From Volume 37, Issue 27 of EIR Online, Published July 16, 2010

Global Economic News

British Empire: We Have Fascist Austerity for the British People, Too

July 4 (EIRNS)—Danny Alexander, chief secretary to the British Treasury, this weekend delivered an "eye-watering demand" to all Cabinet ministers, ordering them to plan for cuts of up to 40% in their budgets, says the July 3 Guardian. To prove their serious commitment to austerity, the new government's plan will produce staggering results, such as:

* Home Office cuts of 25% could mean a reduction in the number of police officers of almost 20,000.

* Cuts in housing benefits of 10% could increase the number of homeless by 200,000—from 140,000 today, to 340,000—an increase of nearly 150%. "Cutting housing benefits could have a catastrophic impact on the lives of thousands of people who—despite their best efforts—have failed to find work for 12 months," said National Housing Federation head David Orr. "The proposals are disturbing and unfair."

* The government this week is expected to announce a halt to rebuilding some 700 schools, in order to save £1 billion a year.

* About 600,000 public service jobs are expected to be lost overall and, adding insult to injury, the government is now planning to sharply reduce their severance pay.

Wasting Food on Ethanol Is Threat to China's Food Security

July 9 (EIRNS)—China should stop using vital food supplies to produce ethanol, an official of the China General Chamber of Commerce said yesterday, as drought and flooding hamper food production. Since June, especially severe floods have hit southeastern China during this year's monsoon, following the worst drought there in memory. Now, the Yangtse valley in central China is being flooded. Hundreds of people have died, and over 20 million hectares of land have been affected, with 3 million hectares of crops destroyed outright. China has been self-sufficient in food production for many years, but, with its huge population and limited arable land and water resources, maintaining food security is a great national challenge, and one taken very seriously.

It is becoming clear to some that it is high time to put an end to the ethanol insanity. On July 7, the Shanghai Securities News reported that the price of corn, used to produce fuel ethanol, has increased 20% year-on-year. China is self-sufficient in corn production, but demand is rising for livestock consumption. The current weather disasters have reduced corn output, but the other factor sending prices skyward is ethanol.

"Producing fuel ethanol has not only cost plenty of food but also doesn't help much in ensuring China's energy security," China Daily quoted Zhao Youshan, head of the petroleum distribution committee of the China General Chamber of Commerce on July 8. "Relevant programs should be stopped, and subsidies [to ethanol producing companies] should be canceled, too," Zhao said. Subsidies and tax exemptions were started in 2004 to promote ethanol production, and many farmers abandoned other crops to plant more corn. China was the third-biggest ethanol producer in 2006, until the government took steps to curb the trend.

To prevent too much crop diversion, the government halted all new ethanol projects by 2007, but did not cut the subsidies. "This year's situation is dangerous," Zhao said. "On the one hand, northern and southern parts of China were alternatively swept by severe drought and flooding this year, making it certain some areas will face food reduction.

"On the other hand, some areas' fuel ethanol firms rush to purchase food, some furtively. China's food security will be under a great threat if the situation continues."

Zhao said he handed in a report to the State Council last month to suggest an end to the pilot program and a cancellation of the subsidies to fuel ethanol production.

IMF 'World Economic Outlook': Nazi Austerity and Hyperinflation

July 9 (EIRNS)—The British Empire's economic gestapo, which sometimes goes by the name International Monetary Fund (IMF), yesterday released its semi-annual "World Economic Outlook" report, which makes the double Nazi policy proposal of demanding of all countries deadly austerity and cuts in living standards, along with an unlimited hyperinflationary bailout of the banks. Or, as the British Empire is fond of stating, simply: "We live, you die."

The central challenge," the IMF states, "is to develop a credible fiscal strategy to ensure that public debt is put—and is seen to be put—on a sustainable path."

The IMF nervously warns that, without fascism, there could be "renewed financial turbulence," and that what is required is therefore:

* Europe has to pump trillions into the banks, by "making the new European Stabilization Mechanism fully operational."

* All nations should make sure that the hyperinflationary spigots are wide open, guaranteeing that "monetary conditions remain highly accomodative for the foreseeable future," and that central banks should "rely more strongly on using their balance sheets to further ease monetary conditions"—i.e., let money supply just rip.

* Budgets have to be cut, especially health care, social security, pensions and other entitlements: "Of utmost importance are firm commitment to ambitious and credible strategies to lower fiscal deficits ... reform pension entitlements and public health care systems."

Such "politically difficult" measures not only have to be implemented, the gestapo ordered, but they have to be "frontloaded" in order to save their disintegrating system.

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