From Volume 7, Issue 43 of EIR Online, Published Oct. 21, 2008

Global Economic News

Italian Daily Broaches Hyperinflation

Oct. 15 (EIRNS)—"Hyperinflation" as a real threat was mentioned on Oct. 15 in a commentary in the Italian daily Il Giornale. "Most of us are not realizing the dimensions of the ongoing disaster, Claudio Borghi writes. "We are in a debt-based economy, and if confidence were to ultimately collapse and nobody gave out money any longer, it would be a slaughter: the existing debt could neither be rolled over, nor paid, with chain-reaction failures, zero mortgages, zero savings, and risk of hyperinflation with money equivalent to scrap paper, like Germany in the '20s."

Derivatives Bubble Is Swallowing the Nation-State

Oct. 15 (EIRNS)—The combined financial bailout measures announced over the past 48 hours by the G7 governments—on marching orders dictated by British Prime Minister Gordon Brown and his financial advisor Alan Greenspan—amount to placing "the full faith and credit" of each and every one of these governments behind the economic cancer known as the derivatives bubble. In other words, the British gameplan is for the derivatives bubble to gobble up the nation-state, leaving only the Anglo-Dutch financial empire to rule the globe. That is what is now proceeding, with some $3 trillion in government monies already thrown into the inferno.

The recent announcements involved more than throwing hundreds of billions of dollars directly into the banks as fresh capital. ("The new capital injections should help," the London Economist noted happily on Oct. 15. "In theory $250 billion of new capital leveraged by ten-to-one could support $2.5 trillion of assets in the banking system.") The other steps included:

Unlimited 100% guarantees by the Fed, the European Central Bank, and the Bank of England for the interbank lending market.

Unlimited dollar swaps supplied by the Fed to all the central banks of Europe and Japan, which has translated into each of them also issuing unlimited dollar loans to banking institutions.

* FDIC 100% insurance of payroll and similar corporate checking accounts.

* Fed direct purchases of unsecured commercial paper, in amounts and terms yet to be announced.

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