Clinton must take on the `Casino Mondiale' by Kathleen Klenetsky

If President-elect Bill Clinton doesn't move immediately to 
crack down on the worldwide ``casino'' created by the last 10 
years' orgy of international financial speculation and deregulation, 
he won't have a snowball's chance in hell of delivering on his 
promises to revive the U.S. economy and to provide millions 
of new high-wage, high-technology jobs. Instead, he will be 
faced with the worst financial and economic collapse in modern 
times, one that will make Herbert Hoover's political fate following 
the 1929-31 collapse seem a bed of roses.
That friendly warning was issued on Nov. 10 by international 
economist and former presidential candidate Lyndon LaRouche, 
who called upon Clinton to prick the speculative bubble that 
dominates the world economy, before it forces a wholesale restructuring 
of the U.S.  economy on the model of the savage austerity implemented 
in 1930s Germany.

-  Prick the bubble -
``Contrary to the popular mythology which grips public opinion 
among the so-called reader of newspapers and viewer of television 
news and talk shows,'' said LaRouche, ``The problem is not ... 
the deficit nor even the size of the federal official debt.
``The problem of the U.S. economy is a policy of deregulation 
unleashed during 1978-79 ... by the Carter administration and 
by Paul Volcker's leadership of the Federal Reserve System, 
which created ... the biggest international financial bubble 
in world history. That bubble is what is crushing the U.S. economy 
and the U.S.  people,'' said LaRouche, ``not the debt, and not 
the federal deficit.''
Under these policies, the international economy has been turned 
into a ``Casino Mondiale,'' a world casino, in which a trillion 
dollars is gambled daily in the world financial markets.
The devastating damage which this has caused to the real economy 
was detailed by {EIR} in a feature published in the Oct. 23 
issue. The study showed how the U.S.  economy has been deliberately 
and systematically looted, especially since the early 1980s, 
through such features of this global crapshoot as the so-called 
derivatives markets, through which flow billions of dollars 
in drug money, as well as trillions in other speculative transactions, 
completely unregulated.
In his statement, LaRouche also urged Clinton not to take the 
advice of such people as Ross Perot, Sen. Warren Rudman (R-N.H.), 
and former Democratic presidential candidate Paul Tsongas, who 
insist that draconian cuts in social spending, especially in 
Social Security and Medicare, must be enforced to ``save'' the 
economy.
As LaRouche put it: ``Unless the Clinton administration changes 
its policy and recognizes that Ross Perot did not understand 
economics, did not recognize that the Fed is the one thing they 
must attack--its policies, and free trade, and GATT [the General 
Agreement on Tariffs and Trade] and this other nonsense--and 
instead follow my particular program, this country is going 
to spiral deeper and deeper into the worst depression of the 
20th century, or perhaps into something as bad as hit Central 
Europe in the 14th century.''

-  Pressure on Clinton -
The issue which LaRouche raised is the crucial one for Clinton 
to address. Wall Street and its minions have already started 
bombarding Clinton with the message that if he goes beyond the 
extremely limited ``growth program'' he has outlined--a piddling 
$20 billion per year infrastructure program combined with another 
$25 billion allocated among an investment tax credit and some 
new worker retraining and educational projects--he'll be cut 
off at the knees.
So far, the bluntest {public} message from this gang was delivered 
by the {Wall Street Journal} on Nov. 6, in a lead article headlined 
``The Vigilantes: World's Bond Buyers Gain Huge Influence Over 
U.S. Fiscal Plans.''
``Big bond investors around the world may now hold unprecedented 
power--perhaps even a veto--over U.S.  economic policy,'' the 
article began. ``Bill Clinton got a taste of that power in the 
past four weeks. Bondholders, increasingly anticipating the 
Arkansas Democrat's victory in the presidential race, pushed 
down prices of U.S.  Treasury bonds and thus pushed up long-term 
interest rates to about 7.7% from 7.3%. It was the bond market's 
way of warning Mr. Clinton that as the new President he will 
long be on probation, with his every move instantaneously scrutinized.''
(Although not mentioned in the {Journal} article, the rise in 
the bond prices coincided with rumors that Clinton was considering 
a proposal for doubling the size of his proposed public works 
program.)
The article asserted that Clinton will be allowed to implement 
some form of stimulus package. But if it means increasing the 
deficit significantly, or causes a rise in the inflation rate, 
``the reaction could be stiff and painful. With computerized 
trading linking global trading in U.S. government bonds, which 
now averages $150 billion a day, a worried investor can unload 
millions of dollars of bonds in seconds--and virtually 24 hours 
a day. If thousands of investors worldwide dump U.S. Treasury 
bonds, they could drive up long-term rates, which move inversely 
to bond prices, hobble America's economic growth and even plunge 
the nation back into recession.''
The {Journal} quoted Robert Hormats, vice chairman of the Wall 
Street investment bank Goldman, Sachs: ``The global bond market 
can be a very tough disciplinarian. Bond buyers have a very 
conservative bias, they'll be looking very hard at whatever 
Clinton does.''
Coming from Hormats, that message is indeed significant. Hormats 
not only served as an adviser to Clinton on economic policy, 
his name has also been mentioned for a top economic policy position 
in the new cabinet. Moreover, his firm, Goldman, Sachs--one 
of the key players in the derivatives markets--was the largest 
single contributor to the Clinton campaign.
The {Journal} is just one among many organs of the international 
financial elite which has been telling Clinton that he must 
move immediately to assure the ``markets'' that he won't embark 
on a growth plan beyond that which he outlined during the campaign.
Paul Tsongas, a founder of the rabidly pro-austerity Concord 
Coalition, along with Warren Rudman, Council on Foreign Relations 
Chairman Peter Peterson, and Washington attorney Lloyd Cutler, 
went on national television on Nov. 9 to tell Clinton that his 
constituency is no longer the U.S. electorate, but the international 
financial markets.
Similarly vicious advice has come from a host of media scribblers 
who speak on behalf of the Wall Street establishment. Morton 
Kondracke of the {New Republic}--which supported Mussolini's 
fascist policies--wrote in the Nov. 7 {Washington Times} that 
``to calm the financial markets, [Clinton] ought to limit his 
plans for infrastructure spending.'' Kondracke urged Clinton 
to appoint ``market-oriented moderates to key economic positions 
and include some Republicans in the groups,'' naming Rudman, 
Peterson, and Tsongas.
Former JFK adviser Ted Sorensen, writing in the Nov.  7 {New 
York Times}, urged Clinton to give a State of the Union speech 
early in his administration, to prescribe ``the unappetizing 
medicine that must be taken for several years by each segment 
of our society.''

-  Key appointments -
How is Clinton reacting? To the extent he's talked about economics 
since his election, he's reaffirmed his commitment to his initial 
program, but has also gone out of his way to pledge his allegiance 
to deficit reduction, and to reassuring the markets that he 
can be trusted.
One important indicator of the incoming administration's economic 
direction will be whom Clinton appoints to fill key economic 
positions, such as treasury secretary. Those who are reportedly 
on Clinton's short list for the posts do not augur well, however. 
In addition to Hormats, they include:
@sb^Paul Volcker, chairman of the Federal Reserve under Jimmy 
Carter and, subsequently, Ronald Reagan.  Volcker, who publicly 
endorsed the idea, first circulated by the Council on Foreign 
Relations' {1980s Project,} for the ``controlled disintegration 
of the world economy,'' is perhaps best known as the man who 
put the U.S. economy through the floor via his 20%-plus interest 
rate policy while at the Fed. Volcker is by far Wall Street's 
favorite candidate, although some in the Clinton camp fear he 
might overwhelm the fledgling administration.
@sb^Robert Rubin, a lifelong Democrat and close friend of Robert 
Strauss, who co-chairs Goldman, Sachs.  He recently stated that 
``you have to combine fiscal stimulus with long-term deficit 
reduction, and the art ot it is to make the deficit-reduction 
part credible.'' He has also asserted that Clinton would deal 
with the deficit more aggressively than the Bush administration, 
because the markets wouldn't give a Democrat the same leverage 
they would give a Republican.
@sb^Roger Altman, who met Clinton when a student at Georgetown 
University. He served as Jimmy Carter's assistant treasury secretary 
for domestic finance. He currently is a partner in the Blackstone 
Group, an investment firm headed by Peter Peterson, which specializes 
in buying up failed savings and loan institutions.
@sb^Felix Rohatyn, of Lazard Fre@agres, who created ``Big MAC,'' 
the bankers' dictatorship which has virtually run New York City 
since the mid-1970s, placating the city's creditors by slashing 
social services and stretching out infrastructure maintenance 
and investment to the point that the conditions of roads, bridges, 
and the water system have become nearly life-threatening.

>From EIR V16, #46.

-- 
         John Covici
          covici@ccs.covici.com