From Volume 7, Issue 50 of EIR Online, Published Dec. 9, 2008
Asia News Digest

China's Investment Chief: Dump Derivatives, Go with New Bretton Woods!

Dec. 5 (EIRNS)—Gao Xiqing, president of the China Investment Corporation (which manages $200 billion of China's foreign reserves) gave an extraordinary interview to The Atlantic's James Fallows, which reflected many of Lyndon LaRouche's views: on the dangerous and unreal quality of derivatives; on the urgent need for a new Bretton Woods conference; and on the urgency for the U.S. to return to its strength and wisdom as seen during World War II. The interview took place two weeks before the U.S. election. It can be found at

Quotations follow:

On derivatives: If you look at every one of these [derivative] products, they make sense. But in aggregate, they are bullshit. They are crap. They serve to cheat people. [Gao describes derivatives as selling a mirror reflection of a mirror reflection of a real product.] I think we should do an overhaul and say, "Let's get rid of 90 percent of the derivatives." Of course, that's going to be very unpopular, because many people will lose jobs.

On a new Bretton Woods: But I think at the end of the day, the American government needs to talk with people and say: "Why don't we get together and think about this? If China has $2 trillion, Japan has almost $2 trillion, and Russia has some, and all the others, then let's throw away the ideological differences and think about what's good for everyone." We can get all the relevant people together and think up what people are calling a second Bretton Woods system, like the first Bretton Woods convention did.

On American power: The current conditions can't go on. It is time for the new government, under Obama or even McCain, to really tell people: "Look, this is wartime, this is about the survival of our nation. It's not about our supremacy in the world. Let's not even talk about that any more. Let's get down to the very basics of our livelihood." I have great admiration of American people. Creative, hard-working, trusting, and freedom-loving. But you have to have someone to tell you the truth. And then, start realizing it. And if you do it, just like what you did in the Second World War, then you'll be great again! If that happens, then of course—American power would still be there for at least as long as I am living. But many people are betting on the other side.

Pakistan's Deals with Soros and IMF Will Cost 3 Million Jobs

Dec. 1 (EIRNS)—The $7.6 billion loan granted by the IMF to Pakistan on Nov. 24 will cost Pakistan at least 3 million jobs, and add 7 million to the ranks of the desperately poor, gloated the chief economist from the Royal Bank of Scotland, Sakib Shirani, one of the architects of the deal. This genocidal prognosis was presented at a meeting on "IMF: Pain or Panacea?" sponsored by the Centre for Research and Security Studies in Islamabad on Nov. 28. Shirani, who participated in the talks in Dubai between Pakistani and IMF officials, told the audience that this policy was necessary due to the import-led policy of the former government, and that they had "no option."

A delegation from the George Soros Economic Development Fund (SEDF) was hired by the Pakistani government last week, to provide "technical assistance in economic, finance, tax reform, export and agricultural sectors." Soros met with Pakistani President Asif Ali Zardari when the President visited New York in September.

As in all IMF loans, the deadly conditionalities must be met for each period or the money is cut off. Pakistan will receive $3.1 billion under a 23-month facility, with the remainder phased in, subject to quarterly reviews. The money will never reach Pakistan, of course—it is all to pay off a sovereign bond maturing in February—but falls well short of the $13 billion that the IMF has said that Pakistan will require this financial year. Many more deaths under IMF austerity and Soros-run drugs and terror will be required before the next tranche is made available.

Taiwan's Ma: Timing Not Appropriate for Dalai Lama Visit

Dec. 4 (EIRNS)—On Nov. 28, the Dalai Lama, speaking from his refuge in exile, Dharamsala, India, said that he would like to visit Taiwan next year. He asserted that, given the improved relations in the Taiwan Strait, maybe this is a good time.

Taiwan's President Ma Ying-jeou, who campaigned for office earlier this year on a platform of improving political and economic relations with mainland China, begged to differ. "We generally welcome religious leaders from all over the world to visit Taiwan, but I think at the current moment the timing isn't appropriate."

The Dalai Lama had visited Taiwan in 1997 and 2001, and met former President Lee Teng-hui. Lee, an asset of the anti-China neoconservative faction in the U.S. and Japan, put little store on good relations with Beijing.

Denying that the delay of the visit will infuriate the Dalai Lama's representatives, as well as his admirers in Taiwan, including the entire pro-independence camp, for whom the Dalai Lama also serves as a symbol, Ma has little reason to soothe the feelings of the pro-independence radical grouping. This small minority rioted when the president of the Chinese mainland's Association for Relations Across the Taiwan Strait (ARATS), Chen Yunlin, visited the island to conclude an important series of trade and transport deals in early November.

Japan's Aso Looks To Overturn Koizumi's Fiscal Reforms

Dec. 3 (EIRNS)—Japanese Prime Minister Taro Aso is calling for eliminating or freezing budget caps put into place in 2006 by then-Prime Minister Junichiro Koizumi, as part of his overall free-market "reform" policies, which dismantled much of the traditional "American System" approach of government-directed credit in Japan. Aso has proposed scrapping Koizumi's annual 3% cut in public works spending from the previous fiscal year, and his $2 billion annual cut in the natural growth in social security spending—a policy which was deadly for the aging population.

Another of Aso's proposals is to set aside $107.13 billion over three years as special reserves free of spending restraints. The funds would be used for such measures as job creation and helping the unemployed. The money would be included in annual budgets, but it would not be subject to spending ceilings.

Aso has also initiated efforts to postpone the privatization of the Postal Bank, which was the centerpiece of Koizumi's "reform."

Aso's moves have generated banner headlines in the Japanese press. The Asahi Shimbun writes, "Aso veering away from fiscal reform platform," and says that the Aso Administration has "essentially shelved the fiscal reform platform installed by ... Koizumi" in light of the economic emergency and "clamors within his ... Party." Japan's most prestigious conservative paper, The Daily Yomiuri, highlights the political repercussions of the change with "Storm brewing in LDP over fiscal policy."

Korea To Assist Revival of Philippines Nuclear Plant

Dec. 2 (EIRNS)— Korea's state-owned Electric Power Company (KEPCO) will reportedly sign a memorandum of understanding with the Philippines' National Power Corp (Napocor) to conduct a feasibility study into reviving the never-used Bataan nuclear power plant.

President Ferdinand Marcos ordered the construction of the two-unit Bataan Nuclear Power Plant after the 1973 oil crisis. Construction of Bataan-1—a 621 MWe Westinghouse pressurized-water reactor—began in 1976 and it was completed in 1984 at a cost of $460 million. It mothballed, after the overthrow of Marcos, on orders from U.S. Secretary of State George Shultz and his Deputy Paul Wolfowitz, on phony safety concerns. The plant, while fully paid for by the Philippines people, has never produced a watt of electricity.

In early 2008, a team from the International Atomic Energy Agency (IAEA) visited the Philippines to assess the feasibility of rehabilitating the plant. The team advised the government that it could be refurbished and operated, economically and safely, for 30 years.

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