From Volume 6, Issue 45 of EIR Online, Published Nov. 6, 2007

World Economic News

France: Hyperinflation Takes Pasta Off Store Shelves

Nov. 3 (EIRNS)—"Pasta Shortages on the Shelves" was the headline of a Le Figaro article on Oct. 31. The paper reports that in certain regions of France, several large supermarkets—Leclerc, Intermarche, and Casino—no longer offer ordinary pasta to their customers. "Will pasta become a luxury item?" asks Le Figaro "This food product, consumed on average of three times a week by the French, is suffering from the shortage of hard wheat, the essential raw material that goes into its production." Inverting cause and effect, the author says, "As a result, in four months, the price of wheat has nearly tripled, going from 170 euros to close to 500 euros a ton. Enough to provoke a mini-earthquake in this sector." The paper blames bad harvests in the wheat-growing countries, and says, "the situation is not going to get better before the next planned harvest in June."

Markets Rattled by Big Banking Losses

Nov. 1 (EIRNS)—Big losses by Citigroup, Credit-Suisse, Bank of America, and Exxon-Mobil rattled financial markets today, plunging the Dow Jones by more than 260 points at its opening, and closing with a loss of 362 points. Against the backdrop of rising oil prices, Exxon-Mobil's quarterly profits dropped 10% compared to the same period last year, which company officials attributed to higher production and exploration costs. Citigroup reported $6.5 billion in writedowns and losses for the third quarter, which will force it to cut its dividend, or sell assets in order to raise $30 billion to shore up its capital. Its shares have been downgraded to the lowest level in four years. Analysts are pointing to Citigroup's exposure to the subprime mortgage crisis as the major reason for its losses. The same is true of Credit-Suisse, whose net income fell by 31% for the third quarter. Its CEO Brady Dougan cited "extreme market conditions" sparked by record U.S. home foreclosures. Peter Horne, an analyst at the London-based Helvea SA, told Bloomberg news service "We've been led to expect horrors in investment banking and we weren't disappointed."

Brits Throw Bear Stearns CEO Under the Bus

Nov. 1 (EIRNS)—Rupert Murdoch's Wall Street Journal today levelled a page-one blast at Bear Stearns chief executive officer James Cayne, characterizing him as a Nero who fiddled while his company burned. The article portrays Cayne as off playing bridge and golf, and smoking dope, during the Bear Stearns hedge fund crisis in July. The issue here is not Cayne, but rather what appears to be a British power play at a major U.S.-domiciled investment bank. In September, a Bahamas-based British subject named Joe Lewis bought an $860 million stake in Bear Stearns, making him the investment bank's single largest stockholder. Lewis made his fortune as part of the 1992 Anglo-American bankers' raid on the European exchange rate system, where some say he made even more money than George Soros.

Bear Stearns itself has a sordid history, with deep connections to the casino business, including as the investment bank for Meyer Lansky's Resorts International, which itself grew out of a British Intelligence operation run from the Bahamas. Now we have Rupert Murdoch, the British imperial propaganda specialist, using his recently acquired Wall Street Journal, in what appears to be an effort to oust or pressure Cayne. This occurs at the same time that Merrill Lynch head Stan O'Neal has been dumped; heading the committee to select O'Neal's replacement is Merrill Lynch director Alberto Cribiore, an Italian banker who was groomed in the 1970s under the wing of Lazard synarchist André Meyer. The Brits are on the move.

Commodities Hit Record Highs; Dollar at Record Lows

Oct. 31 (EIRNS)—The hyperinflationary bailout of the collapsing world financial system, being directed by the Bank of England, the U.S. Federal Reserve Board, and other banker-run institutions, is producing, as Lyndon LaRouche forecast, a "shock-front" explosion in commodity prices. The UBS/Bloomberg CMCI Index of the prices of 26 commodities, soared to 1,271.7 on Oct. 31, its highest level ever. This commodity index rose by 3.9% during the month of October, following a 7.8% increase during September.

Several commodities are at or near their all-time highs. The price of an oil contract for December delivery, closed at $94.53 per barrel on the New York Mercantile Exchange (NYMEX), up 55% for the year 2007. The price of wheat closed at $8.06 per bushel, not far from its record high registered during September, and up 61% for the year. The price of copper, for delivery in three months on the London Metal Exchange, was $7,760 per metric ton, up 21% for the year. The price of gold closed at $800.80 per ounce on the NYMEX, the first time it has gone above $800 since Jan. 21, 1980, and up 21% for the year.

With the hyperinflationary shock front generated by hedge fund speculation, as LaRouche describes it, the primary force in the commodity price spike, a powerful secondary force is the fall in the dollar driven by the world financial collapse. The dollar, as measured against the currencies of 17 leading nations by the U.S. Dollar Index, closed at 76.45 on Oct. 31, a stunning fall of 34.2% since Jan. 1, 2002. The dollar closed at one euro equals $1.45, its lowest level ever.

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