed study,to Chad would manage the water flow for optimum effect,also be completed with specific recommendations for approval by exploiting the hydroelectric power generation of the moving all relevant parties within the shortest feasible time period, water. not more than three years. The introduction of hundreds of millions of acre-feet of water into the Sahel region would alter the climate of northern An overview of the project Africa as a whole. As arable land became irrigated to optim­ Taken as a whole,the continent of Africa has a greater ize cropproduction, the massive increase in vegetation would abundance of natural resources than any other. This includes stimulate a "respiratory " interaction with the atmosphere, the prerequisites for agricultural abundance. The continent whose net effect would be to cool the atmosphere,and intro­ has more unused arable land than any other continent,as well duce a significant increase in natural rainfall. as seven of the world's largest fresh-water river systems. This would not only stop the advance of the Sahara De­ Therefore,it is a doubly painful irony that Africa is suffering sert, but would cause it to recede dramatically. Within an ever-worsening famine. It is truly the result, not of natural astonishingly shorttime, entire regions of the present Sahara conditions,but of the failure to put the natural conditions that could be reclaimed for development, as aquifers and dry exist on the continent to the service of man's needs. lakebeds and rivers would be refilled,many perhaps for the This is a failure that can be remedied with the aid of a first time in a millennium or more, through the increased

20 Economics EIR October 30, 1987 natural rainfall across the entire region. duction of a product at a fixedlevel, realizes far less in yield Once the region achieves the capacity to realize its lim­ than spending the same $50 million to build a section of a itless agricultural growth potential, then the introduction of larger master-plan for a massive increase in yield. The latter transportation and energy infrastructures will become self­ investment is,obviously , better spentthan the former. evident.This would include transcontinental high-speed rail­ In the case of the Zaire River Diversion, the investment roads,criss-crossing the continent east to west and north to in its planning and construction will be infinitely dwarfed by south.It would include efficient, centralized electrical power the yields it will produce. To cite a historical precedent,the grids which would support rapid growth of numerous popu­ Erie Canal proved so valuable to the flowof commerce in the lation centers that would concentrate industrial, commercial, United States,that the entire cost of its construction was paid cultural, educational,and health facilities. for in only 11 years-less than the time it took to build it. The historical analogy to the development of the North Everything gained from that point on was pure profit,and the American continent is important.The United States became benefit to the total economy was epic. No matter what the the most powerful economic force in the world not simply as cost of the Zaire River Diversion,as a whole,it will yield in a result of exploiting abundant resources. The development profits more than any combination of decentralized projects. of the industrialheartland of the nation was impractical until Once the political will exists to build the Zaire River some indispensable large-scale infrastructuralimprovements Diversion,the question will become: Who can afford not to occurred first. invest in its development? The most important was the Erie Canal, which provided The cost-feasibility of the project, then, is primarily a a transportationlink between the Great Lakes and the interior political,rather than economic,matter. If sufficient resolve of the continent, and the Eastern Seaboard.Without that link, is demonstrated to achieve an objective that will unlock an the potential of the interior would never have been fully unlimited growth potential,then cost is no longer important exploited.Additional links, such as a canal linking the Great when measured against the yield.It is only important as long Lakes with the Mississippi River,were also critical precon­ as it remains a deterrent to political will. ditions for realizing the full potential of the interior. In the If the political leader begins by asking, "Can we afford West,large-scale water projects which brought water out of it?" and awaits an answer to that before making a decision, the SierraMountains and the Rocky Mountains (via the Col­ then he will always be told,"No." If, however,the political orado River), by way of numerous systems of dams and leader says, "This is the right thing to do; we must and we canals, made possible the growth of California, turning it will do it; regardless of the cost, we will find a way," and from a virtual desert into the U.S. A. ' s most populous and then asks variousparties if theyare interested in participating, economically prosperous state. In short, large-scale infra­ he will be told,"yes." structure projects have always been the precondition for any True,he may have to do some convincing and searching real,sustained economic growth. to get the "yes " answer he seeks,but, again, the main com­ ponentof this is the degree of determination behind the effort. Cost factors With the amount of resources for investment that exist in the The most common argument against investing in a large­ world today, there is no shortage of potential investors who scale project such as the proposed Zaire River Diversion is will see the advantages to be gained from cooperating witl its high cost. This factor, many will say at the outset, cate­ the leaders determined to build this project (advantages �. gorically rules out such an idea.But this is nonsense. Finan­ both a political and economic nature). Once interest begins cial interests preoccupied with means to optimize profitsfrom to be shown,a stampedeof investors will follow. an underdeveloped region will always argue against the fea­ sibility of major projects which improve the potentials for How to proceed real economic growth, independence, and expectations of Two elements are required to launch the Zaire River those regions. Africa has remained underdeveloped for so Diversion: consensus among nations affected by the project long because of the force of such exploitation, which contin­ and a detailed feasibility study. The two can proceed simul­ ues today in the form of those who preach conservation, tan�ously and,in fact,be directly interrelated. population control,and small-scale,decentralized programs, One understanding must lie behind bothefforts, however: and attack the kinds of large-scale programs that will tr!U1S­ a commitment to the feasibility of theproject. In other words, form theface of the entire continent. it must be clearly resolved from the outset that the study In reality, the cost of any project must be viewed as a being conducted is not aimed at answeringt he question,"Can function of its total economy,or value. That is, it is not the it be done?" For reasons already given,even an engineering nominal cost which is important, but the ratio between the firmcan come back with a "no " answer,ifthat is the question. cost and the yield of an investment.Spending $50 million on The study must be conducted from the standpoint of provid­ a decentralized,local project which conserves use of a di­ ing the necessary detail,as well as alternative routes,loca­ minishing resource,for example, or even stabilizes the pro- tions for dams,cost estimates,etc. , which actually make it

EIR October 30, 1987 Economics 21 possible for the project to get underway. The study should be carried out by a commission made up of appointees from all African nations committed to the realization of the project. This "Zaire River-Sahel Water Diversion Project Commission," composed of appointees who will report back routinely to their respective govern­ ments, will amass a fund to finance the study. The study will Space budget cuts require hiring experienced engineering experts comfortable with utilizing the problem-solving approach who will draw protests in British up three alternativeroutes for the water to flow fromthe Zaire River into the Lake Chad basin. It will also require hiring by Mark Burdman analysts who provide cost, regional impact, and other esti­ mates in some detail. (In the United States, a similar method was undertaken A British government commitment to place strict limits on to study the feasibility of diverting water to the High Plains state funding of space research, while phasing out British region, where water for irrigation was tapped from the Ogal­ participation in the European Space Agency, has provoked lala Aquifer and was found to be diminishing rapidly. The both angry protests and an impassioned defense of the im­ U.S. Congress funded a $5 million project in 1976 to produce portance of space exploration from influentials in Britain's a study of detailed options within a five-yearperiod . A "High political and defense establishment. The unusually vocifer­ Plains Study Council" was created, composed of two indi­ ous rallying behind scientific-technological progress may be viduals appointed by the governors ofeach of the five states read as a signal that powerfulfactions in the British establish­ involved, which oversaw the study in a manner similar to ment are trying to foster a shift away from the destructive, what is being proposed here. In this case, however, the study mystical cult of "privatization" and the "post-industrial ser­ was doomed to failure from the outset, because the mandate vices economy," which has so damaged Great Britain over was flawed. Had there been no constraints on their efforts to past years. It also signals concern about the increasingly find new water, they would have looked to the northward­ dangerous challenge to the West posed by the Soviet space flowing rivers of Alaska, with their massive volumes of fresh program and the past years' disarray in the American space water, and the fe asibility of diverting them, southward and program. downhill, onto the High Plains. Instead, they were prohibit­ Speaking at a conference on space industrialization in ed, for parochial political reasons, from looking outside the Brighton during the week of Pet. 12, John Butcher, the immediate area of the High Plains for new water, and thus, British minister responsible for, information technology, an­ the study was destined to fail .) nounced that Britain, at a critical meeting of the European The commission would meet on a regular basis to hear Space Agency (ESA) in The Hague, Netherlands on Nov. 9- reports on the progress of the study and make ongoing eval­ 10,would insist on a cutback in the European space program. uations and any decisions as needed about changes in the way In the course of his remarks, h� made clear that the govern­ the study is being undertaken. Commission members would ment's policy was to view space as a purely "economic" then report back to their respective governments, and to matter, in the way a "free enterprise" quack views econom­ meetings of larger regional bodies as requested. The com­ ics. Said Butcher: "The time has come for Europe to take mission would have the primary responsibility for assuring stock and review its space activity against the likely future the best possible detailed and comprehensive study emerges demands of the market." from their work within a reasonable period of time, which British Minister of Trade andIndustry Kenneth Clarke should not exceed three years. hadearlier denounced theentire array of Europeanaerospace Once the study is completed, the commission makes its manufacturingcompanie s, as an "expensive club" that would recommendations on which of the three alternative routes it drain necessaryresources fromother areas of the economy. considers the best, and passes the study on to be approved by Such attitudes drew an immediate protest from Jack all the affected and cooperating nations, who would then act Leeming, recently appointed head of the British National with a consensus to seek bids on the beginning of construction Space Centre. On Oct. 19, he briefed a subcommittee on of the various components of the project. Also, the cooper­ space created by Britain's Advisory Council on Science and ating nations could form a cooperation which would seek Technology (ACOST), a group of scientists, industrialists, investment in the project, and subcontract the construction. and representatives of government departments headed by With the aid ofthe most modem construction methods, yields Rolls Royce chairman Sir Francis Tombs. Leeming insisted fromthe project could come within the firstyears afterstar­ on the necessity of Britain boosting government funding for tup, beginning with hydroelectric surplus, and then, the water space research, from thepresent annual level of £100million itself. up to the £300million range.

22 Economics EIR October 30, 1987 Sir James is one of the co-signers of a new reportbeing issued by fiveEuropean foreign policy institutes on the polit­ ical, economic, scientific, technological, security, social, and cultural aspects of space. On Nov. 4, Eberle will be chairing a conference at Chatham House on Anglo-German­ provoke angty French cooperation in space. The irony of Sir James's position is that Chatham Housel RIIA, created by the Freemasonic British Round Table ear­ defense circles lier in this century, and itself the creator of the New York Council on Foreign Relations, has been a key architect of the liberal "New Age" policies of hostility to technology and industry. This was particularly due to the influenceof the late Arnold Toynbee, research director at RIIA from the 1920s It was immediately after Prime Minister Margaret through the mid-1950s. Historian Toynbee was a fanatical Thatcher, acting on the advice of civil servants in the De­ gnostic, hostile to the Judeo-Christian idea of progress. He partment of Trade and Industry, turned down such a funding was a guru-figure to many of the key operatives in both request in July of this year, that Leeming's predecessor at the Britain and North America, who mobilized intensely during Space Centre, Roy Gibson, quit his post. Gibson was a for­ the 1960s to sabotage the U.S. space program. mer ESA director who was appointed firsthead of the Centre when it was created two years ago. He had expressed concern 'The next great industrial revolution' that the level of government funding for space exploration Eberle's critique was echoed on Oct. 19 in Sheffield, at was far below France and West Germany, and even less than the inaugural meeting of the Institute for Bio-Medicine, a Italy and India. private agency, established with aid of government funding. The government, including Mrs. Thatcher, with some There, formerMinister of Space Sir Geoffrey Pattie charged ideological fervor, insisted that the bulk of funding for space that a "curious fog of myopia seems to be descending on the research should come from the "private sector." According Governmenton the issue" of space exploration and research. to one British aerospace-industry insider, "This proposal went He exclaimed, "Can a country which depends utterly on trade over like a lead balloon, especiallybecause everybody knew and whose trade must depend crucially on developing new that the City of London institutions were not about to lend products based on materials and processed technology, af­ money to industryfor space." ford to opt out of a fieldwhich represents the most important One noteworthy rebuttal of the government's position concentration of advanced technologies anywhere in the was made by Adm. Sir James Eberle, director of the Royal world?" Institute of International Affairs, also known as Chatham Similarly, Sir John Curtiss, director of the Society of House. He wrote in the Times of London Oct. 15: "If we British Aerospace Companies, Ltd. , wrote to the Times of want to preserve a strong defensepoli cy, we must take into London Oct. 19, warning that statements made by Minister account the contribution space-based systems can make to a Kenneth Clarke, flatlyre jecting proposals by the British Na­ credible nuclear deterrent. It is no coincidence that France tional Space Centre for an increase inthe space budget, "will has an 80% increase in its military space budget." have dismayed British space scientists and space workers Eberle added, caustically, "British history is littered with alike ....Britain cannot afford to be a mere spectator while examples of lack of political vision in matters of technical othernations make the running in space. At the present rate judgment. At the beginning of the 19th century, their Lord­ of advance in technology, making up lost ground is immense­ ships of the Admiralty stated that they regarded it 'their ly expensive and, in the space business we are, indeed, losing bounden duty to discourage to theutmost of their ability the ground. employment of steam vessels. ' Their successors in the 1920s "Our present Governmentprides itself on its innovative 'saw no use for aeroplanes.' " He added that space explora­ thinking, yet it appears to have a blank spot when it comes to tion "requires, and can stimulate, many other leading-edge appreciating the huge potentialof space .... technologies. Too few people in Britain seem to realize to "I believe that the British people are dismayed at our what extent space has already alteredour lives." Government ministers' lack of vision when it comes to space. He criticized Thatcher government plans to "privatize" The British people see the exploitation of space heralding the space research funding, warning:"If the governmentwill not next great industrial revolution. They look to Government take the lead, Britain's position as a space power and serious for leadership." producer must be seriously threatened. The alternative, to be The Society of British Aerospace Companies, Ltd. com­ a user only, means dependence on the rest of the world, on prises 300 companies, including BritishAerospace Ltd. , Rolls their terms ." Royce, and others.

EIR October 30, 1987 Economics 23 Business Briefs

Commerce to the September issue of Israel and Pales­ kind of service we can provide, for example tine. Most of the trade agreements involve through Onderstepoort Veterinary Institute, Hamburg merchants industrieson the Israeli-occupied West Bank or the cooperation between ourselves and of the Jordan River. Lesotho in the Highlands water scheme, court Khomeini's Iran I&P identifies four Israeli corporations where we, on our part, can assist through as most heavily involved in the Soviet trade: the Development Bank, and wheretechnical The Chamber of Commerce of Hamburg, G.G.Trade Investment Corp. , based in the people from South Africa will be involved." West Germany, met on Oct. 16 to discuss West Bank's Ariel Settlement; the Associ­ He further pointed to the role of Third the future prospects for Iranian-West Ger­ ation of Soviet Jews in Israel, chaired by World countries in the development of the man economic cooperation. The keynote Grisha Feigin, who is quoted saying he deals industrialized nations. "In the final analysis, speaker was the economics attache at the with a Soviet foreign trade ministry official the future markets are to be found in the Federal Republic's embassy in Teheran. Also who was his military commander in World Third World countries, too. That is where attending were representatives from the War II; the Tavori company from the West populationgrowth is still taking place, where Hamburg-based West German-Iran Cham­ Bank, which exports bottled juice; and busi­ there is still room for expansion of living ber of Commerce and the Near and Middle nessman Shabtai Kalmanovitch, a diamond standards, in other words, where there will East Association, including the president of dealer who fostered Soviet trade in Sierra be a place in the future to get rid of manu­ factured products. " the former organization, Christian Brinck­ Leone and is now about to be extradited to the United States on charges of fraud. mann, banking partner of the Hamburg branch of the Warburg family. Following that meeting was another at the Hamburg elites' think tank, Haus Ris­ Energy sen, to discuss the crisis in the Persian Gulf. Development The German-Iranian rapprochement is Mexico, U.S. to the work of German Foreign MinisterHans­ South Africa offers share electric power Dietrich Genscher, and comes as the United help to neighbors States and other Western powers are in a virtual state of war with the regime of Aya­ Mexico and a U.S. electric power company tollah Khomeini. Speaking on South African television on Oct. will share power supplies in the event of an According to a commentary in the Saudi 4, South African Finance Minister Barend emergency, UPI reports. Fernando Hiriat newspaper Asharq al Awsat on Oct. 9, the du Plessis said that his country was willing Balderrama, director of the Mexican Fed­ two countries are resuming a longstanding to play an important role in fostering the eral Electricity Commission, made the an­ love affairwhich started in the 19th century , economic development of countries of sub­ nouncement on Oct. 17, after signing an when philosopher Friedrich Nietzsche wrote Saharan black Africa, but that the interna­ agreement with Gerald L. Moore, president a book on Zoroaster. tional campaign of sanctions against South of the Imperial Irrigation District, which The Oct. 9 Saudi Gazette blasted For­ Africa had prevented this potential from serves part of Arizona and California's Im­ eign Minister Genscher for having spon­ being realized. perial Valley agricultural zone. sored a recent meeting between Iran's For­ He was asked, "In your address to the The accord "commits each side to bring eign Minister Ali Akhbar Velayati and Is­ IMF, you asked for recognition of the role reciprocal support on both sides of the bor­ rael's Foreign Ministry Director General that South Africa can play in the· develop­ der of Baja California and the U. S. ," Hiriat Avraham Tarnir, in the villa of a German ment of sub-Saharan Africa. What did you said. "This is a classic example of agree­ intelligence agent, some 16 km from Bonn. mean by that?" ments that equally benefit both sides." The After the closing of the Iranian arms pro­ Du Plessis replied: "Actually, I pointed two parts will provide mutual emergency curement office in London, the paper re­ out how ironic it is that everyone speaks of electrical supplies as well as economic and ported, West German weapons started going the development of sub-Saharan Africa, and technical assistance when needed. into Iran. how important it is, and everyone wants to help. Yet the one country south of the Sa­ hara that can really make a contribution­ that is , South Africa-is being subjected to Ibero-America Mideast an international attempt to bring our econo­ my to a standstill, or at least inflict serious Brazil looks to Israel, Soviet Union damage to it. "What I meant was that we are Africans. continental integration increase trade ties We are fullyaware of the problems of Africa in agriculture and the like. Indeed, recently Brazilian President Jose Samey raised the Israeli-Soviet trade relations have been we even had to give assistance outside Af­ issue of a common market for Thero-Amer­ steadily growing in recent years, according rica to control equine fever. Now, this is the ica, during a visit to Venezuela on Oct. 16.

24 Economics EIR October 30, 1987 Briefly

• JAY ROCKEFELLER, U.S. senator from West Virginia, told AP He was critical of recent discussions of a gressmen and for Walter Mondale' s election that the Uniwd States might have a common market to link the United States, campaign. thing or two to learnfrom Japan, since Mexico, and Canada, calling this a response 66% of Japanese executives are en­ to Brazil's own recent steps toward integra­ gineers, sci4ntists, or mathemati­ tion with Argentina and Uruguay. cians, while e same portionof U.S. "We want to create a new economic or­ Petroleum th executives are lawyers, accountants, der," he said. " ...This is a very big step, or public relations specialists. Rock­ and we see that the United States, after our Swedish firm found efeller's interview was published in initiative, is beginning an initiative with theJapan Times on Oct. 12. Canada. . . . I think this response is a result running Iran's exports of Brazil's position on the creation of a Latin • FEDER�L prosecutors on Oct. American common market." Sarney de­ The Swedish firm A. Johnson and Co. is 15 filed suit against Manhattan's fa­ scribed his visit to Venezuela as important running oil exports for Khomeini' s Iran, ac­ mous Fulton Fish Market, declaring for developing such continental integration. cording to a report appearing in the Social it to be mafia-controlled. This is the He and Venezuelan PresidentJaime Lu­ Democraticdaily Aftonbladet Oct. 21. first time the government has filed a sinchi agreed to have a meeting of the Bra­ The company owns the tankers that run racketeering suit to put "an entire zil-Venezuela Cooperation Commission in the shuttle trafficfrom Kharg Island to Larak commercial center under court super­ Brasilia and to activate agreements between Island. The firmis runby Antonia Johnson, vision," according to U.S. Attorney the state-run oil, mining, and metals-pro­ a memberof the board of the Swedish liberal Rudolph Giuliani. Also chargedis the cessing companies of the two countries, to party Folkpartiet. main trade union forthe fishmarket, economically integrate the border regions. Local 359 of the United Seafood Workers .

The Debt Bomb • BUTTEltFLIES have destroyed Defense & Aerospace 20,000 hectares of cocaine planta­ Yugoslavia proposes tions in Peru's Tocache province, ac­ 'No contracts for cording to the daily El Comercio Oct. '25 % solution' U.K.,' says SDI foe 21. Total losses for drug traffickers from the insects, locally called mal­ Yugoslav Prime Minister Branko Mikulic umbas, are estimated at $37 million. The u.s. Strategic Defense Initiative will proposed limiting debt payments to 25% of be largely scrapped by the next U.S. Presi­ exportearnings for 1988, in a speechto Par­ • THE BRONFMANS,Edgar and dent, so Britain should not count on getting liament on Oct. 19. The proposal was part Charles, are touring Europe to build any SOl contracts, stated Robert Bowman, of a plan for debt consolidation that Yugo­ up theintemational operations oftheir thehead of the Washington, D.C.-based In­ slavia will be presenting to its Westerncred­ liquor empire andthe Bronfman-con­ stitute for Space and Security Studies, in a itors . trolled Du Pont de Nemours Corp. statement in London on Oct. 20. The idea is modeled on Peruvian Presi­ They are reportedly buying up large Bowman, billing himself as a former dent Alan Garcia's famous "10% solution." interests in Germany's Rheinhessen space adviser to Presidents Ford and Carter, Garciaincurred the wrath of the internation­ and Rheingau regions. Meanwhile, said that the only thing the United States had albankers with his policy, adopted two years Edgar Bronfman, chairman of Sea­ ever wanted was "political entanglement," ago, of limiting debt payments to 10% of gram's, lost the equivalent of £100 when it signed an agreement with Britain on exportearnin gs. million in the Wall Street crash, the SDI cooperation. "You will not get big con­ In the past 12 months, Yugoslavia has Daily Telegraph of London reported tracts fromSOl because this will be held in used 46% of its exportearnings topay debt, on Oct. 2l. check by Congress," he said. "The British a situation which Mikulic described as in­ Government is shooting itself in the foot. tolerable. Since July, Yugoslavia has de facto • BIG LOSSES from the Wall Your space scientists and space engineers stopped further debt payments. Street crash are reported in the British have nowhere to go but SDI, but that will Mikulic also announced that Yugoslavia press for internationalpress magnate come to a screeching halt. This will be coun­ will seek further creditsfrom the West, and Rupert Murdoch, but real-estate bil­ terproductive for the British aerospace in­ will increase price controls, given thatinfla­ lionaire Donald Trumpand the sleazy dustry ." tion, now running at a 123% annual rate, Sir Jimmy · Goldsmith escaped by Bowman is a colleague of Carol Rosin, otherwise threatensto go totally out of con­ selling massively before the crash. who boastedduring the 1984 U . S. presiden­ trol. TheInternational MonetaryFund, as a "Sir James had viewed the market as tial election carnpaign of her cooperation precondition for any furtherbridging credits massively too high," an aide told the with the Soviet embassy in Washington in to Yugoslavia, had demanded that price Daily Mail. shaping anti-SOl programs for liberal con- controlsbe furtherrelaxed.

EIR October 30, 1987 Economics 25 �TIillScience & Technology

New hypothesis shows geometry ofato mic nucleus

A summary ofre cent work by Dr. RobertJ. Moon. adaptedJro m an article by Laurence Hecht in the Ap ril 1987 German-language magazine Fusion.

The fo llowing summary of a groundbreaking new view of the together, until one should try to get them too close, at which atomic nucleus developed by University of Chicago physicist point they repel again. So, the holding together of the protons Dr. Robert 1. Moon is adapted fr om a longer article by in the nucleus is accounted for. Laurence Hecht. Hecht collaborated with Moon to develop Since we disdain such arbitrary notions of "forces," and the implications of his geometrical model of the atomic nu­ prefer to view the cause of such phenomena as resulting from cleus fo r the periodic table and the arrangement of extra­ a certain characteristic of physical space-time, a different nuclear electrons. Dr. Moon, an experimental physicist of view is demanded. Considerations of "least action" suggest­ vast experience, and a veteran of the World War II Manhat­ ed to Dr. Moon a symmetric arrangementof thecharges on a tan Project, began his work at the University of Chicago in sphere, while the number of such charges and the existence the 1930s under Prof. William Harkins . of orbitals beyond the nucleus suggested a nested arrange­ ment of such spheres, containing intrinsically the Golden While an elaborately refined setof rules exists to explain Section ratios (see box). many phenomena observed at the atomic level, there remains no satisfactory model of the atomic nucleus, the centralcore The model of the atom around which a precise number of negatively We are led immediately to the Platonic solids. The sur­ charged electrons can becons idered to orbit. Any attempt to faces of the Platonic solids and related regular solids repre­ produce a coherent theory of orbiting electrons, without sent unique divisions of the surface of a sphere according to knowledge of the structure around which these orbits are a least-action principle. All of the Platonic solids can be constructed, would seem to be doomed to failure. Nonethe­ formed by the intersections of great circles on a sphere, the less, a highly elaborated algebraic theory of the atom, de­ great circle being the least-action path on the surface of the signed to account for a mass of data gathered from spectral sphere, and the sphere the minimal three-dimensional vol­ analysis and other operations, does exist in the form of the ume created by elementary rotational action. quantummechanical model. Most of this theory presumes no The best way to see this is to consider the intersections of more about the atomic nucleus than that it contains a certain the great circles in a Torrianian, or Copemico-Pythagorean number of positively charged particles agglomerated in a planetarium (cf. Johannes Kepler, Mysterium Cosmographi­ centralma ss. cum, Dedicatory Letter, Abaris Press). In the device con­ It would seem past time to arrive at a more developed structed by Giovanni Torriani to demonstrate Kepler's nest­ theory of the atomic nucleus, and Dr. Robert J. Moon has ed-solids model for the solar system, the vertices of the reg­ proposed a geometrical model of the nucleus to do just that. ular solids are formed by the intersections of great circles. The existing dogma of nuclear physics requires us to Three great circles intersect to form an octahedron. Six great believe that protons, being all of positive charge, will repel circles intersect triply in eight places to form the vertices of each other up to a certain very close distance corresponding a cube and doubly in six places over the faces of the cube. to the approximate size of the nucleus, at which point a Fifteen great circles intersect five-at-a-time in 12 locations, binding force takes hold, and forces the little particles to stick three-at-a-time in 20 locations, and two-at-a-time in 30 10-

26 Science & Technology EIR October 30, 1987 cations, forming, respectively, the vertices of the icosahed­ one will fit inside the other such that the vertices of one fit

ron, dodecahedron, and icosidodecahedron . centrally on the faces of the other, each fittingperf ectly inside _ It is interesting that the tetrahedron is not uniquely deter­ a sphere whose surface is thus perfectly and symmetrically mined in this construction, but is derived from the vertices of divided by the vertices. The tetrahedron is dual unto itself the cube. Dr. Moon has developed a nested model using four and therefore plays a part separate from the rest. of the five Platonic solids, excluding the tetrahedron, to de­ The four dual solids may form a nested sequence, cube, fine the atomic nucleus in much the same way Kepler deter­ octahedron , icosahedron, dodecahedron with certain unique mined the solar orbits. In Dr. Moon's "Keplerian atom," the properties (Figure 1). The cube-oc�edron nesting is clear, 92 protons of thenaturally occurring elements aredetermined as is the icosahedron-dodecahedron (figure 2). To fitthe one by two sets of 46 vertices. His proposed arrangement is as pair of duals into the other appears ,t first to be a problem. follows: For the six vertices of the octahedron do notfit obviously into Two pairs of regular Platonic solids, the cube-octahedron the 20 faces of the icosahedron, nor could the fourfold axial and the icosahedron-dodecahedron may be called duals: The symmetry of the former be simply i.serted into the fivefold

Anal gebraicconstruction A geometricalcons truction of theGolde n Section of theGolden Section The Golden Section, or Golden Mean, divides a line into The Golden Section can be constructed directly from a two segments , such that the ratio of these segments is circle, as fo llows: Take any circle, and determine the proportional to the ratio of the whole length to the larger length of its diameter by folding it in half. Now produce a of the segments . tangent from any point on the circumference of the circle, which is extended so that it has the same length as the A C B diameter. Connect the endpoint of thetangent to the center • • • of the circle, and continue this new line until it reaches the AC/CB = ABIAC opposite half of the circumference. This line will becut in This being the case, when the length AB is extended the Golden Section proportion (

112

- v'5 2 AC/CB = ABIAC = (is the traditional symbol for the Golden Mean) A The Golden Section ratio is (1 + VS)l2,which is ap­ proximated by the number 1.61802. A simple construc­ tion of the ratio (1 + VS)/2 can be determined from the Pythagorean Theorem. Construct a square on an extended line. Draw a diagonal through one half of the square, and markthis length on the line. The extended line will be in the Golden Section ratio to the length of the side of the The relationship PQ2= QB x QA can easily be shown original square . by noting that PQB and PQA are similar triangles.

EIR October 30, 1987 Science & Technology 27 Edge of cube 1.00 FIGURE 1 Edge of octahedron 2. 12 Nested sequence of four Platonic solids Edge of icosahedron 1.89 Edge ofdodecahedron 1.618 Note that the ratio of edges between the inner and the outer figures is in the Divine Proportion, =CV5 + 1) +2 =approx . 1.618. Then taking the radius of the sphere circumscribing the cube to be unity, the radii of circumscribing spheres stand in proportion: Cube 1.00 Octahedron 1.733 Icosahedron 2.187 Dodecahedron 2.618 Note here , that the ratio of radii between inner and outer spheres is the square of the Divine Proportion . So arranged, the four solids which are dual contain 46 vertices in a distinct ordering: Cube 8 Octahedron 6 Icosahedron 12 axial symmetry of the latter. The octahedron may still be Dodecahedron 20 placed within the icosahedron in a ma,lmer that is beautiful. Touu 46 The ratio of five-to-four provided Dr. Moon a clue. Six ver­ tices of the octahedron may be placed near to six vertices of Building the nucleus the icosahedron, such that the distance fromthe nearby vertex With the structure of the microcosm so determined, we of the icosahedron to the edge opposite it is divided in the are now prepared to demonstrate the unique arrangements of Divine Proportion , as the Golden Section was called in the singularities that may exist within it. There are 92 such ar­ Renaissance (Figure 3) . rangements known as the naturally occurring elements (see The axis of the cube-octahedron pair is thus skew to the Fig. 6) and some more that we can manufacture but not axis of the icosahedron-dodecahedron dual-a fact of great maintain for very long . Each element has a unique number Z importance later. of positively charged protons in its nucleus. Examining the edges of the figures so nested , considering As a first approximation for the nucleus, Dr. Moon pro­ that of the smallest inner figure , the cube, to be unity, we poses that protons be placed at the vertices, beginning with find: the cube and moving outward . We thus get: Oxygen (8) Completed cube Silicon (14) Completed octahedron Iron (26) Completed icosahedron FIGURE 2 Palladium (46) Completed dodecahedron Nesting of icosahedron in dodecahedron Uranium (92) Completed twin figures Thus, the highly stable oxygen (making up 62.55% of the total number of atoms in the Earth 's crust) and silicon (making up 21.22%) are represented by the first two com­ pleted figures. Together these two elements account for 84% of all the atoms in the Earth's crust. While the curve of relative abundance declines exponentially with increasing atomic number, iron , the completed icosahedron , is three orders of magnitude higher than'the elements near it on the atomic number scale and makes up 1.20% of the atoms in the Earth 's crust, and 5% by weight. Filling the outermost figure, the dodecahedron, we reach palladium Z = 46. To go further, a twin structure joins at one of the faces of the dodecahedron (Figure 4) and begins to fill up its vertex positions with protons beginning on the outer-

28 Science & Technology EIR October 30, 1987 pulling of the electron orbitals. Thus, the otherwise unac­ FIGURE 3 counted-for fillingof the previously unfilled 4-forbital s, and Nesting of octahedron in icosahedron the mystery of the period of 14 for the rare earths, are ex­ plained. The figure is complete at 86-Radon, the last of thenoble gases. To allow the last six protons to findtheir places, the twin dodecahedra must open up, using one of the edges of the binding face as a "hinge." 87-Francium, the most unstable ofthe first 101 elements of the periodic system, tries to find its place on the thus­ opened figure, but unsuccessfully so. Less than oneounce of this ephemeral substance can be found at any one time in the totality of the Earth's crust. 88-Radium, 89-Actinium, and 90-Thorium find theirplaces on the remaining vertices. Two more transformations are thennecessary before we reach the last of the 92 naturally occurringelemen ts. To allow for 91-Protactinium, the hinge is broken, and the figure held together at only one point (Figure 5). The construction of 92-Uranium requires that the last proton be placed at the point of joining, and the one solid slightly displaced to penetratethe other in order to avoid two protons occupying the same position. This obviously unsta­ most figure. (47-Silver is the first.) Six positions areunavail­ ble structure is ready to break apart at a slight provocation. able to it-the fivevertex positions on the binding face of the And so we have the fission of the lU"anium atom, as hypoth­ second figure and theone at the face center where a vertex of esized by one of those who firstmade it happen. the inscribed icosahedron pokes through. Dr. Moon was led to the elaboration of this theoryon the Thus, on the second figure, 15 out of 20 of the dodeca­ basis of a review of the work of Klaus von Klitzing which he hedral vertices are available, and 11 out of 12 of the icosa­ published in the October 1985 issue of the International hedral vertices. We now fill 11 of the 20 available dodeca­ Journal of Fusion Energy . Klitzing won the Nobel Prize in hedral vertices, thus creating 47-Silver and continuingthrough 1985, for the discovery of the quantum Hall effect. 57-Lanthanum. Here, one face of the dodecahedron remains Klitzing investigated the surfaces of semiconductors un­ open to allow fillingof the inner figures. The cube and octa­ der extreme conditions-low temperatures and high mag­ hedron fillnext, producing the 14 elements of the lanthanide, netic fields. The Hall effect is a kindof resistance createdby or rare earth series (58-Ce to 71-Lu). Placing the proton the Lorentz force which appears as a new, transverse electri- charges on the inner solids causes a corresponding inward

FIGURE 5 Twin dodecahedra with "hinge" broken FIGURE 4 Twin dodecahedra joined at one face

EIR October 30, 1987 Science & Technology 29 FIGURE 6 NOBLE Periodic table of the elements GASES IA 0

H 1.00797 IIA iliA IVA VA VIA VillA atomic number

2 Li Be B C N 0 F 6.941 9.01218 GJatomic mass 10.81 12.01 1 14.0067 15.9994 18.99840

11 12 13 14 15 16 17 3 Na Mg AI Si P S CI 22.98977 24.105 IIIB IVB VB VIB VIIB VIII IB liB 26.981 28.086 30.97376 32.06 35.453

IS 19 20 21 22 21 24 25 26 27 23 20 10 11 12 11 14 15 24 • K Ca Sc Ti Cr Fe Co Ni Zn Ga Ge As Se Br II< V Mn Cu A. 19.098 40.08 44.9559 47.90 50.9414 51.'96 54.9380 55.847 ,5 8.9332 58.70 b3.546 6U8 &9.72 72.5' 74.9216 78.9& 79.904

17 18 19 40 41 42 41 44 45 46 47 48 4. 50 5 1 52 51 5 Rb Sr Y Zr Nb Mo Tc Ru Rh Pd Ag Cd In Sn Sb Te 85.0678 87.62 83.9059 91.22 92.9064 95.9" .8 101.07 106.4 107.868 112.40 114.82 118.ft' 121.75 127.60 126.9045

55 56 57 72 71 74 75 76 77 78 79 80 81 82 81 84 85 6 Cs Ba *La Hf Ta W Re Os Ir Pt Au Hg TI Pb Bi Po At 112.9050 117.14 118.9055 178.49 183.85 186.207 190.2 192.22 195.0' 200.59 204.37 207.19 208.9804 (210) 1210)

87 88 89 104 105 106

7 Fr Ra tAc Ku Ha (221) 226.0250 (227)

58 5. 60 61 U 61 64 65 ... 67 68 69 70 71 Ce Pr Nd Pm Sm Eu Gd Tb Oy Ho Er Tm Yb Lu 140.12 140.9077 144.24 (147) 150.0 151.96 157.25 158.9254 162.50 1&4.9304 16,?,.26 168.9342 173.04 174.97

t .0 91 92 .1 94 .5 .6 97 .8 .. 100 101 102 10] Th Pa U Np Pu Am Cm Bk Cf Es Fm Md No Lr 212.0181 211.0]5. 218.029 237.0482 (244) (24]) (247) (247) ( 25 1) (254) (257) (258) (255) (256)

cal potential. It is generated when an electricalcurrent flows finestructure constant (ex= fine structure constant):! in a conductor which lies in a plane perpendicular to the 1 2h - magnetic field. -;; e2 f.LoC According to a classical explanation, the Lorentz force Moon was interested in the geometry which underlay the will deflectthe charged particlessidewa ys. The particles will fine structureconstant and the Hall resistance. He developed collect on the edge parallel to the electron velocity. a two-dimensional model for this geometry, and then consid­ This charge separation leads to the buildup of an electrical ered a three-dimensional model which involved the fivePla­ field (the Hall field). This can be considered to create a tonic solids. This model was like the one described, with compensating force to the Lorentz force, which ultimately electrons, rather than protons, arranged at the vertices of the annuls it, allowing an undeflected current to flow. When figure. However, it brings together three, not two, completed Klitzing investigated the surfaces of semiconductors under dodecahedra. If we allow for one position to be lost by the extreme conditions, he found a surprising result: The Hall joining, then there are 137 electrons. resistance doesnot occur continuously, but as a step function, This figureis of significancebecause it is the integer most which depends only upon the constant value 25,812.815 closely related to the finestructure constant (11137.036). The ohms, and a value n, which depends upon the strengthof the fine structure constant is of crucial importance for the entire magnetic field, and the charge strength. concept of quantum physics. Its value, among other things, The value of this natural resistance turnsout to be deter­ is the ratio of the velocity of an electron at the lowest level in mined by the ratio of Planck's constant to the square of the a hydrogen atom, to the velocity of light. electron charge-which also is a ratio which determines the 1 See Fusion, May-June 1986, page 24.

30 Science & Technology EIR October 30, 1987 Interview: Dr. Robert Moon

'We grew up confident we could solve any problem'

In a recent interview, Dr. Robert J. Moon explained the issue of Executive Intelligence Review. method by which he came to an exciting discovery regarding the structure of the atom. He began the interview with a White: Dr. Moon, we wanted to interview you about your backward look at his own development that we thought would exciting new theory about the structure of the atomic nucleus, be of special interest to EIR readers, because it is a valuable but first, can you tell our readers how you came to make this contribution to the ongoing debate today, about how best to discovery? educate a new generation of scientists. Moon: This goes back a long way . I was born some time Dr . Moon was one of the pioneers in the development of ago, Feb. 14, 1911, in Springfield, Missouri, when Halley's nuclear energy. Before World War II, he developed the most Comet was about. My mother said she showed it to me. I advanced cyclotron then known, and he had planned to build don't remember that, but I found particular joy in studying a synchrotron. He was prevented from carrying through on Halley's Comet last year. It was very intriguing, as anything this by the outbreak of war. Afterthe war he became intensely of this sort is. So I guess I would say that I was borninto this interested in research in neurophysiology, and was involved world, and it is an exciting world-a world of many chal­ in the development of the CAT scan. He is a professor emer­ lenges. itus at the University of Chicago, and the editor-in-chief of the International Journal of Fusion Energy. White: In your new discovery you go back to the method of Although Dr. Moon has been an experimentalist through­ Kepler, do you not? Were you led to this by your love of out his working life, he based his doctoral thesis on the astronomy? theoretical work of the quantum physicist, Louis de Broglie. Moon: That was not exactly what I had in mind. Astronomy In his latest work, he has again taken up the battle, begun by has always been a love of mine. Any true scientist is fasci­ Ernst Schrodinger, Albert Einstein, and Louis de Broglie, nated to try to unravel this living history of our universe, but against the acausal theory of physics promulgated by Niels I was led to my theory more directly from my work in devel­ Bohr, which is still the hegemonic view today . oping the fission reactor. Dr. Moon has applied the geometrical method of Nico­ laus of Cusa and Johannes Kepler,for unraveling the nucleus White: Do you consider that you had more or fewer advan­ of the atom. Thus, his revolutionarynew approach is directly tages in your boyhood, than young people have today? You located in the best traditions of mathematical physics, and were brought up on a farmwere you not? he brings to it rich insights from his decades of experimental Moon: Yes, my father was a lawyer and moved the family work. to a farm in the outskirts of Springfieldwhen I was eight years Kepler discovered that by embedding the Platonic solids, old. I found it to be a very stimulating environment, but I one within the other, he could closely approximate the aver­ think life is just as exciting today. r should say, that all the age distance of the orbits of the solar system, fr om the Sun. way through, I have been running into various exciting things As he pointed out, he was using this device to identifythe fa ct to do . that the planets were essentially governed by the Golden When I was a boy, we had four cars and we lived on 10 Mean ratio-( I + V5)-:- 2 -since this is the ratio which gov­ acres, out in the country. We had a pig apiece and a cow erns the internalrelationshi ps of the Platonic solids, one to apiece, each one of us four boys, my three brothers and I. the other. Dr. Moon has u�sed a similar approach to discover That might not seem so exciting to some, but it was good how the nuclei of the atoms which make up the elements of training for us. the periodic table are organized. We were busy from morning to night: Milk the cows, We print below Part I of an interview with Dr. Moon separate the cream, and so on, but we did it. Those were the conducted by Carol White. Part 2 will appear in the next days when you put the cream in a can and left it about 600

EIR October 30, 1987 Science & Technology 31 feet from the house-on the road. The milk company would come and pick up the cream and leave the can. No one would steal it. That was very interesting . Right up there on the road, we left a nice five-gallon can of cream and no one stole it. Good cream it was, from Jersey cows. We boys had the job of separating the cream. It was done by hand with a Delava­ leeter separator. This was the sort of thing that I grew up with. There were automobiles to repair, batteries to rebuild, generators to re­ wind, a lathe to tum wood. I built my own lathe to do wood­ cutting. We had a lot of trees on the farm and we would cut them down and tum them into lamps and things like that. All of these things were a lot of fun. Of course, when I was growing up, electricity was first coming into general use. When I was still quite young, I became fascinated with the problem of understanding what made the front -door buzzer work. This raised one of the must fundamental laws of physics, Faraday's law of induction. It is this law which makes the application of electricity possible, even today . In 1917, at the age of six, I first came upon the idea of a transformer. My aunt had a doorbell buzzer which was con­ nected to a battery-two dry cells in series-and I used it to help her change the battery . One day I saw a bell-ringing transformer in a shop window that was hooked up to a trans­ former. This was a completely new idea to me. I already understood Ohm's law, but I did not yet know about Faraday's law. If a buzzer were attached to a normal electric circuit, at 110 volts, it would quickly bum itself out; therefore , it was necessary to use a transformer to reduce the voltage to six volts. number of turnsfrom one I was fascinated by that buzzer, and with my child's mind coil to the next. I tried to create the concept of a transformer. I understood After figuring out the by which a door buzzer that the problem was to reduce the current. With my child's operates, I became fascinated with transformers . I began mind, I first tried to create the concept of a transformer. At building them, and my next was to use a transformer first I designed a series of relays to do the job. I knew that I to bum lead. It was necessary get a very high current at a had to reduce the voltage of the household current about 20 low voltage. times. In a certain sense, this work of mine ties directly How does a transformer work? That was the question as into Il,ly most recent area of . I was beginning to study a child, that I first tried to figure out. Finally, I discovered the notion of reactive impeljaIlc¢ the existence of things such as impedance, particularly reac­ tive impedance, which doesn't use any energy. The current White: Could you please tell what you mean by reactive is made to travel through the reactive impedance, which is impedance? created by a coil, around an iron core. This creates a magnetic Moon: As a child I had that the only variable which field. By raising or lowering the current in the coil, the mag­ I could adjust in order to resistance was to decrease netic field strength is changed. An electric current will be the load on a circuit, thereby the flow ofcurrent induced in a secondary coil, its strength will depend upon the and reducing its voltage. Once I introduced to Faraday's ratio of the number of windings of the first to the second coil, law, I not only gained flexibility tn dealing with this problem, and the change of flux in the primary current. but I began to consider how this principle could be used to The principle of the transformer comes from the ratio of transform and store energy with minimal dissipation. In this the number of coils in the primary wire, compared to the instance, the coil windings acted without any of the loss of number of coils in the secondary: The ratio of the turns energy which occurs through reJistance. produces the reduction of the voltage. For example, a reduc­ Throughout my boyhood I as led to this kind of explo­ tion from 120 volts down to 6 volts, would be a ratio of 20- ration, taking the simple things around me as a jumping-off

32 Science & Technology EIR October 30, 1987 point for fashioning my own experiments. Electricity was children being taught to give up on life, being taught that we particularly exciting to me, because it was just taking the cannot possibly feed and provide for a growing world popu­ place of gas, gas lights. Also the carbon light began to dis­ lation. Such pessimism destroys the kind of initiative that appear, and the incandescent filamentbegan to take its place. was common to my generation of young people. Automobiles began to come. White: It's particularly worrying, isn't it, when we see the White: How old were you when you began your experi­ decaying condition of our cities today. ments with transformers? Moon: Yes. Recently, we haven't made a lot of tractors, Moon: I was also interested in automobiles. In 1916, we have we? It seems somehow that we are not making many had an Overland. I had the problem of repairing it in the tractors today, and yet we need farming. We would not want middle of the Jordan River-really a creek. We didn't have to have the population cut down by hunger, do we, and yet it bridges then, so we had to drive over the gravel. The car looks like some people have that idea. simply stopped in the middle of the creek. My father went to get some help somewhere, to find a White: Getting back to your own development, can you tell farmer with a telephone. Of course, there weren't too many us about your schooling? telephones in those days. Before he got back, I decided that Moon: I went to college in my hometown. It was very inter­ I had better look into the problem, so I began to analyze it. esting, because I was able to do a lot of things on my own, I turned the headlights on and found that there were no which, more than likely, would not have been possible in a lights, so I decided it must be electrical. I began to explore larger college. While I was there, I built a 10 watt radio and found that one of the battery connections was loose. I transmitter. I also maintained my interest in electricity. We cleaned it up and put it back on. The lights went on and my had a good electrostatic generator at the college, and I used father came back. He hadn't found a phone, so I said, "I think it to create differently shaped sparks, which I then photo­ thecar will go." And it did. graphed. This freedom to experiment in a laboratory is an essential White: How old were you then? partof a young scientist's education. You can't learnto be a Moon: I was about 5 years old. Well, anyway, these were scientist by passively taking in what someone else accom­ the things I ran into, the challenges. Every young person plished. The exciting thing is to define a problem, and then faces the same potential sort of challenges, because we are develop the tools which you need to tackle it. That's why my born into a changing world. We want to be able to provide early experience in our farmmachine shop was so important for a growing population around the world, and so, we can to me. Every child should be given a similar kind of oppor­ not simply stick on the farm, or rely on existing energy tunity even before he or she enters college. supplies. If we do, we face the problem of running out of the I would urge college students today, not to get dependent resources necessary to support everybody adequately. upon computers to do their experiments for them. Even in a This is the same kind of problem we faced when I was a larger college setting, there is opportunity to get access to a boy. Farming as we knew it then was changing. U.S. farms laboratory for individual experiments. The trickwith a phys­ today are major scientific enterprises. If we are not to have ics department or a chemistry departmentor a biochemistry famine elsewhere in the world, then farmers must get away department, if you want to do a few extra experiments on from the idea of just living on a farm and relying on the your own, is to locate equipment that hasn't been used;the re's weather to produce the food, and so on. usually a lot of that around. A farm is a great place for a boy to grow up in, but I Anyway that's what I was committed to do. In my home­ believe that the growth of cities is very important to the town college, there was a lot of equipment in a storeroom not growth of our civilization. Even in American farms, when I being used. That was a great thing for me. Luckily, the was growing up, you didn't know if you were going to starve laboratory space in the afternoons was all mine. I could use or have an abundance. It is out of cities that the technology any of the equipment and do any experiments I wanted to do. which has transformed Americanagriculture was developed. So it was a lot of fun. These are things I think that every child A man working in a city can produce the ideas which are deserves, and they are also important for the leisure-time necessary to help increase farm production. One example of activities of adults. this, was the electrificationof milk production-which goes back to Faraday's discovery of induction. White: You went to college in the 1920s. What were the I think we are still in that same period today, where we important scientificiss ues then? face the need to apply the scientific method to increase pro­ Moon: I graduated fromcollege in 1930. Fusion energy was ductivity. I was not so different from other children of my important then. People today tend to think that fusion energy day. We Americans grew up then confident that we could was a by-product of getting the hydrogen bomb, but that isn't solve problems. It makes me very unhappy today, when I see so. Already in thetwentie s, we understood that the stars were

EIR October 30, 1987 Science & Technology 33 fusion energy generators. Rutherford, who had discoveredthe nucleus in the atom, said The thing that was going on, that made scientific work that there was nothing new to be learned from nuclear phys­ particularly exciting for me , was very much connected with ics, that was the revealed truth of the time. So, as far as the fusion. This was right before the Depression, and there was University of Chicago physics department was concerned, a lot of talk about our being on the brink of a new millennium, that was that. It turned out that I was the third person to be a thousand years of peaceand prosperityin which there would summarily turneddown by the physics department. The oth­ not be any sickness, and so on. This led me to wonder what ers were Robert Milliken in 1920 and Sam Allison in 1925 . would be the energy source to fuel this prosperity over the They went to work directly with Harkins instead. When I millennium. came along in 1930, I got the same response. They were We knew about the heat of the stars at that time, despite pretty certain about Rutherford's edict. the fact that physics had not yet advanced to its present Harkins actually worked for the chemistry department, knowledge. The chemists had gone far enough. By compar­ so I switched over to there, and Harkins took me right away. ing the molecular weights of hydrogen and helium, they had We started building equipment. I wanted to do the fusion determined that four hydrogen atoms went together to form work and had to get some equipment for it. helium. This would produce quite an excess of mass, which But I changed my plan, because while I was there, anoth­ could be used to make the energy which is found in the heat er revolutionary discovery in physics took place. It was well of the stars. established that a wave behaved like a particle on occasion, The fusion of hydrogen atoms to form helium was also but now I learned of a particle beam behaving like a wave. shown by astronomers, who found that old stars had a lot of The French scientist, Prince Louis de Broglie, who had de­ helium and little hydrogen, while the young stars had a lot of veloped this exciting discovery in his doctoral thesis, had hydrogen and little helium. So, therefore, the process was said that an electron could be a wave, that anyparticle could hydrogen going to helium and producing energy, a nuclear becomea wave. At the fifth Solvay Congressin 1927, he had fusion process. That's what our Sun is and was, I guess, from presented the second solution to the SchrOdinger equation. I the very beginning, a massive fusion reactor. was very much interested in that. (This second solution very Knowing that that process occurred in the stars, imme­ much later turnedout to be the quantum potential, which was diately suggested the possibility of achieving fusion here on rediscovered by David Bohm some years later, about 1951.) Earth, and using it as a source of energy to fuel production, and so on. So, I guess that was one of the big callings that I White: Can you explain how the wave can behave like a had, as I began to plan my future as a scientist. That seemed particle abit more? something I had to do-tame fusion power. Moon: This had been seen previously in the photoelectric effect. If radiation is directed to a metal, the metal can be White: What led you to chose the University of Chicago for made to emit electrons. Contrary to intuition, however, the your further studies? speed of the electron will be a function, not of the brightness Moon: I know many people who apply to three or four of the radiation (its amplitude), but of its frequency (minus colleges to get admitted. They get into two or three of them, the contact potentialof the metal). This is expressed by stat­ and then they finallydecide where to go. For me it was a very ing that the energy is equal to the frequency times Planck's much simpler process. I began reading the scientific litera­ constant of action. ture. And when you read the literature, you find out where In Chicago, I worked on replicating a similar experiment, the work is being done, what you are interested in. So I went in which an electron beam was passed, accelerated through a up to the University of Chicago because Prof. William Har­ medium, which was then made to emit radiation. This was kins was there . He published quite a bit on the neutron, the Franck-Hertz experiment, which had been done in Ger­ though they didn't call it the neutron then. In 1917, he had many. The experiment requires an evacuated chamber to be writtena whole series of papers on it. I still have practically filled with mercury vapor. A cathode emitting electrons is all of his papers. placed inside the chamber, and the electrons are accelerated That led me to the University of Chicago, because Har­ through the mercury vapor in which an electric field is main­ kins was a physical chemist at the university. I came to the tained. The electrons keep gaining in energy until they reach physics department, and said: "Here I am." I already had in a certain voltage, when two things occur. There is a sudden mind a design for a fusion energy experiment. drop in the currentcollected by the anode; and light is emitted My idea was to direct electron beams onto proton beams, from the mercury vapor. That light is the beautiful resonance pulse a magnetic field, and condense electrons onto protons. line, the 2735 resonance line of mercury [2735 Angstroms or I expected to get helium. That was the experiment which I 0.2735 microns]. wanted to do for my doctorate. It is a very intense line. If you look it up in the spectro­ But I had to contend with the entrenched bias of the graphic tables you will see how intense it is-about 20,000. physics community. Since the renowned British physicist, This immediately shows the relationship between the energy

34 Science & Technology EIR October 30, 1987 of the electron [voltage] and the frequency [wavelength] of the mercury resonance line, E = hv, where E is the energy, h is Planck's constant for the smallest increment of action on the subatomic scale, and v is the frequency in Hertz (cycles per second) of the emitted radiation . This gives a fairly good determination of Planck's con­ stant, h. Looking back on it, this Frank-Hertz experiment was one of the precursors to the development of the laser, although of course , we didn't know this at the time. This was what was going on during the 1920s , which led to great excitement: The quantization of action on a subatom­ ic scale as represented by Planck's constant and its measure­ ment in the Franck-Hertz experiments . In general it takes a long time to build good experimental equipment. Besides these basic experiments , I ended up building a 50-inch cyclotron, the Chicago cyclotron, which weighed about 50 tons altogether. This was the first scientif­ ically engineered and fully designed cyclotron, which was built in the early 1930s. This was a superior machine to the one which Ernest Lawrence had at [the University of Cali­ fornia at] Berkeley . JIII8&

White: Clearly , discrete space and time as we perceive it does not exist, or at least, it is not the realm in which causal action takes place in the universe . Moon: I decided to devote my doctoral thesis to carrying out more delicate experiments with electron diffraction, based "This is a fascinating insider's of NASA and the on the theories of de Broglie . I studied the electron diffraction Air Force, a goldmine of 'I n,tr"·nn ,,,tlrln.Hans Mark has of the · surface of liquids with a very low-energy electron been in on nearly every ' civilian and miliary beam-less than 50 electron volts . With electron diffraction, space decision in the last years. Illuminating I was able to "see" the structure of liquid surfaces. In fact, I insights into the key question n spaceflight: do we need men in space?" was able to find the structure of molecules that way. -Robert Jastrow These developments relate directly to other exciting 288 pages, illustrations, things, more recent developments, which in tum led me to the realization of my model. Duke Unlivt!rsitv 6697 StC::ltiClln To be continued. Durham, (Postage and handling: Add $1 .95 for each additional copy. N.C resil EIR is commemorating the aSj'(ls.�m,at/(m of Indian Prime Minister Indira Gandhi on Oct. , 1984 , by reprinting the fo llowing poem by Kenneth . It first appeared in Congress Varnika, the of the ruling Congress Party(I) of India . The author recently directed the Schill- er Institute Research and Fund's production, in Leesburg, Va ., of The , a newly translated, full-

length comedy by Friedrich ""'-'''H<-'

at Jaipur, his lamp; snl.ffi1n�lrealike a gauze was damp.

A little further, on the arch A solitary figure plies his With sextant, glass, and He plots the stars' emerge

"What see you, father?" __ ___ , ____ (As torchlight wheels, and What future profit do the Will Fate betray us, all our

And, turning from his hoops As if to wake, the sire rpr.l1p,,·1 "Dear son, my measures scan our fate , For God's not dicing with the 'n::ll1p.nnp.t1 skies-

The circles of the stars are Who Law upholds, not momejnt "But surely, father, some Some silent message echoes

The watchman placed his A waiting answer to his quest; The elder put his instruments And challenged, said, "My

Are not the birdsongs' '''V'''''''','U'') Such things soon fade , as These lustrous forest 11111""1.41<01" To image the unfolding of Unchecked, the guardsman did his cause pursue. How rare those moments, when our eyes reveal The night was still; an owl swooped past; A beauty bornof certitude and warmth; No soul disturbed their discourse thus, until How short those glimpses, which above we steal, The dawn spread open to the world at last. To recognize God's triumph over death !

Let the stars' celestial motions II Unwind floweringsof grief; Above all else, what endeared her to us Let her fathers' secret ages Was her toughness of intellect, the star Mourn nobility too brief. She wore diamondlike in the Indian sky.

She was descendant of a nation-building IV Family, and sought to lifther people "From fairest creatures we desire increase"; Upon the pinnacle of history. From all God's creatures we desire increase; From each and every flowerand leaf Now she is gone, this jewel whose enemies Our heartsburst open for the soul's release. Called tyrant. Harsh winter whistles through the trees. Our Bard, who fashioned music from the rude, They, they will inheritthis barrenness. Unfinishedletterings of earthy men, Bequeathed to us a father's attitude Toward those who seek their nurture from our pen; III For wisely sang he praise of nature free. The "Discovery of India," she knew, Of love and beauty, twilight, of the Age- Was India's discovery anew What star amongst us dare to sing as he. That ancient pathways strengthenour resolve Unstrained, the precious goodnessman attains? To generate the future , to evolve- Indira, like Shakuntala, flyo'e r: Lead continents of children to explore ! That knowledge of the past will guide our way, As God's untested spacecraft weembark , Kenneth Lewis Kronberg To lift us beyond height, whence we survey 10.25.86 The mobs of ignorance, suspicions dark-

That misery and tumult, pain and want Arenot man's state of nature, but a cave, Whose depths may be illumined by a spark Brought down from heaven, to emblaze our hearts. NOTES Beside man's hearth there bums a sacred fire , Nurturedby huntsmen ' gainst the starlit night; Jaipur Greatest of the 18th-century astronomical observatories built by the scientist-statesman Jai Singh. 0, let the orchids that adornedher pyre Become the blossoms of that holy light! "The Discoveryof India" Jawaharlal Nehru, Mrs. Gandhi's father, wrote this history of India while imprisoned during For the India she saw, was never known the 1940s. Except as past and future, never shown "From fa irest creatures we desire increase" The opening Except to those whose vision could contain of Shakespeare's sonnet series, the great fugue which The lofty Himalayan mountain range. charted the laws of verbal action in theEnglish language. Shakuntala Heroine of the drama by Kalidasa, the fourth­ Her ashes blow, they billow in the wind; century author considered to be the greatest poet and Like birds they twist, they soar beyond our sight; dramatist of Sanskrit literature. Remember us, Indira, on your flight; Work on thispoem began in earnestthe day after theexplosion Bearwitness to things greater than our sins. of the Space Shuttle Challenger. ITillFeature

October financial crisis happened on schedule

by Lyndon H. LaRouche, Jr.

Introduction: During the spring of 1987, candidate LaRoucheforecast that under then-existing economic policies, the U.S. financialmarkets would slide down over the interval between August and October, and reach the brink of a major financial crash during the month of October. (See Executive Idtelligence Review, June 5, 1987; also an early summer radio interview on New York's WAB C-AM "Bob Grant Show.") The candidate is a leading authority in the science of physical economy, and has been one of the most successfuleconomic fo recasters over the 1980s to date. He summarizes the most important fa ct's about the Oct. 6-16 crash in the Dow Jones Index. Mr. LaRouche released his statement on Oct. 17.

George Santayana is often quoted as warning that those who refuse to learn from history are doomed to repeat it. So, as a result of repeating the mistakes of Coolidge and Hoover, since the 91-point Dow Jones plunge of Tuesday, Oct. 6, the published interviews with administration officials and Wall Street financial analysts echo the wishful delusions of Coolidge and Hoover officialsunder similar circumstances over the period 1927-31. It is too soon to say that the October panic on Wall Street will be the big financial crash leading European bankers have been forecasting for six months. The governments and central bankers of the International Mc;;etary Fund's G-7 group of leading industrialized nations could conceivably postpone the full-scale panic for a few more weeks or months. If the big crash comes in October and November, it will be because, as leaders in Europe and Japan are saying, the Reagan administration is so committed to the myth of "59 months of recovery," that it refuses to accept and act on the reality of the situation. The tendency of many people will be to go off half-cocked in one direction or another. Some hysterics will insist that "this is only a cotrectionin the bull market"; others will cry that "the sky has fallen." For the moment, until we see which way the situation turns during the coming two weeks, cooler heads will stick to three facts about the developments of the Oct. 6-16 period. 1) The world came up to the edge of an inevitable financial crash during

38 Feature EIR October 30, 1987 Crowds gather at the � l New York Stock � Exchange on Oct. 20, 1987, the day after J� "Black Monday."

October trading. What has happened up through Oct. 16, is economy and monetary processes; as a result, they confuse a financial earthquake about 6.3 on the Richter scale; it is not these two very distinct factors . As a esult of not recognizing yet the big financial earthquake , between 8 and 10 on the the differences, they are unable to u derstand how these two Richter scale, which we are expecting sometime soon. very different sets of phenomena interact. 2) Whether the expected big crash occurs during late As the only presidential candida e who called the shot on October or November of this year, or later, depends upon these developments, and as an economist, I explain a few of how the Reagan administration reacts to the events of the the ABCs. past two weeks. 3) Ignore what the Wall Street financial analysts say to Twenty years of illusion the press. No one has a crystal ball on the situation, including Since President Johnson introd ced the "post-industrial the economist, LaRouche , who called the October crisis on society" to official V. S. policy, back during 1967, all of the the button six months ago . Westerneconomi es, excepting Japan's, have suffered a long­ How and when the big crash comes, depends upon inter­ term collapse of productivity and t�ngible investment in ag­ action of four factors: riculture, manufacturing, other industry , and basic economic 1) The international and U.S. economic situation, with­ infrastructure . out considering the monetary and financial market statistics The level of development of V.S.I basic economic infra­ and trends. structure peaked in 1970. Since thdn , earlier investments in 2) The interaction between the economy and financial infrastructure have been rotted out by lack of maintenance, markets. to the point that we would have to i�vest more than $3 trillion 3) Political decisions by governments and the establish­ in repairs today, to bring water-man'agement, production and ment generally. distribution of energy, general tra+portation, and basic ur­ 4) Strategic factors , including breaking developments in ban residential and industrial infrastructure back to 1970 the Persian Gulf, South America, the Far East, the V.S. levels of quality per capita. defense budget, and the scheduled Reagan-Gorbachov sum­ Agriculture has been collapsing since 1977-79, and is mit. now in an accelerating state of colapse worldwide. The per­ Concentrate on the first two points . Most so-called ex­ centage of the labor force employed in goods-producing man­ perts, including the stock brokers and the Reagan administra­ ufacturing and other industries has collapsed to levels of the tion's officials, make very foolish predictions about both the early 19th century , while real productivity of operatives has economy and financial markets. The root of their blundering fallen as a combined result of lac of tangible investment, is that they refuse to recognize the differences between real lack of growth of energy supplies, d the accelerating spread

EIR October 30, 1987 Feature 39 of functional illiteracy into even the ranks of high school and The big bubble college graduates. To understand what has happened on Wall Streetover the Ifwe factor depreciation ofbasic economic infrastructure Oct. 6-16 period, the fundamental distinction between econ­ as a cost of production, as we should, the real output of the omy and financialmarkets must be recognized. U.S. economy per capita of adult population has been col­ "Economy" means "physical economy": the production lapsing at an accelerating rate for about 15 years, especially and distributionof useful kinds of physical goods to produc­ over the recent 10 years. tive enterprisesand households. Worldwide, the situation in Britain is far worse than in We measure this in terms of two factors, the amount of the U.S.A. Italy is in a state of collapse. West Germany is physical production per capita, and the amount of physical falling fast, although it has not yet fallen to U.S. levels. production per squaremile of land in use. Since human pro­ France, the most nationalistic of all Western industrialized ductivity is affected by the level of cultural development of nations excepting Japan, has resisted the trend better than the the workforce and managements, as well as the physical well­ Americas and most of WesternEurope , but France is suffer­ being of the households from which the workforce is recruit­ ing the effects of the same general trends. ed, we include categories such as direct production manage­ Yet, during most of the same 20 years, the official statis­ ment, science, and engineering, education, and health care tics show these collapsing economies to be growing. In part, and public health services as part of the direct labor cost of this is because of inflation, and the natural tendency of poli­ everythingproduced. ticians in power to order official statistics to be faked in Everyother formof employment and income-related ac­ anticipation of the next elections; the rate of inflation has tivity is part of the "overhead burden" of the physical econ­ been understated consistently. Even if we assumed that the omy. rate of inflation is no greater than official statistics state, it Over the past 20 years, especiallythe past 15 years, the appears that the gross national product of these economies physical economy of the United States has been in decline, has been growing. but the Gross National Product has been rising during most Since the present Gross National Product system of na­ of these years. The difference is that real growthis measured tional income accounting was introduced, during and follow­ in terms of physical output and productivity rates in produc­ ing World War II, governments and supranational economic tion of physical output; Gross National Product is measured and monetary authorities have been using a yardstick which in termsof financialdata . measures the financial growth of economies, but not their Without understanding the fundamental difference be­ economic growth. The yardstick used is "value added," the tween the two kinds of measurement, it is impossible to difference between the price of purchases and the price of understand why the world's biggest financial crash is com­ sales. The total of the estimated "value added" is then seen ing, and what happened to the stock market this month. as Gross National Product. The result has been that Gross A purely financial marketis measured in terms of what is National Product never has better than an accidental relation­ commonly termed a "price-earningsratio": For example, the ship to economic growth. ratio of the price of a stock to the combined dividends and For example, suppose I shut down the physical produc­ retained earningsof a corporation. Under normal conditions, tion by General Motors in all categories. General Motors "earnings" have a significantconnection to real production; shifts from producing goods, into a combination of reselling the net earnings of farms, industries, and utilities are a large imported products plus investments in real estate and other factor in determining the market price of common stocks, financial speculation. However, General Motors hires more and so on. Under normal conditions, a price-earnings ratio clerical and sales personnel than earlier, to handle the admin­ of between 10 to 1 and 20 to 1 would be competitive. istration and sales functions of the new lines of business. Compare such a normal range of price-earnings ratio to Under certain conditions of this kind, the "value added" the price-earnings ratio on the American financial markets shown on General Motor's books will be even higher than today. By normal standards of the 1950s or early 1960s, the during the time it was still producing useful objects. market is floating in the vicinity of 1,000 to 1. The amount This has been the trendin the U. S. economy over thepast of combined dividends and retained earnings from produc­ 20 years. A smaller ration of our workforce is employed in tion available to holders of financial paper, is floating near producing wealth, while an increasing ration of the work­ 1,000 to 1. force is employed in "overhead burden" occupations of This has happened because the price-earnings ratio is administration, sales, and relatively unskilled services. being determined by financial capital gains on actual or ex­ On top of this "post-industrial" shift into becoming a pected resaleprice of financialpaper. Financial analysts de­ "services economy," has been piled a vast bubble of financial scribe the result by saying that "financial markets are highly speculation in real estate and even outright "junk bonds." leveraged." Financial paper is sold at prices based on ex­ The "value added" shown on the books of poor financial pected financial capital gains, at a time when the ratio of speculation has become the key margin of growth in apparent expected capital gains of this sort ismany times the amount U.S. Gross National Product. of real earningsfrom production.

40 Feature EIR October 30, 1987 Worse, most of the holdings of financial paper are based portMexi co's policy, but both later broke that promise. The on credit borrowed at very high prices compared to levels of Reagan administration rejected my Operation Juarez option, interest rates during the 1950s and 196Os. This includes so­ and moved to crush and loot Mexico, and to proceed to loot called "creative" forms of financial assets, including "junk every nation of Central and South America. Wall Street had bonds." Raising the Wall Street stock market to above 2,700 demanded this; the Reagan administrationcapitulated to Wall pointson the Dow Jones Index, has depended upon a massive Street. flowof inflationarycredit of this sort into markets, plus heavy By various tricks, since October 1982, the Reagan inflow of cash dollar assets from Saudi Arabia, Japan, and administration and the IMF have bought fiveyears of contin­ WesternEurope . The higher the price of stocks zoomed, the ued existence of the sick old financial system. For this five more inflationarycredit, plus Saudi, Japanese, and European years, we have paid a terrible price. What could have been cash was needed to cause the market to continue rising. the easily manageable "debt bomb" crisis of 1982, has been If this did not occur, if the stock market ever slowed its pyramided into the biggest financial crisis in history . rise in prices significantly, the source of new capital gains During 1983 and 1984, and on into 1986, defenders of would be dried out. Without new capital gains of that sort, Reagan administration policy told me: We rejected your pol­ the market would spin into a chain-reaction collapse. icy in October 1982, and we have succeeded in delaying the So, the growth in financial markets-in Europe and To­ crash for five years; we can delay the crash another five years kyo, and well as the United States-has been a classical if we choose to do so. financial "bubble," like John Law's famous "Mississippi In April of this year, I shot back: You are near the end of bubble" of the early 17oos,and the South Sea Bubble which your rope. During the August-October period, you will come popped in Britain during the same period. It is a "bubble" right up to the brink of the biggest crash in history; it might like the "Pyramid Club" fad which victimized many duped just go all the way. Even if you get out of October without a U.S. citizens during 1949, or the famous "Ponzi" scheme crash, you will not be able to stop the crash, under present earlier. It is a "chain-letter" scam, which collapses once the policies, for more thana few weeks or'months after that. The market runs out of an expanding number of suckers to pay probability is that the crash will explode this autumn. into the scam. They replied: No, it is you who are wrong. Your analysis Sooner or later, the Wall Street financialbubble , and the of the problem is right, but your forecast is wrong. You will giant U . S. real estate bubble had to pop, and carry the already see, we will delay the crash until after the 1988 elections, depressed U.S. economy into a deep depression with it. By and George Bush will be elected the next President. spring of this year, it was clear that the bubble had been I was right; they were wrong. It is still barely possible stretched almost to the breaking point. that the main part of the worldwide financial crash could be put off for a few more weeks or slightly longer. It is not likely How the bubble is being burst that any Republican candidate will be elected President in The bubble was ready to burst at the end of 1981. My 1988, or 1992, or 1996. The memoryof Herbert Hoover's associatesand I warned thiswas coming at the beginning of Great Depression will hang around the neck of the Republi­ 1982. During the spring of 1982 I warned the world that a can Party for years to come. "debt bomb" was about to explode in Central and South America. I forecast the explosion to begin during the period Financial forecasting of August and September that year. In physical economy, we are able to predict cause and At the request of leaders of some nations of Central and effect with rather good precision; no one can predict a crash South America, in June of that year, I wrote a detailed report, with exactness. The reason for this difference is elementary. titled Operation Juarez, explaining the nature of the crisis, Physical economy is essentially a branch of physics; we can and detailing the measures which both these nations and the not predict with quite as much precision as we can predict in U.S. government must take. Copies ofthis report were deliv­ ordinary physics experiments, but the situation is about the ered to both the Reagan administration and governments of same in principle. Developments in financial markets are a Central and South America during the first week of August mixture of physical realities and psychological-political fac­ 1982. About two weeks aftermy report had been delivered, tors, with enough elasticity that events like financialcrashes the debt bubble popped in Mexico. in markets can come either earlier or much later than condi­ During a period of about two hours, the world financial tions are fully ripe for such developments. system wobbled on the brink of a "new 1931 collapse." I made my first serious forecast at the end of 1956. I PresidentReagan telephoned Mexico's President Jose L6pez forecast a deep recession would begin about March 1957, Portillo. This telephone call saved the world's financial mar­ and that the recession would hit with full force about Septem­ kets for a moment, but the crisis continued. ber 1957. It happened that way. At the end of 1957, I esti­ President L6pez Portillo acted as my Operation Juarez mated that the financial collapse of 1957-58 would bottom report specified. The world was saved for another month. out about the middle of 1958; that happened as the central The governments of Argentina and Brazil promised to sup- bankers ambushed major speculators, and taught them a pain-

EIR October 30, 1987 Feature 41 ful lesson during the spring of 1957. might be able to do to postpone the crash as they wish to do. My second major economic forecast was nearly as suc­ One must see what they will attempt to do, and then ask cessful. I forecast that the firstof a series of financialcr ises oneself if that can be made to work. would hit the Bretton Woods monetary system during the By spring 1987, it was clear to me that Treasury Secretary second half of the 1960s, as early as 1965. I underestimated James Baker and Federal Reserve Chairman Paul Volcker the Kennedy administration, which stimulated the economy were running out of monetary options. First, the dollar was with the combination of its Apollo program and the Kennedy collapsing on world markets; that meant that interest rates round of investment tax -credit incentives. The monetary cri­ were going to begin climbing upward again within two or sis did not erupt until the interval between November 1967 three quarters. Once the overstretched financial bubble was and March 1968. The second major monetary crisis hit over caught between the Scylla and Charybdis of a falling dollar and rising interest rates, the show was at an end. As long as Baker and Company were able to inflate the U.S. financial markets, and draw down large cash contribu­ I am not runningJor President on tions fromthe Saudis, WesternEurope , and Japan, the finan­ cial bubble could be kept intact. So, from the time the crash the banner qfthe new depression; I was set into motion, by the London stock market deregulation am running on the platform qfthe of autumn 1986, the biggest worldwide financial crash was being prepared by a temporary expansion of the financial recovery. Don'tjlounder there, bubble. However, as a falling dollar put pressure on shaky screaming and drowning about the bond markets, which began in the spring of 1987, a self­ $4 or $5 trillion doomed to be feeding spiral of collapse was building up in bond markets, behind the other parts of the financialmark ets. wiped out by the crash;jo in me in This meant, that to keep the U.S. financial markets up, swimming out qfth is mess. Let us Baker and company would have to inflate the markets; how­ get back to work, producing real ever, to defend the bond markets , Baker and company would be pushed into raising interest rates, and would thus force physical wealth once again; with Western Europe and Japan to do the same. Rising interest enough working . . . we shall all rates, combined with a continued slide of the dollar would survive qUite well. . . . nullify the Louvre monetary agreements on supporting the dollar. This could not be delayed much beyond early August 1987. If this began to build up during August as it must, after the period May-August 1971. the end of the third quarter, about Oct. 10, the first seismic I did better in October 1979. I forecast that the V olcker shock of a new worldwide crash must hit. It could go all the measures instituted that month would set offa major reces­ way, to become immediately the big crash the world was sion beginning February 1980. A few weeks later, my asso­ expecting; or, it could be just the first shock, with the big ciates' computer-assisted forecast gave what proved to be shock to come weeks later. good estimates of precise dates and depth of the 1980 reces­ In other words, to forecast major turns in monetary pro­ sion. Our forecast was the only accurate forecast published cesses, we must first identify critical boundary conditions, at during the years 1980-84; the leading competitors, such as which the psychological-political factors break down. A vise Wharton, Chase, and Data Resources were way off the wall. of combined falling dollar and rising interest rates is that sort Then, during 1983, the Reagan administration and Fed­ of boundary condition. The governments and money man­ eral Reserve System began to fake their published statistics agers can not resort to inflationary tricks on the scale needed as never before in U. S. history, so that it became impossible to stimulate financialcapital gains at the rates needed to hold to make precise forecasts with available statistics. Nonethe­ up the markets; that would blow up the markets. The alter­ less, even without usable statistics, our general estimates on native to inflation, rising interest rates under conditions of trends continued to be the most accurate available. declining dollar values, sets up the conditions for a deflation­ Good forecasting of monetary developments means start­ ary blowout. ing with a sound economic forecast. This definesthe situation The only alternativeto this, under existing monetary pol­ in which the financial markets and related monetary devel­ icy, is imposing a very savage sort of austerity, of the kind opments are being shaped. The governments and central governments would rarely risk during an election year. The bankers have a wide latitude of things they can do to delay a only other alternative, is to scrap existing monetary policy, crash when a crash is already overripe . So, to forecast mon­ and to reinstitute the strict regulations needed to stabilize etarydevelopments , one must imagine oneself inside of the currencies, government bonds, and keep open the doors of mind of the money managers . One must imagine what they banking institutions. That would work, but it would mean

42 Feature EIR October 30, 1987 scrapping every economic and monetary policy of both the The President must act under emergency powers to im­ Carter and Reagan administrations. pose those measures of federal regulation of foreign and In 1787-89, the United States was at the edge of national interstate commerce, and foreign exchange, provided under bankruptcy. Benjamin Franklin, George Washington, Alex­ Article I of the Constitution. These measures stabilize the ander Hamilton, and others recognized the nature of the prob­ dollar, and foster a revival of general transportation, energy lem, and organized a constitutional convention for the pur­ production, and hard-commodity trade. pose of creating the kind of strong federal governmentneeded The President must not only mobilize a strict and effective to reorganize the economy. defense of the U. S. dollar and governmentbon ds; the doors The combination of the strong presidential system, under of essential local banks must be kept openfor business, and the new Constitution, and Washington's and Hamilton's or­ the savings of depositors defended at par value. Other finan­ ganization of what was called "the American System of po­ cial paper, except new loan issues, will be allowed to float litical economy" rapidly transformed the economic situation. down to stable levels in an open market. In that sort of economy, described in Hamilton's reports to Foreign trade balances must be defended by help of both Congress on the subjects of public credit, a national bank, exchange controls and export-import licensing. A gold-re­ and manufactures, was established a different sort ofecono­ serve system, somewhat like the pre- 1968 arrangements, my than the chaotically deregulated mess we have today. In must be reestablished, with monetary gold at a fixed price such a national economy, accurate economic forecasting is corresponding to the fair market price of newly produced much easier to accomplish than under the present sort of gold; this is needed as partof the measures to defend boththe chaotic, deregulated, and bankrupted"free trade" system. U. S. dollar and the value of government bonds. Under the American System of Washington and Hamil­ Loans at low interest rates must be channeled into invest­ ton, financial flows are tied very closely to both tangible ments in capital goods and other operating capital for pro­ investment and production rates. In that system, earnings on duction, in agriculture, industry, basic economic infrastruc­ production andfinancial earningsof enterprises are verynearly ture loans to federal, state, and local agencies and utilities, in correspondence. So, in that case, an economic forecast is andfor exportproduction loa ns. also a very good estimate of financialtrends , as it is not under The tax laws must be immediately revised to provide the monetary order of the past 20 years. investment tax-credit incentives to investors, banks, and pri­ For that reason, if we respond to the present crash by vate savers. All available credit and savings must be mobi­ returning to the principles of the American System-as we lized to build up employment in productionand marketingof must if we are to get out of this depression-we can forecast useful physical output, with an included target of 5 million the results with much better precision thanhas been the case moremanufacturing jobs for operatives addedduring the next over the past 20-odd years. In other words, we can promise four years. what will work, and how well it will work, with rather ac­ Let us sum up the situation facing us. curate estimation. "Yes, John, we are plunging into the Second Great Depression of this century, potentially a depression much What I will do as President worse than that of the 1930s. What's the point of yelling at a The firstthing I must do as the next President,is to declare man who has fallen overboard, over and over again, 'Hey, a national economic emergency. This permits the federal guy, you aredrowning !' The thing to do, is to concentrate on Executive and the Congress to take a series of measures to helping the man to learnto swim, and that very quickly." bring the financial situation under control, and to launch a The first shock ofthe biggest financial crash in history general economic recovery . has happened. The next, bigger shock, is about to hit, either The emergency powers of government must be used to immediately, or soon enough. No need to dwell much longer reorganize the Federal Reserve System, to the effectof estab­ on that fact. The point is to start swimming to safety; we lishing a national bank along the lines of Washington's Bank ought to concentrate our attention on that. We are going to of the United States. pay for the mistakes of the past 20 years, but why think about The Federal Reserve System ceases to issue Federal Re­ that any more than we must? The place to concentrate our serve Notes. Instead, the President sends an emergency bill energies is on the recovery. to the Congress, under theauthority of Article I of our federal I am not running for President on the banner of the new Constitution. This bill authorizes the Treasury to issue at least depression; I am running on the platform of the recovery. $500 billion of Treasury currency-notes. These notes are Don't flounder there, screaming and drowning about the $4 loaned through member-banks of the Federal Reserve System or $5 trillion doomed to be wiped out by the crash; join me at federal interest rates of between I % and 2% for an ap­ in swimming out of this mess. Let us get back to work, proved list of applications of such loans. producing real physical wealth once again; with enough These loans, which will total several trillions of dollars working, producing the physical things we need, we shall all during the four years of the next administration, will get the survive quite well, and findourselves able to bringour finan­ economy moving again. cial affairs back into order once again.

EIR October 30, 1987 Feature 43 'The kind of thing no fish would bite on'

by Criton Zoakos

Early in the morning of Oct. 24, in Brussels, Belgium, Sec­ withdraw from the ABM Treaty for 10 years, with strict retaryof State George Shultz, while reporting to the NATO compliance with the treaty"; second, that "from Nov. 1, a allies the proposals which Mikhail Gorbachov had put for­ moratorium be announced on all work in connection with ward to topple this year's projected superpower summit, [medium-range and short-range missiles] production, test­ described them as "the kind of thing no fish would bite on." ing, and deployment"; and, third, that "all work" be suspend­ Shultz's failure to "bite" on Gorbachov's new proposals has ed at the Soviet radar in Krasnoyarsk and the "U. S. radar in directly led to a new dramatic tum in U.S.-Soviet relations: Scotland. " All of a sudden, after the euphoric days of the Sept. 17 The TASS release also made it clear that Gorbachov's "agreement-in-principle" on elimination of intermediate nu­ vision of a summit with Reagan this year was simply that of clear forces (INF) from Europe, the two superpowers are at a preparatory meeting, which was to have led to a follow-up a new turningpoint, where any chances for an INF agreement visit of the American President to Moscow, in early 1988, are fast receding into the uncertain, distant future , chances where Reagan was to have signed away the sm: "Mikhail for a summit between President Reagan and General Secre­ Gorbachov," TASS said, "suggested, without losing time, tary Gorbachov have been virtually eliminated, and where, that the work to coordinate positions in the field of strategic once again, the commitment of the United States to pursue offensive arms and space at the talks in Geneva and at other its Strategic Defense Initiative (Sm) program is the central levels be intensified so that, at a meeting, which is being issue of contention between the two superpowers. planned for this year, with the President of the United States, Soviet Foreign Minister Eduard Shevardnadze, in the it would be possible, along with the signing of a treaty on aftermathof the abortive Shultz-Gorbachov meeting, told the medium- and short-range missiles, to record an accord on the public, "The Soviet Union considers a continuation of the key provisions of future agreements on strategic offensive sm a violation of the [1972] Anti-Ballistic Missile Treaty," arms and space, which, in their tum, could be signed during and that Gorbachov "restated his readiness to meet President Ronald Reagan's reply visit to the Soviet Union." Reagan to sign an agreement on INF, but mainly to determine This was not to be. George Shultz, under the watchful the key provisions on strategic defense and the preservation eye of National Security Adviser Frank Carlucci, who ac­ of the Anti-Ballistic Missile Treaty." companied him to all his meetings in Moscow, explained to What were the "things no fishwould bite on," that Gor­ theinternational pres s, afterthe debacle: "I don't need to say bachov offered to Shultz during their four-and-a-half-hour again, but I thinlcit is importantto emphasize, that we in the meeting? According to an official TASS release, Gorbachov United States, and the President, feel very strongly that we made three proposals: First, that the United States should must be able to do everything we can to see if we can learn "agree to legally record an obligation not to use the right to how to defend ourselves against ballistic missiles. This is in

44 International EIR October 30, 1987 �viet Foreign Minister duard Shevardnadze ( ith white hair). during rlreetings in Washington. D.C. in September. when a "breakthrough" toward 4n arms-control treaty was "i announced. Now. the � li s(T'iles are gone. and the .ii summit is on the rocks .

the interests of our own security, the security of our friends recently, Foreign Mini"., sh

EIR October 30, 1987 International 45 to speak. First of all, it was the period during which Mikhail Gorbachov had disappeared from public view. As a matter Interview: Gen. (ret.) Paul Albert Scherer of fact, Gorbachov never once, even after he resurfaced after his mysterious absence, had anything positive to say about the Shultz-Shevardnadze "agreement-in-principle." In fact, after his disappearance, he ostentatiously ignored the "dip­ lomatic progress"in the area ofarms control, and went straight to the naval base of Murmansk to exploit "photo opportuni­ ties" on board nuclear submarines and to make tough public speeches about the need to strengthen Soviet defense com­ LaRouche's defeat mitments and the need for civilian austerity in the years to come. Another significantearly "cloud in the silver lining" was all who resist Soviet the fact that the day preceding the September Shultz-Shev­ ardnadze "agreement-in-principle," the SOl Organization Nicholas Benton of EIR' s Washington bureau interviewed submitted its Report to Congress, mandated by law, recom­ Brig. Gen. (Ret.) Paul Albert Scherer, the fo rmer chief of mending a shift from the "restrictive to the broad" interpre­ military intelligence fo r the West German Bundeswehr, on tation of the ABM Treaty during "fiscal year 1988," which Oct. 22 in Washington, D.C. places the decision before April of 1988. The day following the Shultz-Shevardnadze "agreement-in-principle," the sec­ EIR: General Scherer, recently you were in Paris, where retary of defense awarded no fewer that six SDI contracts, you spoke at the meeting held there by the international all involving projects based on the "broad interpretation" of Commission to Investigate Human Rights Violations, and the ABM Treaty, and most of them meeting March 1988 now you have come to the United States, where you partici­ deadlines. pated in a meeting of the same Commission in Boston, con­ The Russian High Command, during Gorbachov's mys­ cerning the upcoming trial of U.S. political figure Lyndon terious absence, had every reason to believe that the United LaRouche. What is your particular interest in the trial of Mr. States was preparing for a restructuring of its SOl program LaRouche? to fitthe "broad interpretation," during the spring of 1988. Scherer: I was interested in coming to observe this trial, Such a U.S. shift during 1988 would imply a preliminary because afterhaving appeared for many years before German first phase of SOl and Tactical Defense Initiative (TOI) de­ courts and parliamentary committees in my capacity as an ployments in Europe beginning in 1991, approximately the expert on questions of espionage, sabotage, infiltration, pen­ time of anticipated Euromissile removal, in the event an INF etration, etc., this particular case seems to me to have very Treaty were to be signed and ratified. marked features going in that direction. One theory, therefore , suggests that potential SOl devel­ Judging from my observations over the past few years, opments in the U.S .A. were leaving the Soviet command no LaRouche has, in my view, become a first-class target of other choice than to embark on a hard-line course, of the kind Soviet psychological warfare, because he is one of the few displayed by Gorbachov vis-a-vis Shultz. politicians in the West-and certainly one of the very few in A second theory suggests that the Soviet command, in the United States-to show his true colors, without any re­ the aftermath of the stock market collapse, evaluated Presi­ gard for his own personal safety and security, to the effect dent Reagan's political position as so extremely vulnerable, that Soviet infiltrationof the Westernworld , and the attempts that he could be forced into further concessions. The Presi­ and successes of Soviet disinformation, will lead to a com­ dent, however, does not seem to be inclined to make conces­ plete softening and decadence within Western civilization. sions on the SOl. For practical purposes, it makes no difference which of EIR: Can you tell me what in your opinion motivates this thesetheories is closer to the truth . The fact of the matter is trial against Mr. LaRouche? that there is a dramatic industrial, economic, and financial Scherer: Since I am a guest in your country, I can only crisis in the United States, and simultaneously, a rapidly express myself carefully. As is the usual practice in psycho­ escalating East-West confrontationnow . As Admiral Crowe, logical warfare and disinformation, certain intelligence and the chairman of the Joint Chiefs lectured a Wall Street audi­ information must have been placed into the hands of federal ence on Oct. 19, the national security of the United States agencies, causing them to view LaRouche within a criminal cannot afford another 1929-33. context, so thatcriminal proceedin gs hadto beinitiated against It may be that Moscow is calculating that President Rea­ him. gan lacks the economic policies required to avert a 1929-33 kindof economic calamity. EIR: What, in your view, is the significance of the role of

46 International EIR October 30, 1987 take it over; and thus, in my view, it absolutely clear that it would necessarily belong to the UV1111.1""" Soviet power. I might add, that in this time of psychological dan- ger for all of us in open and free "'V" "'�fLULlVl1al West is developing far too little en(:rgc�tJc ity in order to give a responsible sponse to these challenges. I am pyj'r<>(,rrii this regard. If you take a map and consider would be a loss to extension of the Mediterranean, the of the ancient Roman Empire is a typical of what confronts us today. Carthage, a land-based power, latt,emptf:dto obliterate offensive Rome in the course o three bloody Wars . Hannibal � I had both the opportumty and the Mr. LaRouche in shaping important policy questions for the on elephants, over the snowy PVlrp.n"'p� Western Alliance? Alps and into Rome, where he forced Rome's de- Scherer: Fundamentally, his ideas in opposition to a with­ mise. The gauntlet thrown down the Soviet Union (to drawal of American troops from Western Europe; his oppo­ return to modem times) is to this Carthaginian sition to eliminating the SDI as a counterweapon against the challenge. If we today do not this, we are going already existing Soviet SDI; his factually well-informed, on­ to fail. going interpretations of global economic conditions, which are currently making our lives very difficult-these, for me, ElK: What kind of President do you needs to succeed are statements coming from an outstanding politician. President Reagan in the White Scherer: As a currently active re[)rei;entative of the NATO ElK: What kind of signal do you think it would send to the conception, and of the effort to I Soviet imperialism, I world, if the operations to suppress the efforts of Mr. La­ would like to see in the White a President and an Rouche succeed? administration, who sees this Scherer: We already have much too much pessimism in the the same standpoint as I and many West, and we tend to overestimate the Soviet Union's so­ Europe do. called peace and disarmament offers. LaRouche's political defeat or demise, effected through Soviet disinformation, would be a loss for those forces who still want to put up moral and spiritual resistance [to those offers] , and who believe in a renaissance of moral and cultural values in our advanced civilization.

ElK: What are the main threats that you see today to the future of the Western Alliance? Scherer: To answer that, I must make an historical digres­ sion. Following World War II, WesternEurope has remained as a bridgehead for the interests of the West and of the United States. For, a maritime power such as the United States can not hold its own against the Soviet Union's striving for world revolution, once the opposite coast of the Atlantic ceases to belong to its realm of potential. Europe's intelligent and industrious skilled workforce would then be forced to be a Soviet satrapy and to work for the expansion of Soviet poten­ tial. Secondly, the Russians view Europe's engineers and technicians as some of the world's most skilled workers in arms technology, on up through the high-technology fields.

And to that extent, following a withdrawalof American troops Brig. Gen . Paul Albert Scherer (ret.) from Germany and Great Britain, the Soviet Union, without international Commission to firing a shot, would be able to occupy this bridgehead and in Boston, Massachusetts on Oct. 20,

ElK October 30, 1987 International 47 Thanks to superpower deals, Qaddafi survives . . . for now

by Omar alMontasser

In the early days of October, another assassination attempt anteed by some of the best-trained fighters of al Fatah, on was made against lunatic Libyan strongman Muammar Qad­ loan from Yasser Arafat. dafi. Perpetrated by an army officer, the assassination was narrowly averted by some of Qaddafi's new bodyguards, a Help from the State Department mixture of Palestinian guerrillas and Lebanese Druze mer­ Obviously, Qaddafi has survived this long only because cenaries, backed up by elements of the Kurdish Workers's he enjoys superpower support. He has Soviet support, of Party (PKK). course, and oodles of East German "advisers" to go with it. No one was surprised at the attempt. Only a few days But his ace in the hole is the support of the U.S. State De­ earlier, Qaddafihad lambasted a group of Army officers over partment, and its "regional matters" negotiations with the defeats in Chad. Adding insult to injury, he proclaimed, Kremlin. "Omar al Mukhtar has only produced daughters," referring In early summer, Qaddafi accepted a bargain offered by to the Libyan hero of the anti-Italian resistance during World Washington as part of the State Department's "regional mat­ War II. Many Army officers were not ready to swallow such ters" sell-out of America's friends around the world. Typi­ an insult, even were they not being blamed for Qaddafi' s own cally, Washington promised thatit would cease all activities mistakes. aimed at either killing or overthrowingQaddafi , in exchange Indicative of Qaddafi's precarious situation, the discov­ for visible signs of "moderation" by this lunatic. ery of the assassination plot has not led to a purge of the First discussed in early spring in Tunis during a meeting Army. Instead of going public to denounce "world imperi­ between U.S. Ambassador to the United Nations Vernon alism" and "Zionism," his usual tack, Qaddafi and his im­ Walters and Revolutionary Council member Khawaldi al mediate associates have chosen to remain silent. Indeed, after Hamidi, the bargain was finally struck in early July during so many military setbacks in Chad, Qaddafi is walking a tight Qaddafi's much-publicized visit to Algiers. rope. With the backing of both Moscow and Washington, the Even the reconquest of the city of Aouzou in northern Algerians were encouraged to get closer to Libya, including Chad did not bolster his prestige. The Libyan Army knows acceptance of a Qaddafi proposalfor a "union" between the thatthe victory was no feat of military genius, but rested on two countries. While Qaddafimeant by "union" a full merger the deployment of thousands of tons of bombs, including of the two countries, Algiers understood and accepted merely napalm and chemical weapons, against a Chadian enemy joint ventures in the social, economic, industrial, and politi­ which had been deprived of air cover. Qaddafi bears the cal fields. However, Qaddafi eagerly accepted the bargain, ultimate responsibility for the Chad defeats in the popular which not only gave him breathing space, but could be per­ mind. And, he needs his Army for a new and more spectac­ ceived as a consolidation of his regime by his opponents. ularoff ensive in Chad, uponwhich his political-and phys­ ical-survivalmay depend. A reconciliation with exiles According to reportscoming from Gen. Abu Bakr Y oun­ On the bilateral issues withAlgeria, Qaddafihad to prom­ is's headquarters, thousands of soldiers have deserted in re­ ise to stop supporting the Islamic fundamentalist faction as­ cent months.Most have found refuge in their traditional tribal sociated with pro-Nazi former Algerian President Ahmed areas. Were an attempt made to arrest them, a full-fledged Ben Bella. Algeria promisedto mediate between Qaddafiand tribalwar could result. his opponents, and during this very visit to Algiers, the ruling Thus, committedas he is to a new offensive, Qaddafihas Algerian FLN organized a meeting between Qaddafi and the had no choice but to send to the front in the southern desert Cairo-based Libyan opposition leader, Abdel Mohein al theelite Armyunits heretofore deployed around key govern­ Houni. In the several hours of discussions, a protocol was ment facilities and for his own personal protection. It was to established for broader negotiations. replace them that Qaddafi hired several thousand Lebanese Al Houni's own demands relatedto a new Libyan consti­ volunteers, Druze, Kurds, and Palestinian followers of tution, the creation of an opposition party, and therelease of Georges Habash. His own personal protection is now guar- political prisoners. Qaddafi agreed to most demands, and

48 International EIR October 30, 1987 went on to explain at length to al Houni how "idiots" in the Libyan Army had dragged him into a war in Chad which he DDLE didn't want. Al Houni left Algiers satisfied and went on to spend several weeks in the United States. INSID Keeping to its side of the bargain, the U.S. State Depart­ ment informed those Libyan oppositionists who didn't want We ekly Confidential 'VH\fII.... lf�lI to join in the game, that support for their organizations would be curtailed. Executive Intelligence Review has been On Sept. 1,al Houni and National Assembly opposition die East affairs for a decade. In 1 978, EIR "".""nt"t1 leader Mahmoud Soleyman al Maghreby were present in profile of the "Islamic fundamentalist" nhj:'nr"m",nnn Tripoli for ceremonies marking the anniversary of the 1969 the inside story of the Irangate In 1980, EIR exposed the late "Libyan Revolution." They then left together for Geneva, intelligence man in Washington, establishing a "committee of coordination" among the Lib­ terror. yan exiles. By the end of the month, al Houni had convened Middle East Insider, created in Nm/"rr.h", his own "National Alliance" in Cairo to draft a "national • the inside story of U.S. Mideast charter of reconciliation" with Qaddafi. During November, • what the Soviets are really in the region a delegation of eight opposition leaders is supposed to visit • confidential reports from I the Middle East Libya from the United States, Western Europe, and Egypt. and North Africa that no one dares to publish Whether this spectacular reconciliation with his exiled • accuracy on the latest terror and terrorist groups foes will actually take place is now in doubt, however. One of the demands that Qaddafi had to agree to, was a purge of A subscription also includes a "hot his Revolutionary Committees. In his meeting with al Houni, for more information on any item we Take out a three-month trial Qaddafi had complained that the committees were "making receive one of our recently published decisions without consulting me ." To replace the commit­ Yearly subscription at 5000-0M. tees, Qaddafi is working on the creation of a political party office.) Write or call: Middle East I like the Arab Socialist Union of Nasser's Egypt and the early 166, P.O. Box 2308, 62 Wiesbaden days of his own regime.

Sabotage from within Many members of the Libyan People's Congress, created in 1976,have a lot to lose in this process. Committed to abort it, they are arguing that the reconciliation with the Libyan exiles is an American ploy, to stage a military coup from Derivative within. They have also been responsible for a wave of pro­ Assassination: vocative statements on the upcoming "merger" between Trip­ oli and Algiers, which have produced doubts in Algeria as to the ultimate usefulness of the process. Who Killed Algiers never had any intention of allowing Qaddafi to Indira Gandhi meddle in Algeria's internal affairs . Now, aware of strong by the Editors of resistance from within Libya, they consider a "wait and see" Executive attitude the best. Similarly , American media, which kept Intelligence silent while the negotiations were ongoing during the sum­ Review mer, have begun expressing sudden worryon the front pages about the process. Apparently, Chad's President Hissene Order from: Habn! still has a few friends in Washington who are not keen on the idea of Chad, or any other country for that matter, Ben franklin Booksellers, Inc. being sacrifiedon the altar of a new superpower deal. 27 South Ki ng St. In any case, turmoil can be predicted for Tripoli in the Leesburg. VA 22075 immediate future . While the traditional Army is less than enthusiastic about the unwinnable war against Chad, Qaddafi plus ship­ has also succeeded in antagonizing his traditional base, the $4.95 ping ($1.50 for Revolutionary Committees he created as a counterweight to first book. $.50 for the Army. The next assassination attempt may come from each additional that quarter-and could be more successful. book). Bulk rates available. Nikolai Bukharin and Leon Trotsky. Such a move has been publicly rejected by top Kremlin figureslike Politburo mem­ ber Yegor Ligachov, who have opposed Gorbachov's "fo­ cusing on the negative," and who want an anniversary cele­ bration that dwells instead on the "positive achievements" of Results of surprise the Soviet Union. The Soviet media greeted Gorbachov' s report to the plen­ Soviet plenum are um with a deafening silence: Contrary to past practice, no Soviet mediareprinted the text nor any quotes fromhis spee ch. Soviet radio reported tersely: "The Central Committee ap­ shrouded in secrecy proved a report delivered to it by General Secretary Mikhail Gorbachov, on matters related to the 70thanniversary of the On Oct. 21, the very day that U. S. Secretary of State George October Revolution, and to some currenttasks ." Shultz arrived in Moscow for discussions which were sup­ The tense situation manifested at the plenum, has been posed to finalize the "Munich II" arms-control treaty for evident in speeches by Gorbachov, following his late Sep­ disengaging the United States from Europe,the Central Com­ temberreappearance. At a speech in Murmansk, he had urged mittee of the Soviet Communist Partyheld a surprise meet­ Soviet citizens not to "panic," a word only used once before ing, which was extraordinary in several respects: by the Soviet leadership, when the death of Stalin was an­ • There hadbeen no advance announcement of the plen­ nounced on March 5, 1953. He admitted that perestroikahad um or hint of any such meeting in the Soviet media, since the not yet ''turned the comer." In Gorbachov's next major speech, conclusion of the last plenum in June. in Leningrad in early October, he stressed the need to be on • The plenum was announced only the day before, by guard so that the "mechanism" ofperestroika, in "all spheres thefo reign ministry-aquite unusual development, since the ...above all in the economic," does not "break down." plenum was an affair of the Communist Party apparat, not the government. A1iyev's ouster • The Soviet media devoted almost no coverage to the Another issue which has beenthe subject of heated debate meeting, and did not report the content of the report delivered concerns policy toward the U.S.S.R.'s nationalities. It is there by General Secretary Mikhail Gorbachov. here that the"resignation" of Geidar Aliyev becomes partic­ • The meeting confirmed the "resignation" of Politburo ularly significant. According to the Soviet press report, Ali­ member Geidar Aliyev, one of the most powerful men in the yev, 64, "resignedfrom his functions . . . at his own request Soviet Union. ...due to the state of his health." Aliyev had disappeared These developments take place amid a fierce factional from public view fromMay 11 until early September. battle within the Soviet leadership, over how fast and how Is there more to it than ill health? It is premature to say far Gorbachov's twin policies of glasnost (openness) and for sure, but consider the background: perestroika (reconstruction) should be allowed to go (see Aliyev was the only Muslim on the Politburo. His port­ EIR , Oct. 9, 1987, "Gorbachov joins the ranks of the un­ folio includes special operations-including terrorism-in dead," by Lyndon H. LaRouche, Jr.). Gorbachov's policies the Mideast and Asia. Before coming to Moscow, he oper­ are aimed at overhauling the Soviet economy and bureau­ ated for 15 years out of Soviet Azerbaijan, first as its KGB cratic structure, to facilitate a war build-p of unprecedented chief and then asfirst secretary of the Communist Party there. proportions. But in so doing, he is attacking the institution­ He tore the party and state apparatus apartfrom top to bottom, alized form of internalstability of the post-Stalin order, caus­ replacing nearly 2,000 officials with KGB men, in order to ing growing alarm froma "nea-Stalinist" faction within the carry out a pilot project that became known as "the Azerbai­ Soviet bureauracy. jan experiment. " His special formula-themodel for today' s Radio Moscow's short summary of the Oct. 21 Central glasnost-was a sweeping anti-corruption purge and atten­ Committee plenum openly admitted a raging fight: ''The tion to the "spiritual needs" of the population. Plenum met at a critical pointin perestroika, at a time where But now, there's troublein Azerbaijan: Rioting brokeout forces opposed to perestroika are continuing to resist the this summer, andon Sept. 26 Pravda reported that the Pol­ process of perestroika ." itburohad reviewed "shortcomings"in the work of the Azer­ The factional issues will necessarilysurface publicly dur­ baijan Instituteof the National Economy, and had decided to ing the Nov. 6-7 celebration of the 70th anniversary of the "liquidate" the institute. Bolshevik Revolution, when Gorbachov is scheduled to give Aliyev's policies are also called into question by the U.S. a major speech. Rumors are rife that he will choose that military deployment in the Persian Gulf, which forces Mos­ occasion to denounce the errors of the Stalin period and cow to choose between its traditional Arab alliances, and "rehabilitate" such leaders of the anti-Stalin opposition as open backing for Khomeini's Iran.

50 International EIR October 30, 1987 suit. And the small Liberal and Republican parties, which support a vote in favor of nuclear energy, have no plans to develop Italy's industrialcapacity . In fact, theonly serious opposition to the referendumhas Referenda steer been the Schiller Institute, which has started a campaign against the referendum, including a postercalling on citizens Italy toward shoals to vote "no" on the abolition of nuclear energy, and to revive the tradition of Enrico Mattei, the man who, in 1956, built thefirst nuclear power plant operating on the European con­ Leonardo SeIVadio by tinent, and had plans to increasinglynuclearize energy pro­ duction in Italy. After Mattei's mysterious death in 1962- On Nov. 9, Italian voters will have to decide on two different often attributed to "Seven Sisters" oil multinationals' mon­ referenda which, if passed, could increase the instability in ey-no new plans for power plants were drawn up in Italy. Italy's political institutions. The first would abrogate the And, except for the Schiller Institute and the collaborat­ country's current nuclear energy policy; the second would ing movement of the Patriots for Italy, there is no political overhaul thecurrent system of justice administration. In the force which intends to educate thecitizens on the importance case of the nuclear referendum, abolishing the nuclear energy of nuclearener gy. program could subject Italy to manipulation of its Middle The intention of those who have imposed this referen­ East oil supplies. The justice referendum would make Italy's dum, is to totally destroy any possibility for Italy to continue legal system much more dependent on whatever political to develop as an independent nation. Instead, Italy would forces are in power at any given time. continue to be subject to blackmail Over the flow of Middle According to the Italian Constitution, voter referendaare East oil-which is increasingly under Soviet control. only to abrogate laws, and do not establish any new law or The partiesthat pushed for the anti-nuclearrefer endum­ regulation. The nuclear energy referendum would halt the the Communist Party(PCI) andits fellow travelers, the Rad­ construction of new nuclear plants, and end Italy's partici­ ical and the Proletarian Democracy parties-have also been pation in foreign nuclear energy projects. With the justice the most outspoken adversaries of the naval deployment in administration referendum, citizens would vote "yes" to end the PersianGulf to allow safe passage of ships. And keep in immunity for judges who make mistakes in condemning mind thatthe largest supplier of oil to Italy is Iran. someone unjustly; and to end the institution of the parliamen­ The referendum was originally pushed by the vice sec­ tary commission of inquiry, which decides whetheror not a retaryof the Socialist Party (PSI), Claudio Martelli, who got parliamentarianaccused of some criminal act can be tried in his marching orders at a Socialist International meeting di­ a court. rected by Willy Brandt that took place in West Germany Should these referenda succeed, it is not clearwhat might shortlyafter the Chernobyl accident. The Soviets then started replacethe existing laws. What is clear, is that the referenda, to push, through their networks in the West, the idea that particularlythe one on nuclear energy, aredesigned to appeal nuclearpower plants should be abolished. The Greenies and to "public opinion." Fifteenyears of anti-nuclear propaganda Brandt were thefirst to get into actiOn. saturating the media, cappedby theChernobyl incident, have fed the people the idea that they can eliminate the danger of Abuse of referendum a nuclear meltdown, by canceling nuclear energy production Theabsurdity of the situation cabbe seen in the fact that in Italy. the institution of thereferendum is designed to give the citi­ Technically, were the existing nuclear energy plan to be zens a way to nullify laws passed by Parliament, that arenot abolished, a new plan could be drawn up for Italy to build in their best interests. Thus it is not proper that the parties hundreds of nuclear power stations, though maybe withdif­ represented in Parliament should promote a referendum, be­ ferentcharacteri stics. For that reason, theChristian Democ­ cause they should be debating the laws in the Parliament racy (DC), Italy's largest party, has decided to follow the itself. tide of popular opinion, and come out for abrogating the Thus, it would seem thatthose who organized the nuclear current nuclear policy. referendumwant to avoid debating the issue in Parliament. The reason appears to be the manipulation of the nomi­ The previous governm.entof Socialist Bettino Craxi, created nallypro-nuclear DC by the forces of Foreign Minister Giulio under the auspices of the U.S. netWlOrks associated with the Andreotti, who dangled the possibility that changes could be lrangate scandal, was collapsed by the DC precisely to judo made in nuclear policy after the referendum passes. Thus, the referendum. Subsequently, the DC was compelled to Andreotti's people lined up all the forces within .theDC to accede to the referendum; if they did not, the PSI would have accept the anti-nuclear line. refused to join the new DC government, preventing the con­ Practically all the parties have indicated they will follow stitution of a parliamentary majority .

EIR October 30, 1987 International 51 ing in the Medellin daily El Mundo: "We are going to mobi­ lize the people ....We believe that this is the moment for organized protests. This is going to translate into strikes, demonstrations. Liberals and Conservatives, trade unionists and peasants must also mobilize." In fact, in the past two weeks, a half-dozen peasant marches under UP direction Colombia terror were organized in different parts of the country,ranging from Cauca in the southwest to Bolfvar in the north central zone, traced to Moscow to the coca-growing department of Meta in the southeast. In each case, the mobilized peasants demanded withdrawal of the military from their largely guerrilla-infested regions. Rush by Valerie Labor is also intended to play a major role in the Com­ munists' scheme. Colombian Communist Party head Gilber­ The offices of the Colombian Defense Ministry in Bogota to Vieira said on Oct. 12 that the two most important devel­ were ripped by a powerful bomb Oct. 19, in what has been opments in the countrywere the creation of the Sim6n Bolfvar described as the most serious direct assault on the Colombian guerrilla umbrella group, and the creation of the Unified Armed Forces by Moscow's irregularwarfare troops. Presi­ Workers Confederation (CUT). The CUT, originally created dent Virgilio Barco described the terroristaction as "a clear as a counter to both the mafia-infested "democratic" trade demonstration of the systematic attempt to destabilize Co­ unions and the Communist-dominated ones, is under attack lombian democracy. " from within as the Communists attempt to use it in their war Although the bombing, which injured 10, destroyedmore against the government. than a score of cars, and did considerable damage to the An importanteffort to reorientthe CUT along its original facade of the building, was claimed by an obscure group anti-drug, anti-International Monetary Fund principles was calling itself "Insurgencia Comunera," it is widely believed made by its founder and president, former Labor Minister to have been the work of the newly formed Sim6n Bolfvar Jorge Carrillo, championof the democraticsector within the GuerrillaCoordinating Group, linked to the mass-based Co­ confederation. On Oct. 15, a lengthy ad was taken out by the lombian Communist Party. The Communists, their electoral CUT in the daily El Espectador, which declared Oct. 15 "a front, the Patriotic Union (UP), and the Colombian Revolu­ continental day of fight against payment of the foreign debt," tionary Armed Forces (FARC) , theleading guerrillaforce in and which pledged the participation of the nationalist trade thenew terroristumbrella group , have all publicly identified union forces of the Americas "against the economic policies Defense Minister Rafael Samudio Molina as their number­ imposed by the usurious internationalbanks and their repre­ one enemy inside the Barco government. sentatives, such as the International Monetary Fund." The Communists were thus out-maneuvered by Carrillo. Dialogue . . . or war? The Communist and UP "mobilizations of the masses" Repeated demands for dialogue with thegovernment from are, in theshort-term, directed at capturing as many munici­ all three Moscow-directed forces were addressed by Presi­ palities as possible when the first-evermayoral elections in dent Barco during the week of Oct. 13, when he invited the Colombia are held in March 1988. But in the longer term, new leadership of the UP to talk with him at the national the drive is to create precisely the kind of "independent re­ palace. The UP leaders promptly refused, releasing instead a publics" established by the Communist FARC during the public letter to Barco which demanded the "civilianization" 1960s, war zones such as Marquetalia and Cimitarra, where of thenation 's intelligence service, policefor ce, and defense neither governmentnor military dared tread. In the 1960s, it ministry, and an end to state-of-siege restrictions. New UP took a U.S.-assisted war effort against the insurgency to president Bernardo Osa Jaramillo also demanded uncondi­ recapture sovereign Colombian territory. Today, the terror­ tional dialogue with the Sim6n Bolfvar guerrilla army, in­ ists-in alliance with the well-financed and heavily armed sisting that governmentref usal would mean civil war. drug traffickers-pose a clear threat of civil war on the EI President Barco responded to the ultimatum with a na­ Salvador model. tionwide television and radio message Oct. 18, saying "The This problem was identified in a special seminar spon­ government will preserve its policy of dialogue, which has sored by EIR in Bogota, where the new Spanish-language as its goal the reincorporation of the guerrilla into civilian version of the book Modern Irregular Warfare, by West life," but insisted that subversives "on theleft and right must German Brig. Gen. Friedrich August von der Heydte (ret.), first be reduced to impotence." was released. Von der Heydte emphasizes that "irregular All of its calls for dialogue and reform notwithstanding, warfare" (terrorism, guerrillaactio ns, kidnappings, etc.) are the truenature of the Communists' campaign is best gauged only a phase of regular declared warfare and, as such, cannot by an Oct. 18 interview withUP head Osa Jaramilloappear- be fought with peacetimejuridical instruments.

52 International EIR October 30, 1987 Clouseau-like handling of the Palme case, succeeded in giv­ ing the impression that something was being done. The pres­ Hans Holmer: first sure of public opinion lessened, and the governmentwas able to water down the proposals prepared by the previous non­ rate cover-up artist socialist government, which had not yet become law. Hol­ mer's final report contained only trivial administrative re­ forms. by UlfSandmark End of drug enforcement Hans Holmer, the deposed head of the Olof Palme murder It was Holmer who buried the famous police task force investigation, has been appointed an "expert" for a United against drugs, the so-called Huddinge Group (named after Nations project in Vienna, Austria, "to develop control sys­ the suburb of Stockholm where it was headquartered), known tems in drug-producing countries." Holmer, as an indepen­ in Europe from the TV documentary, "Mission Shoemaker dent expert paid by the Swedish government, will work with Gang," and called by the press, "The best drug investigators theU.N. Division on Drugs, the U.N. General Secretary, the of Northern Europe." International Narcotic Control Board (INCB), and the U.N. Since the Huddinge Group was createdin 1971, with the Fund for Drug Abuse Control (UNFDAC). The Swedish exclusive task of conducting drug investigations in the Stock­ government's involvement in the various crop substitution holm region (outside Stockholm City), it broke up the Greek programs in countries such as Thailand, will be his main Gang in 1978, the Turkish Gangs in 1979, Riganakos in focus. 1980, and the Shoemaker Gang linked to the ASALA Ar­ The governmentof Malaysia and the signers of the Quito menian terrorists in 1981. Holmer, then head of the Stock­ document of 1986 denouncing drug trafficking as a "crime holm City Police, offered the group better resources-in against humanity," have launched excellent anti-drug initia­ personnel and equipment-if they movedto his district. He tives in the U.N. framework. Now they will have the most promised that they would continue to work together (on TV experienced cover-up artistin Sweden deployed against them. he said, "You don't change a winning team"). It is not widely known, but Holmer was responsible for Swe­ But when the new, big drug division was created under den's catastrophic drug policies, before he used his leader­ Holmer in January 1983, for both Stockholm City and the ship of the Palme murder investigation to run harassment Stockholm region, the Huddinge Group policemen were split campaigns against the political foes of the murdered Olof up into three different departments; and none of them was Palme, and especially the Soviet-inspired campaign to blame appointed to any of the leading positions. Since then, the U.S. presidential candidate Lyndon H. LaRouche for the Stockholm drug investigations have been mired in bureauc­ murder. racy .and inefficiency. In 1981, Holmer's book, The Drug Problem-A Differ­ Holmer became a national public figurein 1970, when he ent Kind o/ Police Report, was published by Tiden, the Swed­ was named head of the Swedish Security Police, sApo. The ish Social Democracy's publishing house. This book was a old leadership of sApo had been forced to resign over the response to the intense debate on drugs set off in Sweden by "IB Affair," when a previously unknown intelligence oper­ the book Dope Inc., written by associates of LaRouche, ation, the Information Bureau, of military personnel and anti­ which named the names of the top networks controlling the communist trade unionists, involved in secret domestic in­ international drug trade. vestigations and registration, was exposed and closed down. In a chapter called "Instead of Prejudices," Holmer's In a climate of leftist pressure from the press, and in book made the following revealing statement: "Nowhere is tandem with the first Palme government, Holmer imple­ thereevidence of any mystical executives hiding in the bush mented the new law for the Swedish intelligence services, nor of any unknown mafia leaders"-denying the existence banning all registration of individuals based solely on their of any mafiacontrol of the drug trade ! political opinion. (The law has since been revised to allow Holmer was appointed to lead theGovernment Commis­ registration of members of terrorist groups.) Holmer person­ sion on Drugs, created by the reinstated Palme government ally went down to the telephone exchange, to check that after the 1982 election. During the election campaign, the phone tapping of the Maoist grouplet called the Swedish Social Democratic Party had been heavily attacked for its Communist Partyhad ceased. liberal drug policies. Holmer's job was to defuse this volatile Subsequently, under the guise of thePalme murder probe, issue. Holmer violated all limitations of registration activity by the During the one-and-a-half years his commission was ac­ police. Without any legal pretext, the "extraordinary situa­ tive, the government, making the same kinds of statements tion" of the murder has been cited to create a police register about Holmer's "efficiency," "informal reporting," "orien­ of 28,000 Swedish citizens, said to have been political op­ tation to results," that became famous during his Inspector ponents of Olof Palme.

EIR October 30, 1987 International 53 N orthem Flank by Goran Haglund

The spy who went back into the cold incompetence and absurdity at the Justice Minister Wickbom is but one victim of the intelligence sAPO,typified by their keeping Palme on a "black list" of people who might warfare now raging in Sweden. be unreliable during a crisis. Pravda cites the now-deposed Wickbom say­ ing it's time to investigate the sApo. onths of intelligence warfare in guard accompanies the prisoner away When Bergling's prison guard, as MSweden have begun to take their toll fromand back to the prison, but leaves per an "agreement" with Bergling, ar­ of high-level govemment officials. The him unwatched during the night. rived at 12:45 p.m. on Oct. 6 to pick most prominentvictim so far is Justice Third, Bergling was given leaves him up at his wife's house, both Ber­ Minister Sten Wickbom, forced to re­ despite his known desire to escape. In gling and wife were gone, to every­ sign on Oct. 19. Wickbom's demise October 1985, a letter intercepted from body's alleged surprise. It then took was followed by the firingof three of Bergling revealed a plan to escape. until 10:45 a.m. before a nationwide his underlings at the Justice Depart­ Nonetheless, he was again granted a search warrantwas issued, perhaps 24 ment, among them the number-two leave in January 1986. His former hours after the escape. man, Harald Fiilth, and the resigna­ lawyer stated, "He is a very dangerous At first, the Social Democratic of­ tion of Director General VIf Larsson and experienced spy and has all the ficialsof the Prisons Board, all cham­ of the Swedish Prisons Board, which time aimed at getting out one day." pions of "humanization of prison runsthe nation's prisons. Fourth, Bergling's leave was care," blamed the sApo for not Wickbom was already discredited granted after the application to con­ watching Bergling. But soon it was throughhis backing of ex-Police Chief vert his life imprisonment to a delim­ made known that Bergling' s frequent Hans Holmer, who had to resign in ited jail term had been rejected. He and lax leaves were imposed by the Marchover his conduct of the inves­ had little to lose. Prisons Board over sApo resistance. tigation into the murder of Prime Min­ Fifth. despite serving an unlimited As recently as May 1987, when a four­ ister Olof Palme. But the immediate jail term, Bergling, as part of his "re­ man sApo team had watched Ber­ trigger of the present wave of down­ habilitation" by the ultra-liberal gIing visit a restaurant, sApo was at­ falls of Social Democratic justice of­ Swedish Prisons Board, had already tacked by the Prisons Board for ficials was a scandal erupting two been given a new identity, including a "spoiling Bergling' s fun" during his weeks before, after the escape from new passport, issued for the name of leave, by deploying too strong sur­ prison of Russian spy Stig Bergling on "Eugen Sandberg," and he had veillance! Oct. 5. changed his looks during the eight Newly appointed sAPOchief Sune Sentenced to life imprisonment in years in jail. Sandstrom said that the Prisons Board 1979 for Soviet espionage, Bergling No wonder a police officer in knew the sApo wasn't going to watch escaped while on a leave of absence, charge of searchingfor Bergling, Di­ Bergling during the night, and that the under a number of peculiar circum­ vision Head EsbjornEsbjornson at the board was responsible for watching stances, hardly attributable to chance: National Criminal Police, told the him. The board, he added, would have First, Bergling was granted a two­ press on Oct. 7 that "this is a case with granted Bergling leave even without day leave from prison, despite his gross political overtones." The inci­ any sApo deployment at all. "Given conviction for espionage, severely dent is but the latest in theintelligence the humanization they're pushing, this damaging to the nation, and despite war among sApo, military intelli­ is how farwe 've come." his refusal to cooperatein controlling gence, and the Social Democratic in­ Among the military, outrage was the damage. Bergling was a Soviet telligence networks-nicknamed visible over Bergling's escape. "It is mole inside the Security Police SAPO-run by Foreign Minister Sten extremely remarkable that a person (SApo), and a liaison between sApo Andersson and his deputy Pierre with his criminal record is granted an and military intelligence. Schori, both eager to trade a favor to unwatched leave, giving him the Second, not only was Bergling Moscow against a kick in the teeth. chance to escape," said Defense Staff granted a leave, in itself outrageous, Moscow's preference in the fac­ press spokesman Hans Gustaf Wess­ but he was on an "accompanied leave tional battle was signaled in the Sept. berg. "It wasn't even known to us that of absence," meaning that a prison 27 Pravda , which painted a picture of he had leaves."

54 International EIR October 30, 1987 Report from Bonn by RainerApel

North German arms mafia exposed men, surfaces very prominently in the The shipyards of Schleswig-Holstein produce fo r Khomeini' s context of these Iranian arms affairs. Thus, on Oct. 19, Italian Customs Navy . Is there a link to the governor's recent death ? seized a freighterfrom Qatar, the Fa­ tulkair, loaded withN ATO guns from the German weapons producer Heck­ ler and Koch. The Customs guards at the Italian port of Savona had been tipped off that the ship, coming from T he mysterious death of Uwe Bar­ modem combat equipment. In other Hamburg and Bremen, was heading schel, the governor of the Gennanstate cases, blueprints of vessels are pro­ for Iran. Special Italian investigators of Schleswig-Holstein, in Geneva Oct. duced by engineers at German ship­ are in Hamburg and Bremen now , to II-an affair related to bitter faction yardsand transferred toIran, via Spain, collect more evidence, but find it hard fights inside the "Irangate" cabal-has Portugal, or Israel , and the actual con­ to make any progress. This is a bitter sparked new investigations into Ger­ struction job is done entirely outside experience they share with German many 's role in secret arms deals with of Germany . Customs officers, who have been Khomeini's Iran . The port cities of All of this avoids direct conflict looking into these arms-dealing af­ northern Germany , on the North Sea with the German laws which ban fairs , which very often involve Swed­ and the Baltic, are drawing special at­ weapons exports into war zones like ish and Dutch operatives as well. tention. the Persian Gulf. Investigations have so far hardly The Oct. 22 issue of the French These secret deals do not proceed proceeded beyond the point that spe­ mass weekly Paris-Match revealed without political promotion from the cial permits are required from the au­ that "a shipyard in a small city close Bonn government, or, to be morepre­ thorities in Bonn. Foreign Minister to Kiel" built speedboats for the Ira­ cise, a section of the government Genscher is not cooperative on these nian Navy . Bypassing West German grouped around the ministries of for­ permits . This means that the region arms export laws, these boats were eign affairs , finance, and economics. along the Weser River, which runs secretly delivered to Iran via Sweden, This "inside" group is directly repre­ from Bremen to Bremerhaven and the the magazine reported. sented on the executive boards of the small port of Notdenham close to the In fact, not just one shipyard, but bigger German shipyards, like the North Sea, is like a huge "free-trade at least four, in the state of Schleswig­ above-mentioned HDW in Kiel, and zone" for arms dealers, off-limits to Holstein aresaid to have covertly built controls Customs along the German official investigators . small vessels for Iran's Navy . These land and maritime borders . As far as the ports in the state of are the big HDW shipyard (in Kiel), Customs officers investigating il­ Schleswig-Holstein are concerned, a the BiisumerWerft (Biisum), Kroeger legal arms deals know that a few years political network loyal only to former Werft (Rendsburg) , and Schlichting ago , Iranian naval officers were sys­ governor Gerhard Stoltenberg, the (Travemiinde) . As for submarines, an tematically touring shipyards in Ger­ current Bonn finance minister, stopped HDW contract for six of the 209 type, many's northto make contact with ex­ unwelcome investigations with meth­ dates back to talks in 1978 with pre­ perts on smallattack vessel technolo­ ods similar to those used in the Bre­ Khomeini Iran , and the IKL naval en­ gy. The problem for Customs is, how­ men region. After all, most of the se­ gineering firm in Liibeck was also in­ ever, also a manpower problem, be­ cret deals with Iranwere signed during volved. cause their "front line" with the arms the governorship of Stoltenberg­ These contracts were carried out dealer cartel is a long one. whom Uwe Barschel replaced in Oc­ in spite of the officialBonn "weapons Besides Hamburg, Germany's tober 1982. Many believe that Stol­ embargo"against Iran . The way it was largest coastal port, and the ports in tenberg's political machine in that state done, is that a special, civilian-look­ Schleswig-Holstein, also Bremen, maintained the delicate contact with ing model of a military vessel is built. Bremerhaven,and the smaller portsof Iran without ever informing the new This model may resemble a yacht and Nordenham and Stade play a role in governor, Barsohel. Inside this net­ could be delivered , for example, to a secret deals with Iran . Foreign Min­ work, one may well find a key to the port in Sweden or the Netherlands, to ister lIans-Dietrich Genscher's polit­ case of the mysterious death of Bar­ be modified into a speedboat with ical home base, the city-state of Bre- schel.

EIR October 30, 1987 International 55 Report from Rio by Silvia Palacios

Locust plague hits Brazil eradication efforts . Thus far, it has An ecological holocaust of biblical proportions-assisted by the been determined that the new variety of locust measures approximately 1.6 International Monetary Fund-is threatening the Americas. inches in its adult form,and forms vast elongated clouds. One such cloud ob­ served in Mato Grosso measured 1.6 miles long. The millennial plague of locusts, operation in Agronomic Research for Such a cloud of insects is estimat­ infallible symptom of ecological hol­ Development. ed to weigh 100 tons , and consumes ocaust throughout world history, is out The French agricultural research its weight in grain each day . Further, of control in Brazil . This plague is the center, together with Brazilian spe­ it travels at the rate of 94 miles a day . direct result of economic looting im­ cialists, has just concluded an inspec­ Each female produces an average of posed by the World Bank and the In­ tion tour of the area in Brazil where 100 eggs between October and No­ ternational Monetary Fund on Brazil­ the locusts have already devoured tons vember, which hatch in November­ ian agriculture . of grain . December. The IMF-mandated policy of ex­ The current locust plague began in Despite the dimensions of the porting food, and the crazy program Mato Grosso in 1984. At that time, threat, the Locust Eradication Pro­ of using 10 million acres of the coun­ the infected area was 14.4 million acres gram created last year by the Brazilian try 's most fe rtile and mechanized land which, if compared to the present 72 Agriculture Ministry does not have for producing sugar cane for conver­ million acres, leaves no doubt that the sufficient resources to carry out the sion into fuel alcohol, has forced Bra­ situation is "in crisis ," as the special­ kind of advanced technology program zil's food producers to migrate ran­ ists are now describing it . required. Use of satellites for detec­ domly into other zones where there is Significantly, the date on which tion of infested areas , and eradication a serious lack of adequate infrastruc­ the problem began coincides with the efforts while the locusts are still in ture . time that the first major burnings of their first stages, must accompany A Ministry of Agriculture special­ forest were ordered "to expand the ag­ eradication of the ravaging locust ist told the magazine lstoe that the lo­ ricultural frontier," a euphemism that clouds in the air. custs "prefer the open fields.... the World Bank uses to force nations Thus far , the program has allocat­ Therefore , the destruction of the for­ to restrict investments in agricultural ed $1 million to eliminate the plague, ests has created a perfect habitat for infrastructure , and opt for the "cheap­ which is considered a drop in the the locusts, which now have abundant er" path of slash-and-burn for their bucket by experts in comparison , say, space and food to multiply in." forests . to the amount the creditor banks are The affected areas are located in Efforts to eradicate the insects (or demanding Brazil hand over as a the states of Mato Grosso, Mato Gros­ rather, palliatives applied in the name "symbolic payment" of its overdue so do SuI, and Rondonia. Locusts are of eradication by dusting them with back interest. beginning to appear as well in the state insecticides while in flight), have left As far as help from international of Goias, which now has 17 afflicted the Mato Grosso totally vulnerable to agencies is concerned, that too has municipalities . In Mato Grosso, the the next infestation, when the locusts' been virtually nil . The United Nations most seriously infested state , the eggs hatch. It is reckoned that by No­ Food and Agricultural Organization plague is covering an area of 72 mil­ vember of this year, billions of locust (FAD) has limited itself to sending lion acres, affecting primarily sugar eggs currently buried in the state 's 2.4 technical experts to Brazil , to conduct cane and rice crops. million acres ofrice and 108 ,000acres bureaucratic inspection tours, contin­ "To tell the truth, in this area, the of sugar cane, will hatch. uing the same genocidal behavior it advance of the insects is irreversi­ This locust horde is of a different carried out in Africa last year. In 1986, ble-that is, if no climatological species from the 23 that have existed a vast locust plague plunged Africa changes occur. In short, we are facing heretofore in Brazil. into catastrophe when, for the first time a plague," was the conclusion reached To confront this new species of in this century, four different varieties by two specialists on locusts , from infestation will require investment in of locusts attacked tons of food simul­ France's International Center for Co- biological research, in addition to new taneously.

56 International EIR October 30, 1987 Andean Report by Jaime Ramirez

CAP wins in Venezuela Yorkwith a group of bankers, towhom The defeat of the President's fa vorite means the fo reign debt he declared, according to the press, that a new approach to the debt prob­ issue will play a role in the presidential elections. 1988 lem was required, "without the eco­ nomic totalitarianism of the Interna­ tional Monetary Fund." Perez report­ ollowing an intense and some­ of Lusinchi in 1983, and backed his edly also told the bankers that "it is timesF dirty battle, which brought his government during the early years impossible for Venezuela to invest party to the brink of a split, former ,through what was dubbed a "social 50% of the value of its exportsin debt Venezuelan President Carlos Andres pact." service. " Perez won the nomination as the pres­ However, during the labor plen­ Once nominated, Perez said that idential candidate of the ruling Acci6n um, Venezuelan Workers Federation the debt problem would be a funda­ Democnitica (AD) party for 1988. In (CTV) President Delpino declared: mental issue of his campaign. "We internalparty elections held Oct. 11, "Since 1959, there has been an unfor­ must have a Latin American consen­ CAP (as he is known to thepress) took tunate custom of delivering over the sus to tell the creditor nations: This is the nomination with65 % of the votes, building of the nation to the oligar­ the framework within which we are defeating his adversary, former inte­ chy ." He added that Finance Minister going to negotiate the debt. . . . Now, riorminister Octavio Lepage, despite Manuel Azpuruaserved as the errand during the electoral campaign, I will the latter's backing by the political boy of the oligarchy's economic send my personal envoys to all my machine of current President Jaime groups. friends across the continent, in gov­ Lusinchi. The "new social strategy" ap­ ernmentand in the opposition, to be­ CAP's victory has been interpret­ proved by the AD labor plenum estab­ gin discussing these possibili­ ed as a repudiation of Lusinchi' s eco­ lishes that the trade union sector of the ties ....I cannot solve the debt prob­ nomic policies. The President has in­ party should participate fully in elab­ lem if a Latin American agreement is sisted on paying the country's foreign oration of government economic pol­ not reached." debt at thecost of recession, austerity, icy, including the possible firing of However, CAP also said that one unemployment, loss of international economic and finance ministers. The had to negotiate within the existing reserves, and devaluation of the na­ labor leaders also demanded that the international financial system, "since tional currency. foreign debt be treated as a matter of we are a part of it." He has also not The internal AD battle resembled national sovereignty, and urged im­ given his backing to the "10% solu­ on a smaller scale what happened in position of exchange controls, pro­ tion" adopted by Peru's head of state­ Argentina to President Raul Alfonsin, grams of "reproductive investment," the limitation of debt repayment to whose Radical Party suffered a dev­ and construction of urgently needed 10% of foreign earnings-nor has he astating defeat in gubernatorial elec­ economic infrastructure. addressed the need to create an lbero­ tions on Sept. 6-the population's re­ However, the labor plenum made American common market, to protect sponse to the International Monetary no specificproposals as to how to ad­ the countries of the region from eco­ Fund's austerity policies imposed by dress the debt problem, made no men­ nomic warfare by the international that government. tion of the strategy adopted by Peru­ banks. Just before the internal AD elec­ vian President Alan Garcia, and deter­ All of this has led many to suspect tions on Sept. 22, the labor section of mined no specific actions to back up that the "framework" of which he the party, which backed CAP's can­ its resolutions. Upon closing the labor speaks is that of the Socialist Interna­ didacy, held its own plenum, where it plenum, CAP said, "In my next gov­ tional, of which he is currently vice analyzed labor's strength within the ernment, the workers will not be stone president. If that be the case, the prob­ party, and during the electoral period, guests, but will have both voice and lem will not be resolved. On the con­ as compared to the influence it has vote. " trary, many leaders of the Socialist wielded in terms of the economic pol­ Perez is the only candidate who International, such as Helmut Schmidt icy of AD governments, past and pres­ has openly identified the problem of and Willy Brandt, not only opposedebt ent. The AD labor leaders, Antonio the foreign debt, although in vague moratoria, but back the policies of the Rios and Juan Jose Delpino, were a terms. One week before his nomina­ International Monetary Fund and decisive factor in the electoral victory tion as candidate, CAP met in New World Bank.

EIR October 30, 1987 International 57 International Intelligence

to stop drug-money laundering and capital will leave Russia with far more medium­ Iran plots 'Islamic' flight. Garcia is facing a furious counterat­ range warheads than now . and the United tack by the bankers, drug traffickers , and takeoverof Iraq States with zero. The paper describes the the Shining Path terrorists, all committed to SS-24 deployment as providing an added bringing Peru to its knees. objective impetus to speeding up the Amer­ The creation of an "IslamicRepublic of Iraq" The Pope told Ambassador Hubert Wie­ ican Strategic Defense Initiative program. was the main subject of discussion between land Alzamora that to realizethe new finan­ Iran's Prime Minister Mir Houssein Mou­ cial order, all nations must "commit them­ savi and the Syrian leadership in meetings selves to appropriate reforms, which are im­ Foreign Noriega seeks military in mid-October, according to the portant to overcome the problems of mar­ Report of London. ginalization, violence and underdevelop­ role in peace talks Iran's Supreme Defense Council is plan­ ment." a ning massiveground ensiveoff against Iraq. "You have a very valuable patrimony," Gen. Manuel Noriega, chief of the Pana­ Led by Revolutionary Guards (Pasdaran) he said, "received with great sacrifice, which manian Defense Forces, in a discussion with Minister Rafigh Dost, one faction is advo­ is worth defending. For that, one must count foreign journalists at an army training camp cating the immediate creation of a Khomei­ on thehonest and loyal participation of those on Oct.. 16, demanded that Central Ameri­ ni-style fundamentalist "republic" as soon who are part of the great Peruvian family, ca's military leadersbe included in any peace as Iran succeeds in breaking Iraq's defenses since political life, in its maximum expres­ negotiations with the guerrillas. If the ne­ and reaches the outskirts of Basrah. Parlia­ sion, is an army of rights and obligations to gotiations fall apart, he said , it is the military mentary Speaker Ali Akbar Rafsanjani, on which citizens are called up, in an inescap­ which is going to be doing the fighting. theother hand, has been advising that Libya able and responsible way, to work for the He stated his support for the Arias peace should be consulted first. common good." plan for Central America, stating that Pan­ Under pressure from Saudi Arabia, the Attacking the terrorists-and their sup­ ama backed Costa Rican President Oscar Syrians have hitherto made their support for porters from the ranks of liberation theolo­ Arias , when "nobody else believed in this Iran conditional on the demand that none of gy-he said, "It must not be said that vio­ plan." Iraq's territory (hence, "Arab" territory) lence is a moral act, because wherever it General Noriega also criticized Pana­ should beoccupied by the Iranians. But now, comes from, it attacks human dignity. It rna's liberal economic planners for creating preparing for such a step, the Iranians have must be considered morally bad, and so, a "dependent model of a service economy" beefed up their "Badr 9 Unit," which in­ rejected." in recent years. This has made Panama vul­ cludes ten of thousands of Iraqis opposed to nerable to the economic warfare being Iraqi President Saddam Hussein. The Badr thrown at the country by the United States, 9 Unit has recently been deployed, together Soviets deploy he said. with pro-Iranian Kurds, in the northernfront Noriega said that Panama must develop of the war. new mobile ICBM production, to reduce its dependence on the outside. The one thing that U.S. economic The Soviet Union has begun deploying the warfare is accomplishing, he added, "is Pope backs Peru 's bid SS-24 rail-mobile ICBM, the West German feeding Latin American resentment against daily Die Welt reported Oct. 19, in its lead the United States." fo r economic justice article. The deployment has been confirmed in the Moscow Military District, from sat­ Pope John Paul II, in a greeting to the new ellite photographs. Tr ouble fo r the Queen: Peruvianambassador to the Vatican on Oct. TheSS-2 4 is themost powerful totally 19, called for the creation of a "new inter­ mobile missile in existence, with its mini­ Fiji breaks with Cro wn national financial order," and hailed Peru's mum of 10 independent warheads. It is also effortsto overcome its economic crisisin an variable in range-between 3,000 km and Queen Elizabeth's policy toward the British international context. 9,000km-thus making it a formidable me­ Commonwealth ran aground on Oct. 16, Peruhas taken the lead among develop­ dium-range successor to the SS-20, which when Fiji, an island nation in the Pacific, ing countries in opposing the austerity con­ the Kremlin has offered to withdraw from announced its formal break with the British ditionalities of the International Monetary Europeas part of "Euroa missile" (INF)arms Crown. The Queen accepted the resignation Fund, and President Alan Garciahas limited control deal. of her GovernorGeneral Sir Penaia Ganilau. debt payments to 10% of export earnings, Die Welt comments that the deployment Now, some are blaming Elizabeth for step­ andnationalized the banking system in order makes a mockery of the INF treaty, which ping out of line.

58 International EIR October 30, 1987 Briefly

• CARDINAL RATZINGER de­ nounced the radical-environmental­ ist Greens, in an interview with the Catholic weekly II Sabato, reported Oct. 22 in the Italian press. The Greens are "a combination of an un­ Fiji came under British domination first and Washington, the two principal allies of defined romanticism, which takes in 1874, when the islands' cannibal chiefs Tunisia. Both have been concerned about: elements from the Marxistcurrent and converted to Methodism and made Queen 1) Tunisia's rapprochement with Libya; 2) is also linked to features of liberal­ Victoria their "chief of chiefs ." On Sept. 25 populardiscontent over the economic crisis, ism," he said. They base themselves of this year, Lt. Col. Sitiveni Rabuka staged which the MTI has exploited; and 3) uncer­ on a conception of Nature which is a military coup and declared the creation of tainty concerning the succession to the el­ "anti-rational," and represent a "new a republic . derly President Habib Bourguiba. animalism, and the wish of man to be The crisis dominated the just-concluded EIR's sources report that the new gov­ a pure animal." summit of Commonwealth leaders meeting ernmentwill go after the MTI, by exposing AT LEAST THREE KGB in Vancouver, British Columbia. It is un­ its financial and logistical support from the • cen­ clear whether Fiji will remain in the Com­ Iranian secret services. ters in the U.S.S.R. train agents to monwealth. infiltrate free masonic circles in the The Queen drew fire when she warned West, sources report. These are in Fijians that they would be committing trea­ Hammer sees progress Feodosia (Crimea), Lvov (Ukraine), son to the Crown if they supported Colonel and Lithuania. Josef Stalin had the Rabuka. The British Foreign Officeprompt­ toward Afghanistan deal centers set up as early as 1936. En­ ly distanced itself from this position, and the glish and Swiss freemasonic groups Queen's involvement in the crisis has drawn ArmandHamm er, the chairmanof Occiden­ are said to contain the highest number criticism from the British press. Columnist tal Petroleum and friend of the Bolshevik of KGB agent infiltrators. George Gale warned in the Daily Mail on Revolution for 70 years , reported on the re­ FRANZ-JOSEF STRAUSS, Oct. 16 that the Queen "should watch her sults of his recent trip to Afghanistan, in an • the Jerusalem Post step." "She has more than once thrown her interview published in the leader of West Germany's Christian weight around in Commonwealth matters . Oct. 18. SocialUnion party,criticized the U.S. She has sometimes allowed it to appear that A deal to get the Soviets out of Afghan­ role in overthrowing the Shah of Iran she is taking sides against her British Prime istan, he said, would be most successful in in 1979 and installing Ayatollah Minister ....It would be a great misfor­ the context of a successful U. S. -Soviet sum­ Khomeini as "just another great dis­ tune if, by insisting on a role within the mit. This would also abet Jewish emigration aster brought into this world under Commonwealth which is more than merely from the U.S.S.R. and a resumption of So­ the banner of so-called democratiza­ honorific, she were to put in jeopardy her viet diplomatic ties with Israel. "Everything tion." "Now," he said, "we have one role as Queen of the United Kingdom." will follow the summit. ...We have an of the worst dictatorships the world opportunitywith Gorbachov . . . . I hope Mr. has ever seen in recent times in power Sharnirwill be invited one day to go to Mos­ in Iran." New leader could cow and meet Mr. Gorbachov and then I think there will be recognition of Israel, full • THE WESTGERMAN military stabilize Tu nisia recognition. And I think we are entering a intelligence service (MAD) is inves­ new era of goodwill for Israel, the U.S., and tigating illegal deliveries of tanks from After a long period of uncertainty , the polit­ Middle East peace, all of which will stem Kiel to the Middle East, the Oct. 18 ical situation in Tunisia is now moving to­ from a successful summit." Wien Kurier of Austria reports . ward greater stability, with the naming of Hammer reported that he arrived in Ka­ Gen. Zin el Abedin Ben Ali to the post of bul on Oct. 12, and met with Afghan leader • THE WORLD COUNCIL of prime minister and secretary general of the Dr. Hajib Ahmadzai, who was receptive to Churches is planning a conference in ruling party . He will keep his post as interior Hammer's Kremlin-endorsed plan for the New Delhi, India Nov. 22-28, to dis­ minister, which will allow him broad pow­ former King of Afghanistan to play an "ac­ cuss "religious identity in a pluralis­ ers to deal with domestic problems. tive role" in Afghanistan's future , and for tic society." Attendees will include Informed sources report thatGeneral Ben the King's son-in-law to be prime minister. Muslims, Hindus, Sikhs, Buddhists, Ali is widely respected, and will seek to The Soviets need help in leaving Af­ Jains, Jews, and Christians. The con­ conduct a dialogue with all democratic com­ ghanistan, according to Hammer. There ference will "unofficially" promote ponents of Tunisian politicallife . At the same would be a "bloodbath" against their troops the setting up of councils on religion time, he will seek to neutralize the funda­ if they left without a framework for peace, in each community in India, to at­ mentalist networks , and the Islamic Ten­ "because they've killed so many Afghans tempt to deaf with religious prob­ dency Movement (MTI) in particular. that people will get revenge. . . . There lems. Some relief is discernable in both Paris would be a terrific civil war."

EIR October 30, 1987 International 59 TIillNational

Reagan press conference flops ; paralysis reigns

by Lyndon H. LaRouche. Jr.

"The new Herbert Hoover" is the judgment Oct. 23 on Pres­ Inevitably , Mr. Reagan is being made the scapegoat for ident Ronald Reagan' s televised press conference on the eve­ the crash by some influential European and congressional ning of Oct. 22. Four days after the shock of Black Monday , leaders whose blunders contributed much more to the crisis PresidentReagan , like the leaders of the Congress, is stunned, than anything actually done by the President. It may be con­ shaken, but still clinging desperately and blindly to the bat­ soling to these critics to hear themselves say, "See, we were tered remains of the same discredited , ritual ideological rhet­ right about the need for deeper budget-cuts and tax-increas­ oric we have heard from that source for six and a half years . es." What is being proposed along these lines is either dan­ The press conference confirmed the fears of informed gerously wrong , or is so irrelevantto the monstrous problems people around the world; both the administration and the at hand as to be a nearly suicidal diversion of energies from leadership of the Congress have fled from reality , into an the real issues which must be addressed. Alice in Wonderland of ideological fantasies. Black Monday's crash, and the much, much bigger crash Over the firsthalf of October. more than $2 trillion of the still to come, have been caused by the entire Westernworld 's Western world's financial paper was erased from existence, complicity in pushing a "post-industrial" utopia for 20 years , with an additional $6 trillion or more due to be wiped out in combined with 16 years of building up the most gigantic a similar way during the weeks and months just ahead. Al­ financial bubble in history, on the basis of the ill-conceived ready approximately $100 billion of this fiscal year's federal "floating exchange-rate system." It is the combination of tax-revenues were wiped out by the close of Black Monday's those two policies which has created this crisis, and this crisis trading, with perhaps an additional $300 billion to washed can not be controlled until those two policies are effectively away by developments ofthe next few months. The vast real­ reversed. estate bubble is tottering on the brink of a collapse which The facts must be faced. The financial bubble has been threatens to wash away the U.S. banking system. popped, and there is no way to prevent its collapsing all the The world was waiting for the President to announce way down except by resorting to the printing presses in a way something which showed that the U.S. government had rec­ which leads to something like the Weimar hyperinflation of ognized the reality of the situation, and was announcing its 1923. At the same time, the present world monetary system, commitment to take charge in some way which would prevent as defined by the present policies of the International Mone­ the deepening financial crisis from plunging the world econ­ tary Fund, is as dead as the Dodo; there is no way it can be omy into chaos. rescued. All efforts to patch up the system, with debt-for­ If the President had done something such as declare a equity schemes, jiggery-pokery with exchange-rates of na­ national economic emergency, or, at least, announce the tional currencies, budget-balancing trained-sealacts , cheese­ resignation of Treasury Secretary James Baker III, most of paring contests in tax reforms, or selective rigging of some the world would have breathed a sigh of relief, whether they financial markets, will only make matters very much worse. liked the President's emergency measures or not. "At least, The only things which cap. be saved from this mess are he is doing something." the value of the U.S. dollar, the value of U.S. government

60 National EIR October 30, 1987 If President Reagan had declared an economic emergency, or at least fired Treasury Secretary James Baker III, have breathed a sign of relief, that at least he was doing something. bonds , the continued regular business functioning of dis­ the biggest crash in history a few tressed local banks, and the par value of principal amounts actly that has happened. of savings by bank-depositors . The collapse in private finan­ Black Mond�y has happened; that cial markets, and the collapse of the most highly-leveraged compared to what is now coming up parts of the real-estate markets, can not be prevented; gov­ comes to his senses about this ernment can do no more than the ensure that these inevitable that the history books would H_'''''''''(',,' drops in prices do not radiate chaos into the economy as a charitably as they do President whole. The only weapons available to the federal government for preventing chaos are heavy use of the regulatory powers Documentation of the government, combined with the issuance of several trillions of dollars of new Treasury currency-notes for lend­ At his televised Oct. 22 press ,."'''TP rprwp President Reagan ing for capital improvements in expansion of production and was asked by a reporter, "How is the threat of a repairs to basic economic infrastructure . Anything contrary recession or something worse?" This his reply . approach, or simply trying to sit out the crisis, means assured Well, first of all, the indices, the that is used for and incalculable disaster. Talking about any other response judging whether we're sound ec(mo'mi�ally and so forth , has to the crisis, is much worse than wasted hot air. been up and increasing 10 of the last 1 months. And with The critics of the President in the U.S. Congress's lead­ the great employment that we have, ership and among leading Europeans, are even more to blame reduced that double-digit inflation the prosperity that is for this crisis than Mr. Reagan. They are the ones who, back ours out there , the one thing out of a happening as the during the 1967-1975 period . created the policies causing stock market that could possibly about a recession this crisis. West Germany's former Chancellor Helmut would be if enough people without urjcjerstandlmg the situa- Schmidt and France's former President Valery Giscard tion , panicked and decided to put buying things that d 'Estaing did far more to cause this crisis, back in 1975 , than normally they would be buying, purchases and Ronald Reagan has done . It was the British under Prime so forth . Minister Harold Wilson, who began the mess long before That could bring on something a recession. It's hap­ Presidents Johnson and Nixon made their major blunders . pened before . But I don't think that 's any real reason I think I am one of the few who has the right to criticize for that. The-I think that this was a overdue correction Mr. Reagan on this issue . Back during the spring and summer and what factors led to its kind of into the panic stage of 1982, I warnedthe Reagan administration of a third-quart­ I don't know , but we'll be watching it closely. I approve er debt-bomb explosion, and presented them the actions very much of what the exchange is to do with regard needed to deal with that crisis in great detail. I admitted then, to the next three days . That the is-trading is going that they could postpone the day of reckoning some years on , in quitting two hours early to give a chance to catch beyond 1982, by the methods which they did, in fact, adopt. up with their paperwork , which is reason for that. But, I warnedthat by postponing the day of reckoning in that way, this is, I think, purely a stock market and there are no there would merely exchange an immediate major crisis for indicators out there of recession or times at all.

EIR October 30, 1987 National 61 Eye on Washington by Nicholas F. Benton

or from seeing Nancy was in keeping of the underlying problems which with how Reagan's advisers told him caused the 1929 crash in the firstplace 'They tell me it's he should handle the crisis. had been corrected, and that the crash just a correction' The President's role was supposed had been, in reality, a harbinger of to be to convince the world that Santa much worse to come. Onthe Saturday before the Great Crash Claus really exists, even though his of Oct. 19 knocked 508 points offthe beard just fell off. stock market, President Reagan But Reagan's performance was far Cap: 'Destruction stepped out of his helicopter on the eclipsed by that of James Miller, head was complete' south lawn of the White House, re­ of the White House's Office of Man­ turning from his first post-operative agement and Budget, who strutted into Lost in the frenzy of the 508-point visit with Nancy at the Bethesda Naval the White House press briefing room market collapse Oct. 19 was the major Hospital. the morning after Bloody Monday and news that the United States had blown The market had plunged over 100 announced that the Gramm-Rudman away an important Iranian military points the day before-a temporary automatic sequester had begun that day target in the Persian Gulf the same single-day record. While the rest of to slash the Fiscal Year 1988 budget, day. Four U.S. destroyers fired over the White House press corps asked the and that the federal budget deficitwas 1,000 rounds in an hour to pulverize President how Nancy's operation being conquered. and sink an abandoned oil platform in went, this reporter shouted over the Miller's nervously boisterous be­ international waters that the Iranians loud whir of the helicopter, "What do havior proved that the administration used for radar monitoring and launch­ you think of the stock market, Mr. simply wasn't prepared to cope with ing rocket-firing speedboats and mine­ President?" reality. laying missions. Reagan cupped his ear to hear the When this reporter asked Miller The decisive, although limited, question, asking me to repeat it. When how he expected to meet the FY88 action had been long awaited , and , as he finally heard it, his answer was so deficit reduction figures now that a predicted. restored the confidence of brief, it virtually assured that the mar­ trillion dollars had been wiped out in U. S. allies in the region while muting ket would cave in to all-out panic on one day, blowing the nation's revenue those in Congress who had been call­ Monday. Making his first on-the-re­ base to smithereens, Miller categori­ ing for invoking the War Powers Act. cord comment on the subject, he said cally refused to answer the question. Defense Secretary Caspar Wein­ only, "Well, they tell me it's just a Much to the amazement of the berger walked into the American correction. " press corps, Miller said he simply Stockholders Conference the day after Over the next four days , the scene wouldn't comment on the stock mar­ the action, and opened his speech by was repeated at leasttwice a day: Every ket-as if it were totally unrelated to reporting, "The operation of yester­ time Reagan left or returned from vis­ the deficitreduction issue he was there day was carried out with ease, was iting Nancy at Bethesda, he would to talk about. done with the aid of computers, and emerge onto the south lawn to shout The "keep the White House out of resulted in total destruction." over the din of the helicopter his latest it" tactic , pretending that the market With a twinkle in his eye, he then comment on the market. place (with just a tad of help from the added, "Of course, I'm not speaking After that first time, however, his Federal Reserve and central banker of the Gulf, but of the stock market." remarks weren't so glib. As the bot­ friends in Japan and West Germany) Overall, however, there was little tom fell out Monday, he repeated a can solve the market crisis on its own, in what Weinberger had to report that litany of "strong economic indicators" is just what Herbert Hoover insisted was frivolous. He warned that the he had been handed to rehearse that on in 1929. Gramm-Rudman deficit reduction se­ morning. Back then, it looked for awhile as quester, if permitted to go into full By Tuesday, a lectern had been set if Hoover's tactic worked. A month effect Nov. 20, will cut 10.5% across up by the walkway between the port­ afterthe crash, the situation had "nor­ the board in the defense budget for able helipad and the White House so malized," and that perception contin­ every category except military per­ he could read lengthier statements . ued through most of 1930. It wasn't sonnel. Such "savage cuts," he said. Still, the casual image of making until over 1 ,300 banks failed in 1931 "will send a terrible signal to friends an offhandremark while on his way to that it finally became clear that none and foes alike."

62 National EIR October 30, 1987 Frankhauser-CIA link exposed

In an extraordinary last-minute development in the "LaRouche trial" in Boston, the CIA has produced a document cor!fi.rming dlifense arguments on LaRouche's ties to the intelligence community.

Defense lawyers in the famous Boston trial of U.S. v. The The prosecution says Fick testifiedthat the other defendants, LaRouche Campaign, et al., on Oct. 20 identified a CIA adopted his proposal. documentdelivered to the court as bearing upon the relation­ The prosecution has constructed fictitious sentences out ship between defendant Roy Frankhauser and the Central of fragmentary, isolated words in the notebooks of some Intelligence Agency. of the defendants, inventing sentences to conform to Previously, the prosecution had based its case upon the Fick's alleged testimony. This is assessed as a desperate at­ assertion, that defendant Frankhauser and prosecution wit­ temptby the prosecution, to shift the btIrdenof its case away ness "Forrest Lee" Fick hadmerely pretended to be connected from its original reliance upon the unsupported testimony of with the CIA. Defense motions have insisted that the prose­ Fick. cutors are attempting a massive cover-up of politically mo­ According to the prosecutor's complex conspiracy the­ tivated intelligence community involvement in attempting to ory , actions by the defendants which were legal in themselves set up thedefendants for federal prosecution. are construed to be actions taken in aid of furthering a con­ The declassified portions of the CIA document released spiracy. The logic of the prosecution's entire case hangs upon referred to a Jan. 21, 1983 meeting between LaRouche and defending Fick's insistence that he and Frankhauser were a CIA officials at Langley headquarters. Accordingto defense pair of mercenary rogues, who lied to defendants about con­ counsel's statement to the court, that meeting had not only nections to the U.S. intelligence community. been angedarr with assistance of defendant Frankhauser, but The defense argues that Frankhauser has longstanding Frankhauser had done advance work in arranging La­ relations to the U.S. intelligence community, and that both Rouche's entry to the CIA compound for the meeting. Fick and Frankhauser were operating under President Rea­ Defense attorney Odin Anderson reported that the Janu­ gan's Executive Orders 12333 and 12334 during the period ary 1983 meeting had been part of LaRouche's continuing 1982-86. The defense will expose Fick's control agent as one relations to the office of the CIA deputy director. An earlier Monroe N. Wenger, a government employee and a well­ meeting, with Adm. Bobby Inman, had been the subject of known specialistof the intelligence community's operations Inman's interview on the subject, published in the news me­ section. The defense is expected to show that the relevant dia during 1984. Defense counsel reported the January meet­ paragraph in the document written by Fick is a gratuitous ing at Langley as arranged to preparea face-to-face meeting insertion, used to lay a misleading paper trail to the defen­ with Inman's successQr. dants . Defense counsel argued that the names of CIA officials According to sources close to the defense, shortly after involved were needed as potential witnesses to assist in clar­ the writing of the December 1984 document in question Wen­ ifying those aspects of Frankhauser's connections with the ger and Fick had a 1985 meeting with LaRouche, during CIA placed at issue by the Justice Department in the case which both Wenger and Fick attempted to solicit LaRouche's being readied for trial. endorsement for an intelligence community "termination with The Justice Department's charges of obstruction of jus­ prejudice" of Frankhauser. According to sources, LaRouche ticein the Boston case are based on the testimony of prose­ warned the pair he would take measures to prevent any such cution witness Fick. By his own admission, Fick wrote a action against Frankhauser. Shortly after that meeting, ac­ document transmittedto some of the defendants in December cording to sources, Fick was discharged from private agen­ 1984, in which Fick recommended burning of unspecified cies retained to assist in security for the defendants; Fick then documents in the defendants' possession. Frankhauser has went to the ADL and NBC-TV News, where he was groomed been implicated by Fick as adopting this written proposal. to become a federal witness against LaRouche et al. in 1986.

EIR October 30, 1987 National 63 be jeopardized by ajoint trial. It would be "easier to ensure a fair trial if there were a severance." The judge's point was repeatedlyillust rated by Frank­ LaRouche tr ial postponed hauser's lawyer, who claimed that his defense strategy would be based on blaming LaRouche for whatever severalweeks . . . aga in wrongdoing might have been committed. "I've got to put on the government's case," Walker said. "I say that Mr. On Oct. 20, Boston federal Judge Robert Keeton granted LaRouche was responsible for anything that happened." motions from most defense attorneys to sever the trial of Walker attempted to back�track Oct. 20 on the incom­ defendant Roy Frankhauser from that of Lyndon La­ patibility of defenses betwee� Frankhauser and the other ; Rouche, several of his associates, and five organizations. defendants , although he had emphasized just that point Keeton further decided to try Frankhauser first, thereby during pre-trial hearings and jury selection. Walker had delaying the larger trial until at least Nov. 16. gone so far as to bring a motion trying to prevent the other Assistant U.S. Attorney John Markham had joined defendants from using a "CIA defense" -which motion with the defense in requesting the severance of Frankhau­ was denied by the court. ser, and during the argument on Oct. 20, offered Frank­ Walker's hysterical arguments caused some defense hauser's lawyer all the assistance he might need in prepar­ attorneys to renew theirown severance motions, and oth­ ing his case. ers to join it. Thomas Shapiro, speaking for IDL and TLC , Judge Keeton's decision was made over the heavy summed up the view of the other lawyers by saying that, objections of Frankhauser's court -appointed attorney, without a severance, the LaRouche-associated defendants Owen Walker, who claimed he was not prepared to go to would be facing the prospect of the government attacking trial-although the trial of all defendants was scheduled them in front, and Walker from behind. to start Oct. 20. Walker insisted that the severance was As in the hearing on Oct. 19, Frankhauser tried to simply a tactic for delay by the defense, that it would cost speak a number of times, only to be silenced by his court­ the government more money, that the other defense law­ appointed lawyer. When Markham referred to Frankhau­ yers wouldn't get paid, that it would take longer, etc., ser's "confession" as "freely given," Frankhauser blurted etc .-although Walker himself had previously asked for "absolutely not" before his lawyer shut him up. At one a severance. point, Frankhauser tried to stand and say, "I would like to Judge Keeton, however, found that the length of the be heard," but sat down at the insistence of his lawyer. two trials would not be greater than one consolidated trial. A hearing was held Wednesdaymorning , Oct. 21, on The primary reason given by Judge Keeton for the his motion to suppress his "confession"-which is actual­ severance was the clear evidence that Frankhauser and the ly an FBI "302" report on statements allegedly made by rest of the defense were preparing "antagonistic," "incon­ Frankhauser after his arrest andjailing in October 1986. sistent" defenses, and that the rights of the defense would The motion was denied.

The defendants have presented pre-trial motions docu­ Clark was leaving the post of National Security Adviser. menting the prosecution's actions as flowing out of a cam­ According to observers, LaRouche's enemies inside the paign launched during mid- 1983, visibly centered around intelligence community are centered in the Irangate-linked, National Security Council contract employee Roy Godson, bipartisan National Endowment for Democracy and the so­ to make LaRouche a target of the FBI's counterintelligence cial-democratic nest long centered around Jay Lovestone. operati!)ns. After LaRouche crossed Casey by opposing President Rea­ Defense motions document orders to the Department of gan's signal to go ahead with the Contraoperat ion, additional Justice to launch such a prosecution from prominent officials, factions of the CIA wereturned against LaRouche. such as Henry A. Kissinger, David Abshire, and Edward Afterthe March 18, 1986 lllinois primary, panic-stricken Bennett Williams, of President Reagan's Foreign Intelli­ leaders of the Democratic Party , including National Chair­ gence Advisory Board, and the Intelligence Oversight Board man Paul Kirk and New York Gov. Mario Cuomo, publicly of special consultant John Norton Moore. proposed to destroy LaRouche "by legal or other means." It is widely known, that a section of the intelligence Most observers agree, that such demands from Democratic community under the late Director William Casey acted to Party leaders pushed elements in the Justice Department to unleash LaRouche's longstanding political adversaries with­ unleash the wave oflegal actions on alleged "credit card" and in the Departmentof Justice, at about the time Judge William other charges, prepared over the summer of 1986.

64 National EIR October 30, 1987 Elephants & Donkeys by KathleenKlenetsky

Nixon also touched on Bush's the Reagan administration. The tele­ "wimp factor" problem, complaining vision preacher castigated Bush as a that the vice president "comes through "whiny loser," during a campaign ap­ Stock market plunge as a weak individual." pearance in Seattle Oct. 16, where he Even before the financial mael­ also took a swipe at Nancy Reagan's dooms GOP hopefuls strom broke , Bush had been encoun­ undue influence over strategic policy. The collapse of the U. S. stock market tering serious difficulties, especially "My wife does not like commu­ has shattered the myth of the Reagan among key political and intelligence nists," Robertson told the Western recovery, and doomed the White layers in London and Paris, who, after States Republican Leadership Confer­ House ambitions of George Bush and his recent visit, worried aloud that his ence. "I want to set your mind at ease. the other Republican presidential can­ wimpiness could lead to a fatal ac­ She has never suggested that I make didates. Bush et al . had pinned their commodation Moscow. an accommodation with the Soviet hopes of electoral success on the so­ To the dismay of many European Union in order to win the Nobel Peace called five-year Reagan recovery, but policymakers, the vice president had Prize." now that this delusion has evaporated, spent much of his European tour last Robertson also attacked George the Republican candidates find them­ month twisting arms on behalf of the Shultz, announcing that he would ap­ selves up the proverbial creek. INF agreement. That dismay was point as Secretary of State "someone One GOP insider summed up the compounded when Bush formally who would stand up for America in­ party's chances this way: "You can opened his presidential bid days later stead of someone who would try to just forget it! There ain't no way­ by challenging his fellow Republican move the nation toward a one-world even if Gorbachov came over to candidates to support such a treaty . socialist government." Washington and kissed Reagan's Bush defended the proposed ac­ Robertson's tough talk rings feet-that we're going to win in '88." cord-which many fear will lead to somewhat hollow, when taken in the The economic downturn "has killed the decoupling of NATO and Soviet context of his own demands for de­ us," he said. hegemony over Western Europe-as fense spending cuts and aU.S. pullout The politicalfall-out will fall most "hard-headed, verifiable, and in the from Western Europe-not to men­ heavily on Bush, who, as vice presi­ best interests of our national secu- tion his recent public statement that, dent, swallowed his 1980 criticism of rity, " though he opposes the INF treaty, he Reagan's "voodoo economics," to be­ Shortly after Bush's tour, a senior would have no choice but to imple­ come an enthusiastic purveyor of the British officialprivately reported that ment it. recovery myth . the "British intelligence establishment The Bush faction had hopedto hold opposes Bush," because of his support the economy together until Novem­ of the INF treaty, and his stubborn Jackson off to ber, but that is clearly no longer pos­ blindness on the worldwide financial the Persian Gulf sible. and economic crisis. Fears of an economic debacle had Another senior British military in­ In an attempt to replay his grandstand­ been haunting Republican strategists telligence official characterized him as ing trip to Syria during the 1984 pres­ long before the market crashed­ "strawberry jelly, who would collapse idential campaign, Jesse Jackson plans though they wouldn't admit as much if a half-pound weight were to be to tour the U.S. military contingent in publicly. Just before the stock market placed on his shoulders." the Persian Gulf. Jackson was at the plummeted, former President Richard State Department Oct. 20, where he Nixon wrote a confidential memo, re­ was briefed by Deputy Assistant Sec­ ported in the Oct. 18 London Sunday Robertson hits back retary of State Edward Djerejian. Times, stating that if the economy fal­ Why he is going is not entirely tered , the Republicans couldn't pos­ at Bush, Reagan clear, since he was one of the most sibly retain the White House. Under Bush rival Pat Robertson is capitaliz­ virulent opponents of the deployment conditions of economic difficulties, ing on the vice president's image as an when it was first announced-al­ wrote Nixon, the Democrats could Eastern Establishment "Rockefeller though he now says he would not urge "nominate a jackass" and still win the Republican," and attempting to dis­ an American withdrawal, at least not presidency. tance himself as far as possible from yet.

EIR October 30, 1987 National 65 'Attend your own funeral, arrange your death now'-this book tells how by Linda Everett

turned the gun on himself. When Malcolm asked the hospital spokesman for more information about the man who walked This Far and No More, A True Story into their facility and killed his wife, the spokesman replied, by Andrew H. Malcolm Times Books, New York, New York, Random "Which one?" House, Inc. This incident, Malcolm says, launched him into a period 247 pages, hardbound, $17.95. of research that led to a lengthy series of New York Times articles and this book. Judging by the results of his "re­ search," Malcolm is now "top gun" in the press for the eu­ Andrew Malcolm, Chicago bureau chief of the New York thanasia mafia. Times, opens his book describing how he started his investi­ This Far andNo More is based on the true story of a New gation into the right-to-die arena, which eventually led to York psychologist who is stricken in her mid-forties with writing this book. In 1984 he was researching a news item ALS-amyotrophic lateral sclerosis or Lou Gehrig's dis­ about an elderly man who walked into a Texas hospital, shot ease, a neuro-muscular disorder causing muscle degeneration his wife who suffered from Alzheimer's disease, and then and sometimes total paralysis. The central character, "Mrs. Bauer" (all names changed to protect the guilty), her hus­ band, and lawyers and doctors from the Concern ForDying , CFD, plan her death in "the least illegal manner possible" in September 1983. CFD carefully evaluated any family, friends, or nurses who might be "whistle-blowers" and "negotiated" Bauer's death with hospital physicians who did not want her dying in any "accident" at their hospital. During a visit to her home, a ConcernFor Dying physician injected the patient and turned off her respirator as he had done with others many times in Weekly EIR the past. Malcolm's book is written around Bauer's journal, which Audio Reports she kept up throughout her illness; when totally paralyzed she used a printing machine. Malcolm develops a chronolog­ ical b�ckground and enough right-to-die rubbish to blot out Cassettes Bauer's initial but inadequate refusal to "give in" to her disease. Before long, she shifts from science and doctors to • News Analysis Reports alternative medicine and quacks who variously massage her • Exclusive Interviews body, put her in touch with her "earlier Egyptian life," and charge $50 an hour in the process. Unfortunately, her per­ $5001Year spective ofhumanity's fight, her own (as well as Malcolm's), does not extend beyond Nietzsche's: "Would that there came preachers of quick death !" So Bauer, fed by death-and-dying Make checks paya ble to: literature,. succumbs to the dominant cultural pessimism that EIR News Service, P. o. Box 17390 fosters medical budget cuts, nursing shortages, collapsing Wa shington, D.C. 2004 1-0390 hospitals, and warehousing of paralyzed patients. When Em­ Attn : Press ily Bauer turns to Concern For Dying, these problems cease to be hurdles one overcomes. and become reasons to die­ MasterCard and Visa Accepted. which she did, after a gathering of friends at her pre-death funeral.

66 National EIR October 30, 1987 NBC-TV used Malcolm's book as a basis for their Co­ lumbus Day TV movie "Right to Die." Both the book and film, a Dan Ohlmeyer production, draw enormously on the capacity of their audience to emphathize and be emotionally Books Received hard hit by the story of a sick woman who can no longer wrap Lords of the Last Machine: The Story of Politics in her arms around her young children, no longer smile at her Chicago, by Bill and Lori Granger. New York: Ran­ husband and whose friends become overwhelmed moments dom House, Inc., 1987. $18.95 hardcover, 242 pages. before her (arranged) death. Suddenly, the audience is sob­ bing for this gang of murderers . How can that be? Aha, this Beyond Our Means: How America's Long Years of is Nazi propaganda at its best! Debt, Deficitsand Reckless Borrowing Now Threat­ Bauer, played by Raquel Welch, gasps for breath, as she en to Overwhelm Us, by Alfred L. Malabre, Jr. New pleadingly tells her husband, "My body is a coffin, I am York: Random House, Inc., 1987 . $17.95 hardcover, being buried alive, I want to die ....If you love me , you'll 174 pages. do it ...." Using Hollywood magic and a seasoned report­ Are We to Be a Nation: The Making of the Consti­ er's manipulation and lies, the right-to-die crowd wants you, tution, by Richard B. Bernstein with Kym S. Rice. if faced with a similar crisis, to bail out. Cambridge, Mass., and London, England: Harvard We are told that Malcolm's advocacy for physician-as­ University Press, 1987. 342 pages . sisted death makes Derek Humphry of the Hemlock Society Manufacturing Matters: The Myth of the Post-In­ look like a pussy cat. His book drums up demands for "ne­ dustrial Economy, by Stephen S. Cohen and John gotiated death ." His "research" plies the euthanasia lobby's Zysman. New York: Basic Books, Inc., 1987. $19.95 lastest campaign, targeting conscious but paralyzed victims hardcover, 297 pages. of ALS and similar disorders . In the last year courts have acceded to the starvation suicide wishes of several ALS pa­ Memoirs of a Fortunate Jew: An Italian Story, by tients, including the precedent cases in New Jersey of Beverly Dan Vittorio Segre. Bethesda, Md. : Adler and Adler, Requena and Kathleen Farrell, whose families wanted ex­ 1987. First English Edition. $16.95 hardcover, 273 plicit laws allowing the "right to die" for patients who are pages. "mentally competent, but [their] body ...dead ." The Soviet Union: The Incomplete Super Power, by Paul Dibb. Champa ign, il l.: University of illinois Press, Modern medical nihilism 1986. 293 pages. There are about 5,000- 10,000 new ALS cases every year , Fidel and Religion: Castro Talks on Revolution and and at any time 20,000-40 ,000 living patients in the United Religion with Frei Betto, by Frei Betto. Translated States. But whether an ALS patient opts for living is frequent­ by the Cuban Center for Translation and Interpretation; ly based on his physician's outlook and the patient's ability introduction by Harvey Cox. New York: Simon and to pay for medical and nursing care . Physicians at San Fran­ Schuster, 1987. $19.95 hardcover, 314 pages. sisco's ALS Reasearch Center were so totally outraged by routine non-treatment of ALS patients that they wrote in the Camp X: OSS, "Intrepid," and the Allies' North British Medical Journal: ALS provided "an astonishing ex­ American Training Camp for Secret Agents, 1941- ample of therapeutic ignorance or nihilism in modem medical 1945, by David Stafford . New York: Dodd, Mead, practice." The physicians' proper role, they said, is to offer 1987. $18.95 hardcover, 352 pages. treatments that relieve the patient's symptoms-not withhold Harry Hopkins: Ally of the Poor and Defender of them! ALS patients are not "invariably" terminal-some live Democracy, by George Mclimsey. Cambridge, Mass. for 15-20 years . In others , the disease "bums out." They slam and London, England: Harvard University Press, 1987. the insurance companies for causing patient suffering by not $25.00 hardcover, 474 pages. covering necessary aids that relieve patient's symptoms. One Spirit of Survival, by Gail Sheehy. New York: Ban­ physician-researcher who has cared for 3,500 ALS patients , tam Books, 1987. $4.95 paperback, 407 pages. made it clear: "There is absolutely no place for suicide among ALS patients ." A Cup ofCoffee With My Interrogator: The Prague Obviously Malcolm and the Concern For Dying think Chronicles of Ludvik Vaculik, translated by George otherwise. Malcolm writes that the CFD doctor who killed Theiner, introduction by Vaclav Havel. London, Eng­ Emily Bauer, said he admired Bauer's bravery in bucking the land: Reader's International, 1987. $7 .95 paperback, system, that is, society's laws against murder and suicide. 127 pages. He says, "I'm a nice Jewish boy and I put people to sleep. I The Constitution: Reflections of a Changing Na­ regard what I do as very ethical, compassionate, sensible, tion, by Margot C.J. Mabie. New York: Henry Holt, and moral . On the other hand, Hitler put people to sleep too, 1987. $12.95 hardcover, 148 pages. Children's book. and he thought what he was doing was right."

EIR October 30, 1987 National 67 Congressional Closeup by Kathleen Klenetsky

not yet adopted a national testing pro­ waiti oil tankers. annemeyer AIDS gram to determine the extent of the Warner called on President Rea­ amendmentD approved virus in our society, if we do not want gan to approve the measure, on the The House approved an amendment to have the phenomenon develop in grounds that it gives him a way to con­ Oct. 15 which would require a pro­ America where the health-care work­ sult with Congress without invoking posed federal government entity to ers are voting with their feet by going the War Powers Act. "It says, 'We notify health-care workers about the off their jobs, rather than exposing support you, Mr. President, and your dangers of AIDS. Sponsored by Rep. themselves to unnecessary risks, this overall policy in the Gulf, ' " Warner William Dannemeyer, a California is the kind of amendment we should claimed. Republican who has been among the be adopting so that our public health Warner's characterization of the most outspoken advocates of stronger officials and the Department of Labor measure is far from accurate. Al­ measures to contain the deadly epi­ are giving notification to our health­ though it is admittedly much less of an demic, the amendment was added to a careworkers as to how they can pro­ intrusion into the President's policy­ bill thatwould establish a federal Risk tect themselves from getting this vi­ making powers-and less of a threat Assessment Board, empowered to rus." to the Persian Gulf deployment-than identify, notify, and prevent illness and Major opposition to the amend­ either the War Powers Act, or the death among workers who are at in­ ment came from the stalwarts of the Nunn-Byrd amendment offeredlate in creased or high risk of occupational "AIDS lobby," including Rep. Henry the summer, it presents the threat that disease. Waxman (D-Calif.) and Rep. Joseph the Congress will indeed terminate the Dannemeyer's motion would put Gaydos (D-Pa.). operation, which Secretary of De­ in this category health-care and emer­ fense Caspar Weinberger has termed gency workers who are at risk of oc­ essential to protect international ship­ cupational exposure to AIDS. It also ping, and to hold back Soviet incur­ mandates the Risk Assessment Board enate passes sions into the Mideast. to "determine the appropriate type of WarS Powers substitute As Sen. Lowell Weicker (R­ medical monitoring or health coun�el­ After months of wrangling over Conn.), one of the major proponents ing with respectto such a population." whether to force President Reagan to of invoking the War Powers Act, put Dannemeyer pointed to numerous apply the War Powers Act to the Per­ it, the resolution means that "the Pres­ instances where health care workers sian Gulf reflagging deployment, the ident can no longer keep Congress out have been infected with the AIDS vi­ Senate approved a resolution Oct. 21 of the way, and Congress has come to rus, due to inadequate protection. He which puts off congressional action on the realization that it does have a re­ cited one horrifyingcase of a nurse at theis sue until next January. sponsibility in matters of war and San Francisco General Hospital, who The measure, co-sponsored by peace." was told by hospital authorities that, Senate Majority Leader Robert Byrd The Senate Foreign Relations in caring for AIDS patients, she could (D-W.Va.) and Sen. John Warner, a Committee released a report in mid­ not wear gowns, masks, and gloves Virginia Republican, requires the October, suggesting how strong sen­ because this offended them. She has President to report to Congress on the timent is on Capitol Hill for shutting subsequently sued the hospital and the situation in the Gulf within 30 days down the U.S. escort operation. The CaliforniaHealth Department forde­ afterit becomes law. Thirty days after study called for a new look at policy fects in her newbornson , believed to that, the Senate would then vote in the Gulf, faulting current policyfor have been caused by her exposure to whetherto opposeor supportthe Gulf having "nebulous" goals and for invit­ the AIDS virus during her pregnancy. deployment. The6O-day periodwould ing "more Iranian attacks of increas­ "I find that franklyto be wrong not begin until the House passed the ing severity." public-health policy," declared Dan­ amendment, and the President signed It charges that the decision to re­ nemeyer. "Considering that we have it into law. flag and protect Kuwaiti tankers was between one and four million people It endorses a U.S. military pres­ made hastily on poor rationale, and who are infected with the virus, no­ ence in the Gulf, but expresses "res­ that the U.S. presence has made ship­ body knows how many, and we have ervations" about thereflagging of Ku- ping in the Gulf less safe than before.

68 National EIR October 30, 1987 The report also takes issue with If, on the other hand, an effective Defense Forces. Weinberger's contention that growing testing program is put into action by The resolution is part and parcel Soviet influence in the Gulf and Mid­ 1990, Salzberg believes the AIDS of the State Department's attempt to east generally is an immediate danger. pandemic could be contained, with 2 overthrow Noriega, who has become "There is little likelihood of Soviet po­ million casualties and another 2.4 to a thorn in State's side, because of his litical encroachment among Gulf Arab 3.3 million carriers. nationalism and strong opposition to states," says the report, because of their Burton, co-sponsor of a mandato­ both IMFpolicies and the internation­ mistrust and basic differences with ry AIDS testing bill now pending in al drugtraf fic. Moscow. Congress, warned that voluntary test­ Like the Senate resolution, which What baloney ! Moderate Arab ing alone would be entirely inade­ passed 97-0, the House measure calls states have long feared that the United quate. "AIDS is a pandemic, not just on the United States to cease "all eco­ States would gradually reduce its an epidemic," he said. "I use the anal­ nomic and military assistance" and presence in the region, creating a po­ ogy of the bubonicplague which wiped "suspend all shipments of militaryand litical and military vacuum which the out half of Europe during the 14th and spare parts" to the Panamanian gov­ Soviets would fill. That is precisely 15th centuries. That disease ...be­ ernment unless it meets a number of what has happened over the last dec­ came so bad that they would nail win­ conditions, among them: ensuring ade; the reflagging operation repre­ dows on houses shut and bum people "civilian control of the armed forces sents a much-needed corrective to that alive the minute somebody said and the Panama Defense Forces"; re­ suicidal course. 'plague. ' moving the armed forces' leaders from "We do not want that kind of thing "non-military activities and institu­ to happen in the United States. We tions"; and instituting a "non-military want to have an orderly way to deal transitional government." with thisepidem ic, but if it gets out of Theresolution 's chief sponsor is , AIDS could kill control, because we have not done the Mel Levine, a liberalCalifornia Dem­ 2S million Americans' properthings today, then we are going ocrat who usually vents his spleen on Rep. Dan Burton (R-Ind.) warned to have a real problem on our hands, the Strategic Defense Initiative. from the floorof the House on Oct. 15 not only economically, but as far as that if the United States fails to adopt dealing with it as a civilization." a comprehensive AIDS testing pro­ If the United States doesn't get gram, 25 million Americans could be down to the "hard decisions" needed dead of the disease by the year 2005- now, Burtonwarned , "we may be fac­ ouse backs law just 17 years from now. ing a problem that humankind has Hon special prosecutor Burton based his prediction on a never seen inthe history of thisEarth ." A measure to makepermanent thelaw new computer study conducted by Dr. Burton announced that he had sent authorizing special prosecutors to in­ Allan Salzberg, chief of the medical copies of the Salzberg report to every vestigate wrongdoing by government service at the Veterans Administration office onthe Hill. officials was approved by the House in Miles City, Montana. on Oct. 21. The study compares how many The move is a blow to the admin­ Americans will contract AIDS, how istration, which had argued that the many will die, and how much the ep­ House calls for law was unconstitutional because it idemic willcost over thenext 20 years, Panama aid cut-otT violates theseparation of powers. if testing andrelated measures are im­ Following inthe footsteps of theU.S. The 327-87 vote is far more than plemented, and if they are not. Senate, the House adopted a non­ the two-thirds necessary to override a Assuming that testing is not adopt­ binding resolution Oct. 19 urging the presidential veto. The Senate was ex­ ed, Salzberg estimates that by 2005 , administration to terminate all U. S. pected to takeup a similarmeasure in some 25 million Americans will die of aid to Panama, and to give the "Mar­ late October, which differs from the the disease, and 43 million will be car­ cos treatment" to Gen. Manuel Anto­ House bill in that it would extend the riers. Costs will total $8.2 trillion. nio Noriega, chief of the Panamanian current law for fiveyears .

EIR October 30, 1987 National 69 NationalNews

tegic Defense Initiative program . The Federation claims to base its charges upon anonymous documents received over Cuomo gets CFR's the recent period . They charge that Teller Panama deports and his collaborator, Dr. Lowell Wood of stamp of approval Lawrence Livermore National Laboratory, U.S. colonel New York Gov. Mario Cuomo, who recent­ "conveyed both orally and in writing overly The formercommander of the U.S. Military ly spent a week in the Soviet Union meeting optimistic, technically incorrect statements Assistance Group in Panama, retired Army with top Russian officials, has gottten to the nation's policymakers regarding the Col. Charles "Chico" Stone, was put on a "thumbs up" from the New York Council on potential of Excalibur," codename for the plane at 3 a.m. Oct. 16, with a first class Foreign Relations. On Oct. 14, about 250 project. ticket courtesy of the Panama government, members of the elite EasternEstablishment This is the second time that such charges and deported to the United States. He was organization turned out in Washington to have been leveled at Teller and his collabo­ caught "distributing subversive leaflets" hear Cuomo pontificate on Establishment rators in the last two years . The original against the government in Panama City, as foreign policy, and to purvey the line that it charges, appearingin the LosAngeles Times, a "private citizen." is in the United States' interest to ensure that were based on a laughable misinterpretation U.S. Ambassador Arthur Davis was Gorbachov's perestroika-"restructuring" of test results, in which the x-ray laser per­ shown a videotape of Stone's participation for war buildup-is a success. formed so much better than anticipated that in an opposition demonstration on Oct. 10, According to the New York Times, CFR diagnostic equipment was unable to even after which both the embassy and the U.S. members turned out in force because of "the measure the results. The Times accordingly Military Southern Command declared that uncertainty in the 1988 Democratic race for reported that the x-ray laser had not per­ Stone was acting as a private citizen. The President and the hope by many in [Wash­ formed as anticipated-overlooking the fact embassy identified Stone as a "former em­ ington] that a stronger candidate, perhaps thatit had performedbetter than anticipated. ployee," and the Command said he was Mr. Cuomo himself, might enter the contest In its July 18, 1986 issue, EIR published "formermilitary personnel." Therefore, they or be drafted ." lengthy excerptsfrom a General Accounting had "no comment." The CFR was apparently impressed by Office report which completely cleared This was only the latest incident proving Cuomo's performance. Not that there was Lawrence Livermore of charges that it had that the U.S. government amounts to the any substance to his remarks. "It was his attempted to defraud the government, by only "democratic opposition" in Panama. presentation, his style of thinking and talk­ exaggerating claims for its x-ray laser ex­ On Sept. 13, a U.S. embassy employee, ing that people mentioned to one another," periments. David Miller, who had been in the Philip­ remarkedinvestment banker Peter Peterson, pines for the overthrow of Marcos, and in a former Secretary of Commerce and lead­ Haiti for the overthrow of "Baby Doc" Du­ ing light in both the CFR and Trilateral valier, was also arrestedfor participating in Commission. an opposition demonstration. Cuomo also drew praise from former Congress to target The Oct. 20 edition of the Washington Defense Department employee Richard Post amused observers by beginning its ar­ Perle. "What he said was unexceptional," Contra drug-running ticle on the Stone affair, "The government said Perle. "But the manner in which he said The next phase in U. S. congressionalinves­ controlled by military strongman Gen. it was exceptional. He was unusually can­ tigations into the Contras will focus on drug­ Manuel A. Noriega has escalated its cam­ did. He's forceful and lively. I agree that runningand gun-running by the Nicaraguan paignof political attacks on Washington with that was what people were talking about." Contras-and on charges that American of­ a series of actions to harass U . S. diplomats, ficials condoned the crimes, the London servicemen, and other citizens in Panama, a Daily Telegraph reported Oct. 20. U.S. spokesman said." According to the Telegraph, U.S. Rep. The nonexistent character of the indig­ William Hughes, chairman of the crime enous "opposition" was demonstrated anew Teller slandered subcommittee, has said the panel is widen­ shortlyafter Stone's arrest. On Oct. 22, more ing its investigation of possible crimes by than 10,000 American military personnel on x-ray laser and for the Contras . He is quoted, "We are and civilian workers were advised to stay The Southern California Federation of Sci­ developing some very troubling informa­ out of Panamanian cities during a national entists issued a press release Oct. 14 accus­ tion." work stoppage and mass demonstration ing Dr. Edward Teller of having consistent­ The crime panel is also tracking allega­ promised by opposition leaders . Col. Gar ly lied about the potentialities of the x-ray tions that federal officials knew of and dis­ Thiry, a U.S. military spokesman, warned laser-a leading research item in the Stra- couraged prosecution of the crimes. Americans in a broadcast on the military

70 National EIR October 30, 1987 Briefly

• ALEXANDER HAIG, a GOP presidential hopeful, told the Wash­ ington Post that President Reagan 's "excessive" defense spending is re­ SouthernCommand Network to stay at home cies, particularly the U. S., have directed a sponsible for the budget deficit, the and out of Panama's cities unless they were large part of their space resources and tech­ trade deficit, and the stock market on officialor emergency business. nology toward other goals .... We have collapse. Thereupon, only 400 people turned out allowed the Soviet Union to come danger­ for the demonstration, and were easily dis­ ously close to achieving its military objec­ • GEORGE SHULTZ has offi­ persedby riot police. tives in space. " cially withdrawn his invitation to the Organization of American States to hold a foreign ministers' meeting in SanFrancisco in November,the State Department has 8nnounced. In a let­ Soviet space station Admiral Crowe: U.S. ter to OAS Secretary General J080 Clemente Baena Soares, Shultzcited has military objectives can't afford depression the U.S. government's "unprece­ A new Defense Department assessment has Adm. William Crowe, chairmanof the Joint dented financial difficulties." concluded that the Soviet Union is likely to Chiefs of Staff, warned attendees at a con­ "dramatically increase" the tonnage of space ference of the American StockExchange in • REAGAN POLLSTERRichard hardware it launches over the next 5-15 years, Washington Oct. 19, that the United States Wirthlin has announced that he will and that the Mir space station is dominated cannot afford the lUXUry of another Great be working for Bob Dole's 1988 by militaryob jectives, according to the Oct. Depression. Even as he was speaking, the presidential campaign-in an appar­ 12 Aviation Week and Sp ace Technology . stock market was suffering a record loss. ent change of heart. Only a few weeks The report was also critical of the absence "In the 1930s, there were no other world earlier, he had told reporters that of military objectives characteristic of the powers to threaten us," Crowe said. "But George Bush was favored to be the U.S. space program. today theSoviet Union has amassedan awe­ 1988 GOPpresidential nominee. "Thepro jected rate of growth in the space some military power worldwide ....The program, driven by such things as an ambi­ military equation is not controlled by the • A.G. AGANBEGYAN, chief tious manned program, future communica­ U. S. alone, but by what our major adversary economic adviser to Mikhail Gorba­ tionssatellit es, new reconnaisance systems, is doing." chov, has replaced Gorbachov' s chief and space-based weapons, is expected to He said the Soviets are superior to the adviser, Ivan Frolov, as the manwho outpace overall Soviet trends in both mili­ United States in nuclear forces, operate on will tourthe UnitedStates in October taryspending and grossnational productwell all the major oceans, and are actively en­ as a guest of the Esalen Institute's into the future ," the report states. The report gaged in "low-intensity operations" that in­ Soviet-Americanexchange program. is beingprepared for public release soon. clude terrorism and limited confiicts on the The increased Soviet orbital tonnagewill borders of areas representing U . S. strategic • HENRY KISSINGER, in an in­ resultfrom use of the new SL-16 and SL-17 interests. terview with British press, attacked Energiya boosters , the Soviet version ofthe One day later, Defense SecretaryCaspar theproposed INF treaty as "anhistor­ space shuttle, and greater use of the SL-12 Weinbergersuggested that the stock market ic joke," then called it "inevitable," and SL-13 Proton versions. crash was partly due to fears that U.S. de­ and then called upon the Senate to For example, the Soviets launched three fense spending is too low. Weinberger ratify it as the best way to keep the Proton missions in a recent four-week peri­ opened a speech to an American StockEx­ peace movement "off thestree ts."His od. The latest, on Oct. 1, was a mission into change meeting in Washington Oct. 20 by curiousstatements were carriedin the geosynchronous orbit with a payload des­ noting that the Defense Departmenthad been Daily Telegraph Oct. 18, and in the ignated Cosmos 1,888. blamed for the stock marketblow-out. "But Washington Times a day later. The report states of the space station: we had a counter explanation," saying that ''The Soviet Mir space station has been and if the U. S.defense budget was too low, the • THE NEW YORK Council on probably will be largely dedicated to mili­ United States would be unable to guarantee Foreign Relations has established a tary purposes.... Many of the experi­ the security of its chief trading partners . new "Project on European-American ments will use visual observations, camer­ "We feel that the whole problem was Relations," according to informed as, radars , spectrometers, and multispectral caused by the extremenervousness of inves­ European sources. The project is electro-optical sensors-devices that could tors who felt that the defense budget was chaired by Cyrus Vance, who also support, among other things, anti-satellite going to be low-and that's the explanation chaired the "1980s Proj ect," which and ballistic defense system deployment." that satisfiesme. " Weinbergermade the same formulated the disastrous policies of The report was critical of past U.S. space comment on two nationally televised talk the Carter administration. decisions, "because the Western democra- shows earlier in the day.

EIR October 30, 1987 National 71 Editorial

A manfor troughtim es ahead

The admiring crowd gasped with unisonic awe as the the reception ceremonies. giant helicopter's landing-gear touched the tarmac of The handshaking done , those who had fainted dis­ Interstate Route 93, just outside Concord, New Hamp­ creetly carried away in waiting ambulances, the great shire. As the gold-plated rotor stuttered to a halt, the one began his oratorical utterance: "The time has come great doors on the side of the purple fuselage's belly to stand up and resist the looting of our economy by were slid down by liveried attendants wearing white those foreigners we call our allies ." If the crowd had uniforms with gold epaulets . An hydraulic mechanism ever doubted this a moment before , now it was revealed thrustthe gangway out from the fu selage; as the lowest to one and all, that this great one was the true presiden­ step touched the tarmac , a great roll of red carpet un­ tial material for which all had waited, so devoutly , so furled itself, down the stairway, and out from the craft despairingly, for so long . toward the waiting crowd. Here was a man who had lifted himself fromhumble Instantly, four bare-chested attendants, each of not beginnings as a lowly slumlord, to become the ac­ less than 250 pounds , adornedwith turban, pantaloons, knowledged satrap of a formerly great city, a modern and broad sash, great scimitars at their side , issued from Nero whose mere look could launch holocausts of fire the door of the helicopter, to stand on parade beside the among vast tracts of tenements, and lift whole com­ farend of the red carpet. plexes of high-rise boxes, phoenix-like, from amidthe The adoring throng held its breath until most were smouldering ashes, a man whose awesome indebted­ blue in the face, lest the sound of their breathing ob­ ness exceeded that of many national governments, a scure a single prophetic rustling of the great one's ap­ man who stood at the peak of an Everest of financial proach. A roar of breathless adulation rocketed from leverage, a man who had risen to such heights fromthe the throng as he himself appeared in the doorway of the depths of being von Trog , a man who dared to walk the craft, the Dick von Trog so fabulously wealthy it was giddy pathway betwixt vast wealth and abysmal ruin. rumored that each morning eachof the tips of his hairs Who could deny, that this man , more than nearly all was individually manicured. It was said that even others , was the living incarnation of that great balloon Rockefeller gasped with awe at the mere thought of von which the outgoing President praised as the adored Trog . symbol of our national prosperity . The great one swiveled his head slowly, scanning This was the man of the newprosperity. Away with the nearly prostrate crowd with a diffident hint of a the old! Prosperity is not to be held, but adored; its smile. He had arrived to receive the pledge of fealty aromas are to be savored, but not to be tasted, not to be fromt he citizens of this humble state capital; only those worn, but admired on stage; its splendor is greatest, political extremists withdirty minds whispered he had when it is less diluted by sharing, that assembled, ral­ come to steal the gold leaf from the domeof the capitol lied to become an apotheosis of itself in the eye of the building. envious adorer, gathered into one great mass, in the The great one levered himself down the gangway, titled possession of a von Trog. and then moved imperiously along the unfurled carpet, With a von Trog as President, poor as the nation while the scimitared attendants, bare chests bluing in might become , it would seem all the richer, because all the chill winds of an overcast October day, herded the the wealth of the nation which might remain would crowd into the looping single file of a reception-line. stand before the world proudly in one great, awesome The great one's secretary scuttled officiously from be­ mass, gathered unto the person of von Trog. Vox po­ hind von Trog to assume the spot at which to orchestrate puli, vox von Trog; Hail , Caesar, von Trog !

72 National EIR October 30, 1987 In Decemb er 1986, EIR Alert told its readers about Brazilian discussion of a debt moratoriUm. On Feb. 20, 1987-it happened. On Aug. 18, 1987 EIR Alert published an AIDS Alert item on Soviet measures on AIDS. On Aug. 26, 1987, the story hit the fr ont page of the Washington Post. With the EIR Alert, you will be ahead of the news. With Alert the presidential season coming up, and a financial crash being predicted by leading European banking circles-can you afford to be behind the times? EIR Alert brings you 10-20 concise news items, assembled fr om its bureaus all around the world, twice a week, with Alert leading economic and strategic news. It comes to you first class mail-or by fax (at no extra charge). In the U. S.: Confidential Alert annual subscription $3,500. In Europe: Confidential Telex Alert annual subscription DM 12,000, includes Quarterly Economic Report Strategic Alert Newsletter (by mail) annual subscription OM 6.000 Alert Make checks payable to: Em News Service P.o. Box 17390, Washington, D.C. 2004 1-0390 In Europe: EIR Nachrichtenagentur GmbH. Postfach 2308, Alan+ Dotzheimerstr. 166. D-6200 Wiesbaden, F.R.G.

------� I would like to subscribe to I I Executive Executive Intelligence Review for Intenigence o 1 year 0 6 months 0 3 months I enclose $ _____ check or money order

Review Please charge my 0 MasterCard 0 Visa Card No. ____ Exp. date ____ _

Signature ______u.s.. Canada and Mexico only ...... $396 1 year Name ______6 months ...... $225 3 months ...... $125 Company ______

Foreign Rates Phone ( Central America, West Indies, Venezuela Address ______and Colombia: 1 yr. $450, 6 mo. $245, 3 mo. $135 City ______$410. 6 $255. South America: 1 yr. mo. State ______Zip ___ _ 3 mo. $140. Make checks payable to EIR News Service Inc .. Europe, Middle East, Africa: 1 yr. DM 1400. P.O. Box 17390. Washington. D.C. 2004 1- 6 mo. DM 750. 3 mo. DM 420. Payable in 0390. In Europe: EIR Nachrichtenagentur deutschemarks or other European currencies. GmbH. Postfach 2308. Dotzheimerstrasse 166. 62 Wiesbaden. Federal Republic of Germany. Asia and Oceania: 1 yr. $550. 6 mo. $300. telephone (06121) 8840. 3 mo. $150. LaRouche on target "Global financial crash predicted for October," was the headline of a news release issued by presidential candidate Lyndon H. La­ Rouche, Jr. last May 26 and printed in EIR's June 5, 1987 issue . LaRouche stated: "Leading Europeanfin ancial officials have warned my associates, that we should expect to see the beginning of the world's biggest financial crash by October of this year. My comment on that forecast: It might not occur in just that way, but, if the Reagan administration continues its present policies, it is certain that the world's economic situation will become much worse than it is today over the summer months .... "Whether the great financial crash of 1987 erupts by October, or later, will depend upon what leading governments do at the international monetary 'summit' held in Venice" on June 8-10. He continued: "As long as the official line of the administration is to stick to the 'successful economic policies' of the last fiveyears , the Reagan administration is likely to stick to those policies. This would turn the Venice 'summit' into a disaster, destroying the last bit of confidencein the U.S. dollar in international financial markets . Under those conditions, an October crash would be very probable."

Venice debacle In the June 19, 1987 issue, EIR reported that the admiBistration had done in Venice exactly what LaRouche warned against: "Pres­ ident Reagan and Treasury Secretary James Baker, during and after the Venice summit, maintained that the United States has exp.eri­ enced an extraordinary period of 53 months of economic growth, · and that complete deregulation of U. S . banks will facilitate the rational consolidation of the banking system." EIR observed: "At this point, the slightest shock could trigger a major financial panic of uncontrollable scale. Never before have international financial investment flows been at such a precarious uncertainty. "

October crash On Oct. 19, after the U. S. stock market plunged more than 500 . points , LaRouche commented: "The market has elected to choose this most appropriate rri"oment in time to express its total confidence in the accuracy of my forecasting."

EIR: Knowledge is leadership.