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<A HREF="aol://5863:126/alt.conspiracy:539872">EIR on British gold war vs.
Africa Pt. II</A>
-----
Subject: EIR on British gold war vs. Africa
From: [EMAIL PROTECTED]
Date: Sun, 25 July 1999 04:22 PM EDT
Message-id: <7nfrmf$7oe$[EMAIL PROTECTED]>
TONY PAPERT: Welcome to "EIR Talks." It's Wednesday, July
21, 1999. My name is Tony Papert. And with us in the studio is
{EIR} economics writer Richard Freeman, and we're honored to have
back on the show, after a long absence, {EIR} Africa editor Linda
de Hoyos.
LINDA DE HOYOS: Hi.
TONY PAPERT: Hi. Rich, I understand that bankers have
started stealing from their own banks on a large scale, at least
we know this across Europe.
RICHARD FREEMAN: Yes, absolutely, Tony. Although I just
wanted to ask you -- did you hear that they caught the Wall
Street rapist?
TONY PAPERT: No, what happened?
RICHARD FREEMAN: Well, what happened, was Judge Myrtle
Pennywhistle dismissed the case, saying that his behavior was
just an example of "irrational exuberance." (Laughter.)
But yes, there's been an operation which Lyndon LaRouche has
called "Operation Skim and Park." And in this operation, Eddie
George, who is the head of the court, which is the Board of
Governors of the Bank of England, has precipitated the sale of
gold so that a bunch of wealthy families -- actually, a bunch of
wealthy investment banks which are in the London Bullion Market
Association -- could steal this gold for their own private
purposes.
And so what you have, is you literally have, in the last
days of the financial system, sort of like the last days of the
Roman Empire, someone going in and looting the temple. Well, in
this case, they're simply looting the gold out of the Bank of
England with Eddie George's participation in this whole
operation.
If I could give you a couple of the details --
TONY PAPERT: Yeah, how does it work?
RICHARD FREEMAN -- to flesh this out. And let me also say
that at the price at which gold is being driven, and yesterday
gold closed at $252.80 an ounce -- $253 an ounce -- it's
impossible, even for an increasing number of mines, to stay in
operation, which means that in addition to stealing the gold,
which is the main part of this "skim-and-park" operation,
there's also the ability to steal the mines themselves, to buy
them up at greatly reduced prices, because the mine operators are
in very, very dire straits.
But what happened was this. On May 7th, the Bank of England
caught everybody by surprise, and said that they were going to
sell 415 metric tons out of 715 metric tons of their gold supply
-- more than half.
At that point, the price of gold was $289 an ounce. It has
since fallen $35 an ounce, plummeting on the news that the Bank
of England was selling this. One fellow who {Executive
Intelligence Review} spoke to, who is an officer at the Gold and
Silver Institute, told us on July 20th, he said "we were
completely astonished that the Bank of England would do this.
They had always been a supporter of gold. The gold market is in
London, where the fix is made every day, this caught us by
complete surprise."
The gold was sold to what's called the London Bullion Market
Association, which are a group of banks. Just to give you a sense
of them. J. Aaron (ph) and Company, which is a gold dealer; Bank
of Nova Scotia-Mocotta; Barclay's Bank; Credit Suisse First
Boston; J.P. Morgan, N.M. Rothschild, which is one of the five
banks that sets the gold fix and so forth; Republic National Bank
of Edmond Safra of New York; Union Bank of Switzerland, Warburg.
So they were the ones who got the gold. They were the only
ones declared eligible for the auction. It didn't go out to the
general public, they got the gold. And they simply siphoned it
off, on behalf of the oligarchy, with the coordination of Eddie
George.
Now, the announcement was May 7th, the auction was actually
on July 6th, and that's when these guys simply took this gold.
What we're looking at, is the possibility that this will simply
keep driving the price down. Let me just say, the Bank of
England, according to the World Gold Council, lost $600 million
on the value of remaining reserves on this gold sale. So the
stories will be --
TONY PAPERT: By depressing the prices.
RICHARD FREEMAN: By depressing the price from what they
actually got when they sold the gold. So the story will go out
that the Bank of England needed to sell the gold, the cover story
was, so that they could have a higher earning instrument, like
buying a U.S. Treasury security with the money they would get
from the gold sale.
Well, they just lost the British people -- not that they
care terribly -- $600 million. This was simply another example of
just parking it and skimming it off by these financial
institutions.
This is occurring, as we have identified, but I think it's
worth stating again, against the backdrop of a huge financial
crisis concerning the Tiger Fund, the Tiger Management Fund,
which on June 11th we know got into serious problems. The Federal
Reserve, the Bank of England, and above all the Bank of Japan,
intervened. And we know the Bank of Japan spent $22 billion
depressing the yen, because the hedge funds had a position where
if the yen kept rising, they would lose.
And the Tiger Fund of Julian Robertson, which is based on
Curacao, was in a very exposed position, as were probably 10 to
15 other hedge funds. So that we know that the extraordinary
action during the month of June of the Bank of Japan, spending
$10 billion on June 15th, and $22 billion during the month of
June to depress the yen -- which did not benefit the Japanese
people-- was an action to simply prevent the banking system from
going through what happened last September 23rd, when the Long
Term Capital Management went under.
And the dimensions of this indicates that the world
financial system is finished. The inside financiers know that.
Lyndon LaRouche of {Executive Intelligence Review} is working
from that standpoint, and therefore, the people who know what's
really going on, as opposed to the mickeys who are still holding
on to their stocks, realize we're in a post-collapse world.
In such a post-collapse world, the view of the oligarchy is
"steal as much as you can." Simply thievery, take whatever you
can in precious metals, also in food and other things, and hold
on to those things.
And so therefore, the problem of mid-June of the Tiger Fund,
and this gold thievery operation, this skim-and-park operation,
are actually part and parcel of the inner circles of the British
monarchy and their hangers-on preparing for a post-collapse
world.
TONY PAPERT: Let's just turn to Linda for a second. I mean,
a lot of African countries are dependent on gold production and
other precious metals. What have they done about this scheme
which has already lowered the price of gold by 10% over two
months?
LINDA DE HOYOS: Well, there's been discussion that the
International Monetary Fund should also sell its gold in order to
give debt relief to the poorest countries and the most highly
indebted poorest countries. And this has been protested by South
African President Tabong Mbeke and other heads of state. And they
are also protesting this sale of gold by England.
The reason for this, is that the fall in the price of gold,
is going to mean layoffs in the mining industries, and it's
ultimately going to hurt these countries significantly. And any
debt relief that they might get from this, is going to be offset
by the fact that their economy has just taken a major blow.
And there is discussion and layoff orders in South Africa
already in the mining industry, under conditions in which, for
example, in the South African development community in those
countries of the Southern African region, it is estimated that
unemployment is actually 80%. So what you're really
talking about, is laying off the very few workers who have actual
employment.
And there have been demonstrations in South Africa, Ghana,
Zimbabwe, South Africa, are most immediately affected. They have
the best organized industries, and there have been demonstrations
and protests to the Swiss, to the British embassies about this
issue. So, they are at loggerheads not only with Britain on this
sale of gold, but also ultimately with the IMF. If it's pushed
through, as Jeffrey Sachs wants to do, for example, that the IMF
would sell its gold in order to give debt relief to these
countries, this is really --
TONY PAPERT: It's a complete fraud.
LINDA DE HOYOS: -- you know, it's a fraud.
TONY PAPERT: Because they've already written off those
debts, and put reserves to cover them. And now they say they have
to sell gold-- it's a total lie.
RICHARD FREEMAN: Absolutely. Just to back up what Linda's
saying, according to the South African Bureau of Mines, they've
lost, since 1996, 103,000 mining jobs in South Africa. They're
now threatened with a loss of another 80,000. So that's 183,000
jobs in a very, very fragile economy which has very high
unemployment rates.
TONY PAPERT: For each worker, I was told -- I'm not sure if
it's true -- but that each worker, it coincides with your
unemployment figure, that each employed person supports an
extended family of 10 on average with his earnings. And as you
said --
LINDA DE HOYOS: Well, yes.
TONY PAPERT: -- and as you said, that's the guy who's going
to lose the job.
LINDA DE HOYOS: Oh, at least, because a lot of the mine
workers are people who have come in, just men who have come from
other countries and are supporting an entire village or something
back in the countryside.
RICHARD FREEMAN: Exactly. And the thing to look at in this,
Tony, also, is that this price that Eddie George, who people
should remember on June 10th said, before a Lord Mayor's banquet,
that he knew that last year, when people were saying that there
was a financial crisis which was completely out of control, he
said that was not just hyperbole. That was true.
So he knew this, he knows exactly what's happening with the
situation with Tiger Management. {This same Eddie George has
driven the price down below the cost of production.} The U.S.
Geological Survey has reported that in South Africa, the average
price of mining gold is $273 an ounce; in Canada, $267 an ounce,
Australia, $261 an ounce, and in the United States, $257 an
ounce. That's the average price.
So, half of are above -- or some are above, some are below.
We're now at $253 an ounce.
TONY PAPERT: Below the cost of production anyway.
RICHARD FREEMAN: Below the cost of production at least in
your major mining countries. Those four countries are among your
major mining countries.
Now, in that setting, what we're going to see is a
consolidation. And companies like Anglo American Corporation --
which, by the way, just this year has moved itself to be
headquartered in London -- which gobbled up gold during the
Central African wars, was behind some of the genocidal Central
African wars, bought up gold holdings. It can buy some more.
And the same gentleman I referenced before from the Gold and
Silver Institute, told {EIR} -- he said "Look, with prices of
gold shares down of these gold-mining companies, 30% to 35%,
we're going to see a consolidation." And he said "Look for
Barrick" -- Barrick Gold -- "Anglo American, Newmont Mining,
which is partly owned by George Soros, and Rio Tinto, which Queen
Elizabeth has an ownership share in -- look for them to begin
buying this up."
So they're going to buy {the actual source of production,}
as this shake-out continues.
TONY PAPERT: Now, turning to a broader subject, I mean, the
prospect that the system is coming to an end and can't be
sustained beyond the fall, or sometime in the next few months,
should be looked at from the point of view of Lyndon LaRouche's
famous Triple Curve, which shows financial aggregates rising at
an increasing rate on the top, physical production falling at an
increasing rate on the bottom, and then money supply rising at an
increasing rate, although less than the financial aggregates.
I know that you have, over the past few days, you have new
information on both the financial aggregates end, and also the
physical production end.
RICHARD FREEMAN: Exactly. I mean, as you said, that's
exactly correct. And the curve is a simultaneous curve. The three
curves themselves are one function, where what's happening with
the topmost curves determines what happens with the bottom, which
then affects and undermines the ability of the topmost curve to
even exist as the bottom curve collapses.
Just to give you an example. We have rates of growth of some
of these financial instruments, or at least things that are
feeding the financial instruments, of 70% per year.
I think the simplest one is to take what's called margin
debt, or customers' margin debt, which is the borrowing by people
from brokers to play the stock market.
Between 1992 and 1998, this rose from $44 billion to $141
billion of margin debt, which was a 21% rate of growth. Then,
from the end of 1998, just through May, which is the latest
figure we have of this year, it rose from $141 billion to $178
billion, an increase by $37 billion. That's a 74.9%, or 75%,
compounded annual rate.
So it's growing -- it's almost doubling in the course of
this year. And people should keep in mind that according to a
person who's looked at this, the level of margin debt, which is
what people borrow from a broker, the unofficial margin debt,
what's called the hidden margin debt, could be two to three times
that: people borrowing from their credit card to play the stock
market, borrowing against a home equity loan, borrowing against a
401(k) retirement account.
So that what you actually have, according to a fellow by the
name of Raymond Devoe (ph), who's been on Wall Street for 49
years, you have two to three times the official margin debt.
So, if they're saying now the official margin debt is $71
billion, it's actually {over $500 billion} playing the stock
market. So, those rates of growth are going on. And it's I think
an indicator, again, of the psychosis -- of the gambling
psychosis that exists in the economy.
But against that, we have some of the features of the
collapse of physical economy. And I sort of want to highlight
two. What's happening in the United States, where everyone is
being told, still, that there's a recovery going, and no such
thing at all exists, and then to look at the continent of
Ibero-America, which is a continent of over 500 million people,
to get a real sensuous sense of what happens when this topmost
curve--these financial aggregates controlled by the bankers and
oligarchical financiers, loot, literally loot, the physical basis
to keep their financial bubble going.
In the United States, the Department of Labor announced that
in June, there were 35,000 additional manufacturing jobs lost. So
that means the United States has now lost 487,000 manufacturing
jobs since January of 1998. That's a half-a-million manufacturing
jobs.
This is bigger than the labor force of entire countries. And
so, this is what the United States has lost. If you look at three
critical sectors -- take steel, for example. Steel production has
fallen 10% through the first five months of the year. Now, it's
not just because of imports, which are high, and have been
disruptive. But imports fell 6% this year during that same
timeframe.
So, why is it falling? Actual contraction of the economy.
Machine tool consumption, through the first five months of
this year, in the United States: they're down 39%. That's
almost 40%. That's a rate you would associate with Africa,
or Russia. This is happening in the United States.
And lastly, farm equipment. If you look at the two-wheel
tractors of greater than 100 horsepower, down 35% through the
first five months of this year, the sales of them, but production
follows sales closely. Look at the question of the combines and
harvesters, down 48%. That's down almost half.
So, steel, machine tool production, farm equipment -- and
America produces one-third of the world's farm equipment and
countries around the world depend on it -- these are absolutely
collapsing.
And just to mention one other thing, which I think will sort
of signify what's going on, there's a company that produces heavy
equipment. Its name is Harneschfegger (ph), and this is a company
based in the Midwest, produces huge paper-mill machines and
mining machines -- it just filed for Chapter 11 bankruptcy in the
United States a couple of weeks ago. That's the condition here.
Now, in Ibero-America -- I would just like to review, if
it's okay, a few things that were prepared by Dennis Small, who's
the editor of the Ibero-American desk for {EIR.} But to give a
sense of how widespread this is, and that we've entered a
{qualitative shift.}
What I gave from the United States, you could say "Well,
things are falling, and have been falling, and in the United
States there's been a contraction going on for 30 years. There's
{not} an economic recovery of nine years, there's a contraction
of 30 years since the post-industrial society was put in place in
the 1960s."
But if you look at it, we've entered probably another
{qualitative phase} of contraction. And the United States gives
some indication of that, and then South America, Ibero-America,
gives some others. So, we're going to just show a few graphics.
But just to indicate this.
Let's take industrial output. And unfortunately, we don't
have a simple, same thing for every country, 'cause it's a little
bit harder to get statistics in Ibero-America. But in Argentina,
for the first three months of the year, industrial production is
down 9.5%.
In Brazil, we took Sao Paulo, which is a gigantic area. If
it were an economy on its own in the world, it would be probably
one of the 20 largest economies in the world. This is the heart
of industrial production in Brazil, and Brazil is the heart of
industrial production, along with Mexico, for all of
Ibero-America.
In Sao Paulo, industrial production for the first quarter is
down 10.9%. In Colombia, industrial production for the first
quarter down 20%. In Peru, industrial production down for
February compared to last year, 11.4%. And finally, Venezuela,
just comparing December of last year to March of this year, down
20%.
TONY PAPERT: So, the physical economy every place we look,
is in a rapid decline during 1999.
RICHARD FREEMAN: Exactly, Tony.
TONY PAPERT: I mean, it was declining before, but now the
rate is far swifter.
RICHARD FREEMAN: Yes. These are all declines in 1999. Then,
look at the official unemployment rates, and people can look at
it. Argentine, 15%; Brazil, taking the same Sao Paulo district,
20%; Chile, 9.5%; Colombia, 19.5%; Venezuela, 20%. And we know
that these official unemployment rates completely understate
what's going on. So, if you have unemployment rates of 15 to 20%,
it's probably more likely 25 to 30%.
Then, to take something that {EIR} has really focused in on,
and say "Okay, well, we've got production collapsing, we've got
people out of work. What are they consuming?"
And here's what's remarkable. You've had a process, in many
of these countries, differing from different dates, of
contraction -- of their consumption levels. But what's remarkable
is, let's look just at what's happened recently.
If you take Argentina, staples -- which is your basic food
and -- basically food and a few other necessities -- has fallen,
in May of this year, compared to May of last year, 15%. In
Mexico, basic food, which is tortillas, nothing elegant, beans,
meat, corn, and chicken -- those are the major things -- that is
down 20% in the first quarter. In Peru, down 6% in January. In
Venezuela, food is down 12% in April, compared to last year.
Now, if food or staples are down 15, 20%, that means
people's living standards have fallen by that amount in this
period of time.
So then look at the currencies, what's happening with these
countries' financial situations? Well, people can look at the
next chart, which is "Devaluations." Without going through the
individual figures, if you look at Brazil, Colombia, and Ecuador,
you'll see somewhere between 27% and 42% devaluations for those
countries.
Venezuela, which is shown on this chart, has not fallen as
much. And Argentina has not fallen at all, because they have a
currency board. But Venezuela has been in the barrel. In
Argentina, there have been emergency types of actions taken to
try and support their currency. There were fears that the
Argentine financial situation could blow out when a presidential
candidate {merely raised the question that they might not pay the
debt.} He said afterwards "Get real, I didn't say that. I merely
raised it." But what type of financial markets are there when
the world financial system starts to go kaflooey when someone
simply raises that question?
TONY PAPERT: And now, as far as I know, much of the
Argentine government is touring the world to convince people that
there's no problem.
RICHARD FREEMAN: Precisely. And they're trying to get
emergency infusions into Argentina. And if they can't, or even
if they can and they're not sufficient, then the zero devaluation
is going to turn into a very large devaluation in Argentina.
Finally, I think the thing to do is to take the situation of
Mexico, which we know intimately, and which Helga Zepp LaRouche
has now visited, and galvanized last year a process of organizing
and taking the LaRouche movement very, very seriously because of
the success of this tour, and in which former President Jose
Lopez Portillo, a very courageous person who actually acted in
Mexico's national interest back in the 1980s to nationalize the
banks, has said the United States should look to Lyndon LaRouche
to what has to be done.
If you look in Argentina and in Mexico, there's I think two
distinct features to look at. First of all, there's steel --
AMSA, which is a major Mexican steel company, is now at the point
of defaulting -- not exactly, but it's at the point of defaulting
on $1.8 billion of foreign debt.
A company called Buffete (ph), which is the second-largest
construction company in Mexico, actually could not meet a payment
of $100 million Eurobond. So technically, it is in default.
Grupa Dina (ph), which is a bus and truck maker, went into
default.
So, these are major industrial concerns in Mexico going into
default. Mexico has $53 billion of payments that they have to
make of external debt. And most people jump to the conclusion and
say, "Well, this is their government debt."
Actually of the $53 billion, $27 billion is corporate debt,
and another $15 billion is bank debt. So the problem is, is that
in Mexico, the corporate and bank debt are being starved. And
we'll get to the bank debt in a second, but in terms of the
corporations, the banking system has literally contracted its
lending by over 35% since 1994. So corporations are getting less
money. That's what the problem is.
And, just to conclude on Mexico, the difficulty is that the
government spent, over the last number of years, through a
company called Foboproa (ph), which was the agency to help bail
out the banks, $65 billion. They just got another $23.7 billion
of, quote, "financial armor" to help them through next year's
elections. Everyone knows where that money is going to. They're
going to try and use that to bail out again some of the banks.
They've pumped in another $20 to $25 billion that's expected
to bail out the banks. So actually, the banks will get about $90
to $100 billion worth of money. But the corporations and the
consumption level of people -- remember, 20% falling in Mexico
-- those are the things that are being written off in this
kind of --
TONY PAPERT: Because the banks are not lending.
RICHARD FREEMAN: Precisely. Precisely.
TONY PAPERT: Now, we have reports I understand of some
military preparations for the social conditions which might
accompany a collapse of the monetary system over the next period.
RICHARD FREEMAN: Yes. I think the way to look at this is
the following. You can never look at this as strictly "a
financial question." This is a question of power. You've got a
London oligarchy, with Wall Street junior partners, but just as
nasty, who are in a complete rage. And that the thinking of this
oligarchy is that they want to destroy, still, the United States
and President Clinton. They would like to destroy Lyndon
LaRouche. They will destroy populations if they can.
{They're in a murderous rage.}
And so, when people see these financial events, or see this
incredible stealing of gold -- I mean, when a government turns
over its vaults to be looted by private citizens, it's an
indication of the disregard for any sensibilities --
TONY PAPERT: Appearance.
RICHARD FREEMAN: -- any appearance -- exactly. You're at a
level now at which they are saying "We are in the final days, we
are preparing for those final --
TONY PAPERT: "Either we steal it now, or we don't get it."
RICHARD FREEMAN: Exactly. Exactly So, what we had, was a
very interesting report which surfaced in the July 18th Sunday
Times, which is owned by Rupert Murdoch, and which also has
functioned through the years as a sort of leak sheet for the
Foreign Office -- sometimes knowing things before the British
Foreign Office even knows it itself.
And they had a story about "Operation Surety." And what
they said about "Operation Surety," is that the government is
preparing -- perhaps -- to pull troops out of Kosova, has an
emergency plan to do so. It has a plan to do so, in case of a Y2K
bug. And that if the Y2K bug got into trouble, then they would
have to deploy these troops.
They would have to be fanned out throughout London, they
would have to be deployed into financial districts and other
districts of England.
Now, if we can put aside for a second the Y2K bug, and look
at the plan -- or else this is quite a remarkable bug.
TONY PAPERT: It's interesting. The plan points to the fall,
where of course Y2K begins in January.
RICHARD FREEMAN: Yes. This is what I was going to say. The
plan starts -- exactly -- in September of 1999. And it's a plan
that would run through the end of a certain part of next year.
So, why you would need troops -- SAS troops, Special Forces
troops -- pulled out for something that won't even come till
January 1st of the year 2000, raises another point entirely,
which is that what the oligarchy is looking for, is that they may
have tired of Blair, or think that Blair is incompetent, and say
he cannot do the job, and that they are setting the conditions
for a military coup.
Now, think back. Some of our listeners and viewers may not
remember this, but way back in 1974-75, we had a similar
situation where Heathrow Airport was militarized, and many places
throughout Europe; in Italy, there was a militarization, in
France, there was a militarization. And it was a period of
extreme upheaval going on in the world, crisis all over the
place, financial crisis -- the dollar had been taken off the gold
standard in '71.
We're in a similar situation right now, and the thing to
think about is that the timing of September, is that many
insiders are telling us that the next and perhaps last phase of
this currency blowout would be September to November.
So, if you think about that, then the placement of troops
has much more to do with the murderous rage of this oligarchy
preparing to take over its own country. And if that's the case,
then think of what the preparations must be for other countries
around the world.
for more info:
http://members.aol.com/eusebius7
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Share what you know. Learn what you don't.
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Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris
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