EIR LEAD EDITORIAL FOR WEDNESDAY, MARCH 9, 2022
NATO Is Crashing the Economy and Banking System on Our Heads
March 8, 2022 (EIRNS)—As forecast with awesome precision by Lyndon LaRouche 10 years ago in a webcast, NATO is crashing the global financial system and the economy all around us, through a world war against Russia.
LaRouche broadcast in December 2011, when the regime-change wars had reached the stage of the murder of Colonel Qaddafi of Libya, that “We are now on the verge of what must be called World War III.... The intention is to eliminate two nations—Russia and China—and this means nuclear weapons; it means thermonuclear weapons.” London and Washington were threatening world war, he said.
“Remember, most of this bailout debt, the Wall Street debt, the London debt, the other bailout debt, is absolutely worthless! It can never be repaid! It never could be repaid: And the only solution, of course, for this thing, was to have this war. And if the British Empire came out as the victor in such a war, with the support of the United States, then they would cancel their debts, and they would go about their business. But, the population of the world would be reduced, greatly, through hunger, starvation, and so forth, which is about to occur anyway.”
Led by London, Wall Street and Washington, NATO is bringing the world economy down willfully and deliberately, although with “unintentional” and disastrous consequences.
Major European governments, particularly Germany’s, fear telling their people that Russia’s (unsanctioned) energy exports to Europe are banned. But they are banned in effect, by intimidation of any company that would think of buying Russian petrochemicals. See the abject apologies of Shell Oil after it dared make an oil purchase. The same is true for metals and fertilizers; Russia is a huge exporter of both. It is possible, even likely, that within a week all Russian exports of natural gas, oil, and fertilizers to Europe and the United States will have stopped. Fossil fuel prices made another huge jump over the weekend into Monday morning, reaching $125 for West Texas Intermediate oil and in Europe €375 /MWh (or roughly $3,900/1,000 m³) for natural gas, although they then lost a part of those increases. As for coal, “Monday’s price for thermal coal, used to produce electricity in coal-fired power plants, was $435 a ton. According to Jason Bostic, Vice-President of the West Virginia Coal Association, that’s the highest price in history, by about $200,” reported the West Virginia MetroNews.
Over a 48-hour period, the futures prices of half a dozen important metals, and all petrochemicals, have risen by 50-100% each. This cannot happen without hundreds, perhaps thousands of major corporations and banks receiving margin calls because their hedged short positions must be closed out at very great loss. To give an idea of who is unable to pay current margin calls: Peabody Coal, the biggest coal company of all, and it is in formal default as a result; and the China Construction Bank, one of the four biggest state commercial banks in China, which got a grace period of a few days from the London Metals Exchange to try to pay an obviously huge margin call.
In addition, a food shock has hit, due to scarcity, which may send food commodity prices up another 50% and spread famine worldwide.
The market for financing oil and gas trading is reportedly losing liquidity. Credit default swaps (CDS) on Russian debts are now reportedly considered unlikely to pay out as those debts default; CDS of non-Russian companies linked to the same commodities have suddenly jumped in price, requiring more margin calls. Most Russian commodities like metals have become unacceptable as collateral for any company’s trading credits, meaning those credits must be repaid—more margin calls. In spite of immense amounts of Fed-printed liquidity, the interest rate for borrowing against commercial paper rose by 0.5% on Monday. The repo market expert Zoltan Pozsar continues his daily assertions that the interbank lending market is starting to seize up as it did in mid-September 2019, requiring emergency liquidity of hundreds of billions from the Fed.
The futures prices will fall back from current unbelievable levels. But the underlying commodity prices will keep marching upward, and the cracks in the international debt and trade credit system will widen until they explode the credit markets. There is one way out: Fast “Glass-Steagall” bank separation, capital and exchange controls by nations; and establishment of “Hamiltonian” national credit banks in every nation.