From Volume 37, Issue 20 of EIR Online, Published May 21, 2010

Global Economic News

Financier Vampires Demand More Blood

May 10 (EIRNS)—The $1.1 trillion pledged this weekend to feed the financial predators of the British Empire, is only the beginning of what they have planned—if LaRouche's Glass-Steagall firewall is not implemented immediately.

The European Central Bank (ECB) has announced that it will offer banks "as much cash as they need for three months and six months, and reactivate a swap line with the Federal Reserve," according to Bloomberg. This is the "nuclear option" of unlimited ECB money-printing that the British have been demanding for months, with the U.S. Fed being the guarantor of last resort through the swap mechanism.

"This sets a precedent for the rest of the life of the Central Bank," said the smug chief European economist at the Royal Bank of Scotland, the flagship bank of the Inter-Alpha Group of British and allied financiers. "The ECB's intervention ... was necessary to short circuit the negative feedback loop which was getting more and more threatening for the global economy," said Jacques Cailloux.

But these same financial interests are already saying that what was done was insufficient, and that more bloodletting will be needed. "EMU politicians and the ECB have now pressed the nuclear option," an ING bank strategist stated. "The central question from here is whether the cumulative measures can manage to stabilize the system." Bank Julius Baer's global chief investment officer agreed that the $1 trillion package "might temporarily calm nerves, but questions will come back later, on how they will pay for this package." Bloomberg took note of the fact that inter-bank lending rates did not go down on Monday after the package was announced, and concluded that the "$1 trillion European loan plan may not be enough to restore confidence in markets."

China's Not Buying Britain's Anti-Dollar Gambit

May 12 (EIRNS)—China is looking anxiously at the developments in Europe, where a large amount of its overseas financial portfolio has been relocated over the years. Europe is also a major destination of China's exports. China has spent the bulk of its more than $2 trillion of foreign exchange reserves in dollar-denominated assets, such as U.S. Treasury bonds. It was, however, planning to diversify the structure of investment from dollar bonds to those in euros.

"But now it is clear that the euro also has risks," Yu Yongding, head of the China Society of World Economics said. "It would complicate China's policymaking. The Greek crisis fully exposed the weakness of the global economic recovery," Yu, who is also a former member of the central bank's monetary policy committee, told China Daily. "It is hard to predict what will happen next. The euro will probably remain weak, while the dollar will strengthen," he said.

Japan 'Re-Imports' Nuclear Technology to the U.S.

May 9 (EIRNS)—Japan's Mitsubishi Heavy Industries has been chosen by Dominion Power of Virginia to build a large nuclear power reactor outside Richmond. Mitsubishi says it will sign a contract with the major U.S. utility to construct the reactor at Dominion's power station after obtaining necessary approvals. The reactor is rated at 1,700 MW, and will cost about $5.5 billion.

The reactor will be a US-APWR (Advanced Pressurized Water Reactor) originally designed by Westinghouse, but enhanced by Mitsubishi. Beyond increasing the reactor rating from the original 1,000 MW, Mitsubishi modified the design to meet new U.S. safety standards. The core technology of the reactor remains that developed by Westinghouse.

All rights reserved © 2010 EIRNS