Clinton must take on the `Casino Mondiale' by Kathleen Klenetsky
If President-elect Bill Clinton doesn't move immediately to
crack down on the worldwide ``casino'' created by the last 10
years' orgy of international financial speculation and deregulation,
he won't have a snowball's chance in hell of delivering on his
promises to revive the U.S. economy and to provide millions
of new high-wage, high-technology jobs. Instead, he will be
faced with the worst financial and economic collapse in modern
times, one that will make Herbert Hoover's political fate following
the 1929-31 collapse seem a bed of roses.
That friendly warning was issued on Nov. 10 by international
economist and former presidential candidate Lyndon LaRouche,
who called upon Clinton to prick the speculative bubble that
dominates the world economy, before it forces a wholesale restructuring
of the U.S. economy on the model of the savage austerity implemented
in 1930s Germany.
- Prick the bubble -
``Contrary to the popular mythology which grips public opinion
among the so-called reader of newspapers and viewer of television
news and talk shows,'' said LaRouche, ``The problem is not ...
the deficit nor even the size of the federal official debt.
``The problem of the U.S. economy is a policy of deregulation
unleashed during 1978-79 ... by the Carter administration and
by Paul Volcker's leadership of the Federal Reserve System,
which created ... the biggest international financial bubble
in world history. That bubble is what is crushing the U.S. economy
and the U.S. people,'' said LaRouche, ``not the debt, and not
the federal deficit.''
Under these policies, the international economy has been turned
into a ``Casino Mondiale,'' a world casino, in which a trillion
dollars is gambled daily in the world financial markets.
The devastating damage which this has caused to the real economy
was detailed by {EIR} in a feature published in the Oct. 23
issue. The study showed how the U.S. economy has been deliberately
and systematically looted, especially since the early 1980s,
through such features of this global crapshoot as the so-called
derivatives markets, through which flow billions of dollars
in drug money, as well as trillions in other speculative transactions,
completely unregulated.
In his statement, LaRouche also urged Clinton not to take the
advice of such people as Ross Perot, Sen. Warren Rudman (R-N.H.),
and former Democratic presidential candidate Paul Tsongas, who
insist that draconian cuts in social spending, especially in
Social Security and Medicare, must be enforced to ``save'' the
economy.
As LaRouche put it: ``Unless the Clinton administration changes
its policy and recognizes that Ross Perot did not understand
economics, did not recognize that the Fed is the one thing they
must attack--its policies, and free trade, and GATT [the General
Agreement on Tariffs and Trade] and this other nonsense--and
instead follow my particular program, this country is going
to spiral deeper and deeper into the worst depression of the
20th century, or perhaps into something as bad as hit Central
Europe in the 14th century.''
- Pressure on Clinton -
The issue which LaRouche raised is the crucial one for Clinton
to address. Wall Street and its minions have already started
bombarding Clinton with the message that if he goes beyond the
extremely limited ``growth program'' he has outlined--a piddling
$20 billion per year infrastructure program combined with another
$25 billion allocated among an investment tax credit and some
new worker retraining and educational projects--he'll be cut
off at the knees.
So far, the bluntest {public} message from this gang was delivered
by the {Wall Street Journal} on Nov. 6, in a lead article headlined
``The Vigilantes: World's Bond Buyers Gain Huge Influence Over
U.S. Fiscal Plans.''
``Big bond investors around the world may now hold unprecedented
power--perhaps even a veto--over U.S. economic policy,'' the
article began. ``Bill Clinton got a taste of that power in the
past four weeks. Bondholders, increasingly anticipating the
Arkansas Democrat's victory in the presidential race, pushed
down prices of U.S. Treasury bonds and thus pushed up long-term
interest rates to about 7.7% from 7.3%. It was the bond market's
way of warning Mr. Clinton that as the new President he will
long be on probation, with his every move instantaneously scrutinized.''
(Although not mentioned in the {Journal} article, the rise in
the bond prices coincided with rumors that Clinton was considering
a proposal for doubling the size of his proposed public works
program.)
The article asserted that Clinton will be allowed to implement
some form of stimulus package. But if it means increasing the
deficit significantly, or causes a rise in the inflation rate,
``the reaction could be stiff and painful. With computerized
trading linking global trading in U.S. government bonds, which
now averages $150 billion a day, a worried investor can unload
millions of dollars of bonds in seconds--and virtually 24 hours
a day. If thousands of investors worldwide dump U.S. Treasury
bonds, they could drive up long-term rates, which move inversely
to bond prices, hobble America's economic growth and even plunge
the nation back into recession.''
The {Journal} quoted Robert Hormats, vice chairman of the Wall
Street investment bank Goldman, Sachs: ``The global bond market
can be a very tough disciplinarian. Bond buyers have a very
conservative bias, they'll be looking very hard at whatever
Clinton does.''
Coming from Hormats, that message is indeed significant. Hormats
not only served as an adviser to Clinton on economic policy,
his name has also been mentioned for a top economic policy position
in the new cabinet. Moreover, his firm, Goldman, Sachs--one
of the key players in the derivatives markets--was the largest
single contributor to the Clinton campaign.
The {Journal} is just one among many organs of the international
financial elite which has been telling Clinton that he must
move immediately to assure the ``markets'' that he won't embark
on a growth plan beyond that which he outlined during the campaign.
Paul Tsongas, a founder of the rabidly pro-austerity Concord
Coalition, along with Warren Rudman, Council on Foreign Relations
Chairman Peter Peterson, and Washington attorney Lloyd Cutler,
went on national television on Nov. 9 to tell Clinton that his
constituency is no longer the U.S. electorate, but the international
financial markets.
Similarly vicious advice has come from a host of media scribblers
who speak on behalf of the Wall Street establishment. Morton
Kondracke of the {New Republic}--which supported Mussolini's
fascist policies--wrote in the Nov. 7 {Washington Times} that
``to calm the financial markets, [Clinton] ought to limit his
plans for infrastructure spending.'' Kondracke urged Clinton
to appoint ``market-oriented moderates to key economic positions
and include some Republicans in the groups,'' naming Rudman,
Peterson, and Tsongas.
Former JFK adviser Ted Sorensen, writing in the Nov. 7 {New
York Times}, urged Clinton to give a State of the Union speech
early in his administration, to prescribe ``the unappetizing
medicine that must be taken for several years by each segment
of our society.''
- Key appointments -
How is Clinton reacting? To the extent he's talked about economics
since his election, he's reaffirmed his commitment to his initial
program, but has also gone out of his way to pledge his allegiance
to deficit reduction, and to reassuring the markets that he
can be trusted.
One important indicator of the incoming administration's economic
direction will be whom Clinton appoints to fill key economic
positions, such as treasury secretary. Those who are reportedly
on Clinton's short list for the posts do not augur well, however.
In addition to Hormats, they include:
@sb^Paul Volcker, chairman of the Federal Reserve under Jimmy
Carter and, subsequently, Ronald Reagan. Volcker, who publicly
endorsed the idea, first circulated by the Council on Foreign
Relations' {1980s Project,} for the ``controlled disintegration
of the world economy,'' is perhaps best known as the man who
put the U.S. economy through the floor via his 20%-plus interest
rate policy while at the Fed. Volcker is by far Wall Street's
favorite candidate, although some in the Clinton camp fear he
might overwhelm the fledgling administration.
@sb^Robert Rubin, a lifelong Democrat and close friend of Robert
Strauss, who co-chairs Goldman, Sachs. He recently stated that
``you have to combine fiscal stimulus with long-term deficit
reduction, and the art ot it is to make the deficit-reduction
part credible.'' He has also asserted that Clinton would deal
with the deficit more aggressively than the Bush administration,
because the markets wouldn't give a Democrat the same leverage
they would give a Republican.
@sb^Roger Altman, who met Clinton when a student at Georgetown
University. He served as Jimmy Carter's assistant treasury secretary
for domestic finance. He currently is a partner in the Blackstone
Group, an investment firm headed by Peter Peterson, which specializes
in buying up failed savings and loan institutions.
@sb^Felix Rohatyn, of Lazard Fre@agres, who created ``Big MAC,''
the bankers' dictatorship which has virtually run New York City
since the mid-1970s, placating the city's creditors by slashing
social services and stretching out infrastructure maintenance
and investment to the point that the conditions of roads, bridges,
and the water system have become nearly life-threatening.
>From EIR V16, #46.
--
John Covici
[email protected]
