From Volume 38, Issue 14 of EIR Online, Published Apr. 8, 2011

Global Economic News

S&P Downgrades Greek and Portuguese Debt ... Again

March 29 (EIRNS)—The Standard & Poors rating agency downgraded both Portugal and Greece today, saying that the European Union's new bailout rules may mean both nations eventually renege on their debt obligations. This is the second S&P downgrade of Portugal in a week, and leaves its paper one notch above junk. Predictably, yields on Portuguese bonds rose sharply.

The "consensus" line put out in the financial media is that Portugal will be able to meet its April 15 bond redemption of EU4.5 billion euros, barely, but that it will default on its June 15 redemption of another 4.5 billion, unless the country get an EU-IMF bailout before then. So, Portuguese President Cavaco Silva is being pressed to call new elections for early June, to try to get a compliant government in office just in time to slaughter its own population on behalf of the bankrupt Inter-Alpha Group. This is the Ireland scenario, Take 2.

The S&P note says that the March 24-25 EU Summit results "confirm expectations that sovereign debt restructuring is a potential pre-condition to borrowing and senior unsecured government debt will be subordinated to loans from the fund. Both features are, in our view, detrimental to the commercial creditors." In other words, both countries will have to get EFSF/ESM money, and that new debt will go to the head of the line, ahead of existing bondholders, who are going to get screwed.

Sorghum Under Patent-Rights Assault. Target: Africa

March 29 (EIRNS)—Sorghum—the world's fifth-ranking staple grain, after corn, rice, wheat, and barley—is the foremost cereal food for 40 million people in Sudan (North and South, where it's called "durra"), and for many other African nations. But sorghum is now under assault, for control by the British Empire agro-cartels, through gene-patenting and licensing, in the evil model used by Monsanto for corn, soybeans, cotton, and other crops over the past 30 years of blatant subversion of law.

In 2009, an exclusive patent right to the "invention" (as the corrupt U.S. patent office now terms it) of identifying and isolating a gene of wild sorghum from Tanzania (gene IS7173) was granted to applicants at Texas A&M University and the federal agriculture departments of the United States and Brazil. In turn, these agencies have moved to obtain patents in dozens of other nations, and to sell "licenses" to cartel companies to commercially develop seed traits and "products" using IS7173, for both sorghum as a food grain, for its biofuel use, and for transplant to other grains and forest plant life. Front in line are reportedly DowAgroScience, and Oji Paper Company (Japan-based wood products giant).

Sorghum originated in North Africa, and many varieties are to be found there and in east Africa. The desirable feature of the cartel-arrogated gene, is that it equips its sorghum variety to tolerate acidity and aluminum in the soil, thus overcoming a relatively widespread problem.

Last year the government of Tanzania tried to halt this wrongful patenting process, by seeking legal obstructions against the United States and Brazil. Tanzanian authorities rightly can claim that the private-patent grant to the Tanzanian sorghum gene, violates various multinational agreements set up in the past 20 years, which were nominally to respect poor nations' rights to get something back for their botanical germ plasm. In reality, these agreements were just sops, while the agro-cartels went right ahead and wrongfully claimed control over seeds and bio-science of the means to life.

In Sudan in 2007, for example, of the 6.7 million metric tons of grain supply utilized that year, 5 million was sorghum. Worldwide, the volume of the top grains produced was corn/maize (722 million metric tons), rice (659 mmt), wheat (606 mmt), barley (133 mmt) and sorghum (63 mmt)—most of which latter in Africa.

Belgian-French Bank Dexia Heading for Meltdown?

April 1 (EIRNS)—Dexia, one of the main and most arrogant providers of "toxic loans" to cities and local governments in France and elsewhere, is increasingly the subject of doubts regarding its viability and solvency.

Dexia emerged from the merger of the Belgian Crédit Communal and the French Crédit Local, both credit institutions more or less managed by their respective states, and turned into a predatory investment bank. Dexia, through FSA, made and then lost buckets of money with the U.S. subprime massacre, and never actually recovered.

Its "legacy division" (internal "bad bank") is still stuck with 1EU38 billion of toxic, unsellable mortgage-backed securities (MBS). Dexia remains the only French bank still under government management. As a result of its current bad results, even before the end of the stress tests, on March 30, Moody's rating agency declared that it has considered lowering Dexia's A1 rating, if nothing is done in the next 90 days to reduce its dependence on acquiring new capital from covered bonds.

Yesterday, following a successful Freedom of Information Act challenge by Bloomberg, the U.S. Federal Reserve released documents disclosing what banks borrowed how much from the Fed's discount window in October 2008 at the height of the financial meltdown: While U.S. banks were borrowing surprisingly little, on Oct. 24, Dexia through its New York branch borrowed $31.5 billion, leading the pack of mostly European banks at the handout.

The total borrowing from all banks during that week climbed to $111 billion. The data showed that Germany's Commerzbank, Royal Bank of Scotland, and France's Société Générale all used the facility. Three of the major lenders, Royal Bank of Scotland, Depfa, and Dexia were propped up and had to be taken over by their governments to survive.

Dexia received billions of euros in capital and funding guarantees from France, Belgium, and Luxembourg during the credit crunch. Depfa was taken over in October 2007 by Hypo Real Estate Holding AG, which in turn was seized by the German government in 2009, and RBS, which had $11 billion outstanding from the discount window on Oct. 29, 2008, was a unit of Edinburgh-based HBOS Plc, which announced its takeover by London-based Lloyds TSB Group Plc in September 2008. Too Inter-Alpha to fail?

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