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Date Posted: 10:45:39 11/24/07 Sat
Author: part 1
Subject: November 24, 2007

ICLC BRIEFING INTERNATIONAL VERSION

[A7-47-6/BFG001]:SLG:L: [07/11/23][06:1 ]AM BRIEFING
STAND:[0.1.00/ ][1.0.00/ ][ . . / ] [23: ]AREA SECTOR INTEL
SUBJT:[3.3.00/ ][3.1.00/ ][ . . / ] [21: ]ECO-FIN
TOPIC:[210.020 :ECONOMY ]
SUB-T:[210.608 :BANKING CRISIS ]
TITLE:[AM BRIEFING SATURDAY NOV 24 2007 ] 1 of Pages
SYNOPSIS:
TO:AM BRIEFING BY: DENNIS SMALL/ssu
RE:HBPA FANNIE MAE FREDDIE MAC WASHINGTON POST
+---------------------------------------------------------------+
| |
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| MORNING BRIEFING |
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| Saturday, November 24, 2007 |
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- YOU CAN RUN, BUT YOU CAN'T HIDE BEHIND YOUR FANNIE -

The Lazard Freres investment bank's house organ -- known on
the street as the Washington Post -- on Friday had to admit in
its lead editorial, that the entire scam of pretending that the
so-called sub-prime mortgage crisis could be solved by
off-loading the garbage onto the books of Fannie Mae and Freddie
Mac, simply won't work. Under the headline "No Rescue Here," the
Post confessed that Fannie and Freddie themselves had such huge
losses, that "this is no time to pile new risks on top of
those--known and unknown--that Fannie and Freddie already bear."

Lyndon LaRouche had warned from the outset that the
Fannie/Freddie bail-out scheme would never work--for starters,
because we are dealing with a systemic blow-out of the entire
international financial system, not merely some sub-prime
mortgage problem. "Sub-prime refers to cuts of beef," LaRouche
explained today. "It's not just some mortgages which are
sub-prime; it's the whole global financial system."

And yet, despite LaRouche's repeated warnings, numerous
members of Congress under the sway of the screwed-up Speaker of
the House, Nancy Pelosi, and her Pinochetista patron Felix
Rohatyn, rejected LaRouche's proposed HBPA legislation, arguing
that they preferred to rely on their Fannies. Now what are they
going to say?

"Make a list of the congressmen," LaRouche suggested, "who
talked about an `alternative' to our proposed HBPA legislation--
an alternative which now doesn't exist. {Now} what are they going
to do? They were {wrong}. Are they going to admit their mistake?

"They said the Fannie/Freddie option was going to be true.
They based their argument against our legislation, on their
option being true. But now it's obvious that it's {not} true.
What are they going to say about this?"

So far, they haven't said anything.

But city councilmen, state legislators, and other local
officials and political leaders {are} speaking out, and are
joining the national bandwagon for LaRouche's HBPA. In
Pennsylvania, for example, in addition to the seven city councils
which have already passed HBPA resolutions, as many as another 10
are expected to sign on, by the time of the Nov. 29 hearings on
the subject in the state legislature.

The motivating issue, LaRouche has repeatedly stressed, is
not merely the horrible fate of homeowners (and renters) facing
foreclosure and eviction, but the broader need to establish a
functioning chartered banking system in the U.S., as part of a
global bankruptcy reorganization of the international financial
system.

That full, strategic scope of the crisis was again
elaborated by LaRouche in response to a journalist's query:

"The present world monetary-financial system is currently
already doomed. It could not be saved. Any contrary view would
be wishful thinking. What is now occurring is a general breakdown
crisis of the global system. The only practical question is: What
is the new system now immediately needed to replace the already
dying system with a viable form of new one?

"There is only a little time available in which the choice
of a viable new system could be made. What I have proposed in
the USA as my draft legislation to protect households and regular
chartered banks, and prevent a general breakdown-crisis, is only
a first step. Without a core agreement on long-term
treaty-agreements establishing a fixed-exchange-rate system
among keystone nations (including the USA, Russia, China), there
will be a chain-reaction collapse of the existing monetary
systems of the world, accompanied by a physical-breakdown-crisis
of the world at large.

"An earlier generation of leading professionals, from my own
generation, or the earlier one, would have known, from experience
with the period since the post-World War I Versailles system and
the FDR recovery, how to proceed. The presently reigning
generation -- that born between 1945 and 1958 (the '68er
generation) -- is so brainwashed by the effects of '68er
ideology, that they refuse to think of any system but a set of
unworkable, modest, short-term reforms of the presently doomed
system.

"The crucial problem is, that even the nearly best from my
own generation have thought in terms of not only financial
systems, but also physical-economic matters, in Cartesian, rather
than dynamic terms. Everything voted up in the U.S. Congress is
worse than the problem which the legislation was advertised as
ameliorating.

"I am not utterly pessimistic; circumstances can force a
sweeping change in thinking, if not from the so-called reigning
elites, from those who will arise to replace them.

"We must think in such terms; contrary terms are a waste of
time."

..............

- FLASH -

Los Angeles, Nov. 23--At a press conference tonight to
announce the opening of a "Forum on U.S.-China Relationship and
Peaceful Reunification of China," they introduced the speakers at
tomorrow's conference. There are speakers from the mainland,
Taiwan, and the U.S., including Lyndon LaRouche.
There were about 60 people at the press conference,
including 8-10 media representatives.
LaRouche focussed his remarks on the dollar taking another
plunge today, noting that this process will continue. It's not
good for the U.S. or China. He gave a very brief comment on the
interrelationship of the U.S. and China economically, and that we
have to reverse the antipathy towards China from some members of
the U.S. Congress. The dollar crisis can be solved, but it will
require changes in U.S. policy.
LaRouche also commented on the Peace of Westphalia.
Religious warfare from 1492 to 1648 was ended by the Westphalia
action. The one great principle on which this Treaty depends is
that each must work for the benefit of the other. As we look for
the complete unification of China, we must follow in the
footsteps of the Treat of Westphalia. And those of us who are
conscious of these matters must take leadership.
There were two questions directed to LaRouche. One was from
the head of the China Unification Committee in the Bay Area. He
asked what can the U.S. do to facilitate a better relationship
between China and Taiwan? LaRouche said it's a complicated
question: we have to change here in the United States that which
is spoiling our relationship in China. But it's a complicated and
dangerous problem.
The second question came from a woman who has a book coming
out tomorrow on U.S.-China relations. She's from Hong Kong, and
she asked LaRouche: Can't we end the U.S. arms sales to Taiwan?
Can the U.S. cancel this act? LaRouche said that the U.S. now
stands at the verge of an attack on Iran. This is a dangerous
threat. But at the same time we've had progress in Korea. We have
to get a change in U.S. policy. That means getting this
administration out. [hcs]

- NEWS SUMMARIES -

- LAROUCHE -

HBPA SUPPORT MULTIPLYING IN PENNSYLVANIA in run-up to Nov.
29 hearings in House. On Wed., Nov. 21, another Pennsylvania
municipality, the Borough Council of Canonsburg passed a
resolution unanimously to support HBPA and HR 418.

- ECONOMICS -

DEMOCRATS' FANNIE/FREDDIE "SOLUTION" TO FORECLOSURES is
insane. LPAC names the names of Congressional fools. (see slug).

FORECLOSURES IN LOUDOUN COUNTY VA INCREASE 758% in one year
(see slug).

NOW, COMPANIES THAT "INSURE" BONDS ARE GOING UNDER (see
slug).

FRENCH BANKS TRY TO CONCEAL their own super-conduits (see
slug).

- UNITED STATES -

NATIONAL SCHOOL ASSOCIATION BLASTED FOR SUPPORTING GATES AND
MURDOCH'S social networking (see slug).

- WESTERN EUROPE -

EUROPEAN UNION'S NETWORK AND INFORMATION SECURITY AGENCY
warns of security danger from Facebook et al; Murdoch expanding
his psycho-control empire (see slug).

- RUSSIA AND CIS -

RUSSIANS DISAPPOINTED BY U.S. message on missile defense
(see slug).

- SOUTHWEST ASIA -

SAUDI AND SYRIAN REPRESENTATIVES WILL ATTEND ANNAPOLIS
CONFERENCE (see slug).

DIRECTOR OF U.N. REFUGEE OPS IN GAZA SAYS ISRAEL'S SIEGE
breeds extremism and human suffering (see slug).

REPORT ALLEGES SAUDIS SEND BRAINWASHED FIGHTERS into Iraq
(see slug).

LARIJANI SPEAKS OUT ON IRAN NUCLEAR ISSUE (see slug).

TALIBAN CONTROL HALF OF AFGHANISTAN, ACCORDING TO A REPORT
FROM THE SENLIS COUNCIL (see slug)

- SOUTH & EAST ASIA -

CONGRESSIONAL COMMISSION ON CHINA RELEASES A SUICIDAL
China-bashing Report (see slug).

Chinese Govt. Report: JAPANESE-YEN CARRY TRADE PUTS CHINA AT
RISK (see slug).

Chinese Official Says, A DEVALUATION OF THE RMB WOULD DAMAGE
CHINA'S GROWTH (see slug).

LEADING DEVELOPMENTS

THE DEMOCRATS' FANNIE MAE AND FREDDIE MAC "SOLUTION" WAS
INSANE; LISTEN TO LAROUCHE

Nov. 23, 2007 (LPAC) -- Lyndon LaRouche declared that the
Democrats were "flunking" foreclosure crisis back on Aug. 29,
2007. And, he warned that those Democrats who were pumping up
Fannie Mae and Freddie Mac as a solution would have to "eat those
words, and soon," (see "House of Representatives Bill Ignores
Bank Crisis," on LPAC site).
Why did it take Lazard Freres client, the Washington Post so
long to figure it out? Finally, on Nov. 23, the Post devoted its
lead editorial to denouncing the foolish Democrats in the
Congress who are proposing that Fannie Mae and Freddie Mac, the
government-sponsored privatized agencies which back up $4.8
trillion in mortgages in the U.S., bail out the sub-prime
mortgage bubble. The Post, of course, has no better plan, and
refuses to mention the FDR-solution proposed by LaRouche, but
correctly notes that Fannie and Freddie are themselves facing a
disastrous collapse, and that "this is no time to pile new risks
on top of those -- known and unknown -- that Fannie and Freddie
already bear."
Called "No Rescue Here," the Post editorial says that with
both Fannie and Freddie reporting huge losses, "their own safety
and soundness come first." Freddie has 15% of its holdings in
sub-prime-backed junk, while Fannie has 6%, or about $42.4
billion, according to the Wall Streeet Journal, and Freddie will
have to write off at least $5 billion of its holdings next year
(in addition to the $2 billion loss reported this week). Freddie
is now only $600 million above its legal capital minimum, and
will be issuing $5 billion in preferred stock next week. Will
anyone want it? [mob]

CONGRESS' "FANNIE" EXPOSED ON MORTGAGE BLOW-OUT; WHAT ARE THEY
SAYING NOW?

Nov. 23, 2007 (LPAC)--For months, LPAC and the LaRouche Youth
Movement have encountered glazed-eyed Democrats following the
Felix Rohatyn line that Fannie Mae and Freddie Mac would solve
the foreclosure crisis, and that Lyndon LaRouche's Homeowners and
Bank Protection Act is {not needed}! But that game is over -- now
that Fannie and Freddie have already reported billions of dollars
of losses, with more to come. LPAC is naming the names and
holding these members of Congress and the Senate accountable.
House Speaker Nancy Pelosi (D-CA), and Sen. Chris Dodd
(D-CT) are among those who led the pack of fools. What are they
saying now? LPAC was unable today to reach Congressional offices
for comment. Here's {some} of the evidence of the insanity:
* PELOSI: Posted on the Speaker's website is: "Make Fannie
Mae and Freddie Mac Loans Part of the Solution: The House has
passed comprehensive legislation (H.R. 1427) to improve the
regulation of Fannie Mae and Freddie Mac, and the Federal Home
Loan Bank system. The bill raises the GSE loan limits for single
family homes in high cost areas, so that these entities could
purchase more loans in higher cost areas (lowering interest rates
for new homes and refinancings in those areas). {These
government-sponsored enterprises (GSEs) provide liquidity to the
mortgage markets by buying loans already made, freeing up money
for new mortgages and refinances. (The Senate Banking Committee
is expected to take up similar legislation this fall.)}
* Presidential candidate DODD, another Rohatyn flunkey,
repeatedly made raising the Fannie/Freddie loan levels his battle
cry. On Aug. 21, he told CNBC, this policy "would have, I think,
a positive effect of dampening down interest rate hikes..."
within the loans that these GSE's deal with.
In October, both Rep. Barney Frank (D-MA), and Sen. Charles
Schumer (D-NY), introduced legislation calling for the raising of
the portfolio caps for Fannie Mae and Freddie Mac, thereby
exposing these government sponsored agencies to bankruptcy.
Rep. Melissa Bean (D-IL) and Rep. Randy Neugenbauer (R-TX)
cosponsored a similar bill in early October.
On the Republican side, Sen. Charles Hagel (R-NE) and
cosponsors Sen. Elizabeth Dole (R-NC), Sen. Mel Martinez (R-FL),
Sen. John Sununu (R-NH) in April have introduced a bill, S. 1100,
to address the regulation of secondary mortgage market
enterprises which includes the raising of caps for Fannie and
Freddie.
LPAC will keep you posted. (jd_,mjs)

SCRANTON, PENNSYLVANIA INTENDS TO PASS THE HPBA RESOLUTION

Nov. 23, 2007 (LPAC)--Scranton, PA, intends to introduce and
pass a HPBA resolution in support of Rep. Harold James' HR 418.
Below, reprinted, is a letter sent to Rep James' office.
November 21, 2007
Representative Harold James
317 Irvis Office Building
Harrisburg, Pa. 17120
Dear Representative James:
On behalf of Scranton City Council I have been asked to
write a letter to you regarding House Bill 418.
It is with great pleasure that Scranton City Council offers
their full support for House Bill 418. It is their hope that our
Legislators will support this and take emergency action to
protect homeowners and banks by enacting a Homeowners & Banks
Protection Act.
This will be of great importance to the citizens of the City
of Scranton to protect their assets during this period of
financial unrest that is leading to home foreclosures in record
numbers.
Thank you for your attention to this matter.
If we can be of any further assistance you can contact our
office at xxx-xxxx. Signed: City Clerk. (lpac site)

FORECLOSURES IN LOUDOUN COUNTY VA INCREASE 758%

Nov. 23, 2007 (LPAC) -- RealtyTrac, the national company
monitoring foreclosures, announced that Loudoun County VA, which
Lyndon LaRouche has long labelled as "Ground Zero" of the real
estate bubble, reported a 758% increase in foreclosures for the
third quarter over 2006 -- from 125 filings in 2006 to 1,073 this
year. While the million-dollar McMansions are taking a hit, the
Washington Post notes that "foreclosures are especially evident
in communities with lower-price houses."
The national rate of increase in foreclosures over this
period is about 100%. [mob]

LAROUCHE PAC PAMPHLET TABLE OF CONTENTS

Nov. 23 (LPAC)--Here is the Table of Contents for LaRouche PAC's
forthcoming pamphlet, "The Noosphere vs. the Blogosphere: Is the
Devil in Your Laptop?"

Introduction, by the LYM
Lyndon H. LaRouche, Jr., "From Milken & Enron to Perugia:
Extreme Events!"

I. Origins of the Disease
Matthew Ogden, "The Noosphere vs. The Blogosphere"
David Christie, "INSNA: Handmaidens of British Colonialism"

II. Case Studies: The Disease Spreads
Delante Bess, "MySpace: Murdoch's Nuremburg Rally"
Nick Walsh, "Facebook: A Tombstone With a Photo Attached"
Brent Bedford, "What IS Wikipedia"
Oyang Teng, "Video Games and the Wars of the Future"
Gabriela Arroyo-Reyes, "The Cyborgs of Silicon Valley"
Nick Walsh, "Terrorism Comes to the West: The New Cult of
the Teenage Suicide Bomber"

Epilogue
Peter Martinson, "Where Your Computers Really Came From"

ECO-FIN

NOW, COMPANIES THAT "INSURE" BONDS ARE GOING UNDER

Nov. 23, 2007 (LPAC)--LPAC warned you on Aug. 12, 2007 that
"Monolines," the insurance companies that insure bonds, including
mortgage-backed securities and municipal bonds, would be going
under in the financial collapse -- and now the bail-outs are
beginning to publicly surface. But the collapse already happened.
In addition to the news reported in France on the Nataxis
dilemma (see slug), Bloomberg reports that the New York-based
monoline Financial Guaranty Insurance Co. (FGIC) was given three
weeks by the Fitch Ratings agency to come up with proof that it
should not have its rating reduced. FGIC is jointly owned by PMI
Group Inc, the U.S.'s second-largest U.S. mortgage insurers, The
Blackstone Group, and the Cypress Group. PMI insures $315 billion
worth of bonds, including $30 billion of mortgage-backed bonds
and $25 billion of collateralized debt -- but, it had only $5
billion in capital reserves as of Sept. 30. Fitch says New
York-based FGIC, the fourth-largest debt guarantor, is the most
vulnerable in the industry.
The monoline insurers are now backing $2.4 {trillion} of
securities, whose own ratings will suffer if the monolines'
ratings go down. [dea]

YEN CARRY TRADE INFECTS CHINA

Nov. 23, 2007 (LPAC)--According to a research paper by China's
Ministry of Commerce, any large unwinding of Japanese-yen carry
trades could pose significant risks to China's financial
stability and the yuan, the {Wall Street Journal} reported.
The carry trade targets certain markets, "with China being
the preferred destination," according to the essay, published by
the Policy Research Department of the Chinese Ministry of
Commerce. China's rapid economic growth, and expectations for the
yuan to appreciate, "offers arbitrage funds boundless
imagination," the essay said.
The Chinese yuan appreciated 17.4% against the Japanese yen
between July 21, 2005, and June 1, 2007. The interest-rate
differential between the yuan and yen is about two to three
percentage points, which implies at least a 21% return on bank
deposits but sharper 100% to 300% returns on investments in
Chinese property or stock markets, it said.
The attraction of such high investment returns means
speculative sources from yen arbitrage trading are coming into
China from all sorts of underground and informal channels, the
essay said. These types of money flows make it extremely
difficult for the Chinese government to control its own economy.
"This will lead to the rapid growth of China's foreign
exchange reserves, increase the yuan's appreciation pressure, and
worsen the yuan liquidity problem," it warns. (ron)

A DEVALUATION OF THE RMB WOULD DAMAGE CHINA'S GROWTH, OFFICIAL
SAYS

Nov. 23, 2007 -- A large revaluation of the renminbi would damage
China's growth, said Fan Gang, an adviser to the People's Bank of
China and a member of the Bank's Monetary Policy Committee. Such
a move would result in "large speculative capital inflows and
outflows that will kill China's growth and financial stability,"
Fan said. Fan was speaking at an investment forum in Seoul. "What
would happen after a large -- say 40% to 50% -- appreciation of
the yuan? Fan said, "Another request in two years." He was
referring to U.S. lawmakers' calls for bigger gains. Fan Gang
also indicated that the fall of the U.S. dollar was creating a
"problem" for the yuan. Fan noted the tremendous cost in job
losses if the yuan were revalued. He also noted that the
government should speed up tax changes to curb a stock market
bubble, and said that several measures in this direction were
being prepared. [WCJ]

Major Italian Bank Head Rejects Central Bank's Fantasy Model

Nov. 23, 2007 (EIRNS)--Mario Draghi, head of the Italian central
bank and of the International Stability Forum, lectured
international bankers yesterday in Frankfurt, praising the
derivative-based financial system, calling for more of the plague
that has killed the patient. More reality-oriented bankers,
however, like Unicredit CEO Alessandro Profumo, announced
yesterday that they are going out of Draghi's proposed model.
Draghi, in his speech at the Center for Financial Studies,
praised what bankers call the ``originate-to-distribute model''
(OTD), which means create (originate) derivative assets and
spread the risk (distribute) onto customers. Although admitting
that the current crisis ``is essentially a crisis of the OTD
business model,'' Draghi said that ``it is hard to imagine that
the industry will abandon securitization.'' ``As one can see, the
OTD business model has shown cracks in some of its components,
but I think it is too valuable to all parties to be abandoned.''
The former Goldman Sachs executive called for more globalization,
and further elimination of national regulations, as well as
taking over broader sections of retirement funds still held by
state agencies. He aknowledged the progress ``done by the private
sector and public authorities to dismantle existing technical and
procedural national barriers'' in the European Union, ``along the
lines suggested by the second Giovannini Report.''
Alberto Giovannini is a former executive of LTCM, the fund
that almost collapsed the system in 1998 by going bankrupt, who
has applied his recipes to the Euro system as head of a special
advisory group on the transition from national currencies to the
single currency and liberalization and integration of financial
markets in Europe.
While Draghi was flying high in virtual reality, Profumo was
announcing that his bank Unicredit, the third largest in Europe,
was abandoning the failed model pushed by Draghi. ``Previously we
had the idea of moving towards a model of origination and
distribution (OTD). This model is not there anymore,'' he told
the Financial Times. ``Mr. Profumo is at odds with others in the
industry who say that the credit squeeze and market turmoil are
temporary and will not change longer-term trends,'' the Financial
Crimes comments. [ccc]

IT'S THE GLOBAL SYSTEM! FRENCH BANKS TRIED TO CONCEAL THEIR OWN
"SUPER-CONDUIT"

Nov. 23, 2007 (LPAC) -- In spite of all the propaganda to the
contrary, the major French banks were furiously discussing -- in
September 2007 -- creating their own "super-conduit," to move
problem securities off their books, Les Echos, France's main
economic daily, revealed on Nov. 22. Les Echos tries to minimize
the French situation by stating that, unlike the MLEC proposed by
Citigroup, the French super-conduit was "only" aimed at "solving
the liquidity crisis of this summer" in the asset-backed and
mortgage-backed securities and other securitized titles in
France.
The reality, however, is that the French banking system is
up to its neck with securitized assets. BNP Paribas owns 6
conduits with EU9.6 billion in assets and more than EU10 billion
in credit lines; Societe Generale has one SIV and six conduits
with EU20 billion in assets and EU30 billion in credit lines;
Calyon, the real estate company of the Crédit Agricole, has 4
conduits with EU18 billion in assets and EU24 billion in credit
lines; and Natixis, the investment bank of the Caisse d'Epargne
and of Banques Populaires, has several conduits with EU9 billion
in assets and EU5.6 billion in credit lines.
The fact that Les Echos publishes these revelations on its
front page, under the title "Sub-prime: The Markets Plunge Into
The Crisis," indicates that with major drops in their share
values -- 30% in the last six months -- the major French banks
can no longer pretend to contain their losses until a further
date when the situation "will be better." (cbi,mjs)

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