At the special UN Security Council session on terrorism Sept. 30, China’s Foreign Minister Wang Yi called for the convening of a Geneva-3 conference on Syria with no preconditions and with participation from all interested parties. The convening of a third Geneva peace conference, at an appropriate time, “should be considered, and conditions conducive to the opening of such a conference should be actively created,” Wang Yi added, according to Xinhua Wednesday.

According to a Foreign Ministry statement, Wang Yi told the Security Council meeting that “the Syrian crisis has been going on for five years now.  The international community cannot look on without lifting a finger, but also ought not to interfere arbitrarily.  A political resolution for the Syrian crisis is the fundamental way out.”  Xinhua also reports that the Chinese Foreign Minister met with his Syrian counterpart, Walid al-Moallem, and told him that the world should respect Syrian sovereignty, independence, and territorial integrity.

UN special envoy to Syria, Steffan de Mistura, announced prior to the UNSC meeting that working groups for Geneva-3 were going to start work in October, focusing on security and the fight against terrorism, political and constitutional reforms, the humanitarian crisis, and economic restoration.

Also on Sept. 30, Swiss Foreign Minister Didier Burkhalter told the UNGA that the Syrian government must be included in a broad dialogue to achieve a settlement to the Syria conflict.  He called for the rapid creation of an international contact group to lead the effort.  Today, European Parliament President Martin Schulz called for a coalition including Russia and Iran to resolve the Syria conflict.  “We will have to talk to Russia and to build some kind of common strategy.  We need an international coalition which must be formed on the international level.  That coalition will definitely need Iran and Russia.” 

Polite and subtle though she always is when talking about “those people” (as in her “Greeks have to learn to pay their taxes”), IMF Managing Director Christine Lagarde can be a regular Donald Trump when it comes to pinning Wall Street’s financial crash on “others.”  She prefers to call them “emerging market economies.”

Interviewed on CNBC on the latest IMF world economic survey, Madame said that world growth was going to keep falling and that the Federal Reserve could trigger an emerging-markets crisis by raising interest rates.  “Could” is the proper finance-speak verb for referring to what is already happening.

But the debt crisis is happening primarily in the “trilateral” economies, the trans-Atlantic London-Wall Street financial system and Japan.

Leveraged debt held by the U.S.-based banks, defined as junk bonds plus loans to already over-indebted companies, has zoomed up to over $3 trillion, and to roughly $2.5 trillion in Europe. A great deal of that debt is linked to collapsing commodities, as it was to collapsing real estate prices in 2007-08.

During 2015 the “spread” of the interest rates on that debt (how much higher they are than the interest rate on AAA-grade debt) has jumped from about 4.5% to just under 7%; and when this high-yield debt is connected to “energy commodities” (e.g., oil and gas firms), the spread has risen from 7% to over 11%.  Both spreads are rising.

The constant complaints about “no liquidity in bond markets” focus on this debt.  When defaults reach a point that suddenly most of the holders of this debt (U.S. mutual funds hold $1 trillion, for example) want to try to sell it, to investment banks, other broker-dealers, and hedge funds, those sharpies will apparently be able to “cover” only 5-10% of it, total.  This has already led to short-term interbank credit being cut back in the United States and Europe, as during 2008.

The cycle is exactly as described at length in the IMF report Lagarde is talking about.  But the bond-debt problems of a Petrobras, which that report makes the rule, are the exception: This crisis is centered in Wall Street and London.  And as far as Lagarde saying it “could happen if the Fed raises interest rates,” that is her well-cultivated manner of not discussing the actual rope in the house of the hanged.