From Volume 37, Issue 48 of EIR Online, Published Dec. 10, 2010

Ibero-American News Digest

LaRouche: The BRIC Is Bringing Down the Global Financial System with It

Dec. 4 (EIRNS)—The whole international financial system is coming down, in a chain-reaction fashion, and it is happening now, Lyndon LaRouche stressed today. The emerging picture of the imploding Brazilian credit bubble and banking system, LaRouche noted, is simply making clear what I've said all along: that the BRIC—the Brazil, Russia, India, China grouping that Goldman Sachs created to keep the Big Three Asian giants in London's orbit—is the weak point in the Ponzi scheme set up by the Inter-Alpha Group of banks going back to 1971, and things tend to break apart at their weakest point.

The whole world system, centered on the Inter-Alpha Group, is now coming down. There is nothing they can do to prevent it, except to try to establish fascist dictatorships, but that won't work either at this point—we are beyond that. The only thing that will actually work, LaRouche stressed, is a global Glass-Steagall reorganization, the American System of credit. But the guys in charge today won't do it, and prefer to bring the whole world down with them.

I could handle it, LaRouche said, but anything less than my program will not work.

All crashes go like this, LaRouche added. The BRIC cover-story was used to sucker in certain Cayman Island-based Russians and others to the carry-trade Ponzi scheme. That has been stretched beyond the limit, in order to create a phony appearance of value behind the Inter-Alpha Group banks. So the weakest point was used to cover up the vulnerabilities of the largest parts of the scheme. Then, when the weakest link breaks, it detonates the biggest portions, and everything goes.

The BRIC and the Brazilian carry trade were always a cover-up, LaRouche said; they are a kind of financial transvestite hiding very ugly things underneath. And the Brazil illusion could only be maintained with a special kind of dictatorship, which is not possible elsewhere at this point.

So the Brazil meltdown is a signal that the whole system is coming down. Things are crumbling at the edges, but it's all coming down now.

Brazilian 'Bolha' Imploding

Dec. 4 (EIRNS)—It would appear that a new financial instrument is all the rage in world financial markets of late, including in trendy Brazil. After the MBS and the CDS, we now have the "LCS"—which stands for "Lie, Cheat, and Steal."

It turns out that Brazil's 20th-largest bank, Banco Panamericano, had to be bailed out by the country's Central Bank on Nov. 9 for a modest $1.5 billion, because it had committed the indiscretion of selling portions of its loan portfolio to other banks—two and three times—and also left those loans on their own books as assets! This creative accounting was overseen by the international accounting firm Deloitte and Touche, whose major client in Brazil is the Inter-Alpha Group's Santander Bank.

Banco Panamericano ran into trouble when its non-performing loan ratio broke 20%, mainly due to heavy involvement in the "check-off" payment consumer credit bubble which has spread across the Brazilian banking system. Typical are automobile and motorcycle loans with terms of 84 months. This domestic credit bubble, known as the "Bolha Brasil," has grown from 20% to 45% of GDP, over the last few years.

So what's the difference between multiple listings of non-performing loans as assets on different sets of books in Brazil, and the U.S. mortgage market? Absolutely none.

Everything indicates that what Banco Panamericano did was fairly standard across the Brazilian banking system. Bloomberg reported on Nov. 25 that at least two of Brazil's biggest banks are now reviewing their internal rules after the Panamericano scandal. Central Bank head Henrique Meirelles, former president of BankBoston, said Panamericano was bailed out to avoid wider risk to the banking system as a whole. The head of the Brazilian government's bank guarantee fund found it necessary to insist that there was "absolutely no evidence" that banks were having trouble selling loan portfolios to each other.

This whole thing is a total fraud, LaRouche commented today. This is what speculators always do: You have to consider the psychological side of the bubble. They get in deep, and then they try to cover up their thievery. It's classic: Some weak bank gets out on thin ice, and they can't dump it, and so it ends up dragging everything else down with it. But the cause of the crisis is not the weak bank; it's the bankruptcy of the entire system.

Estimated 1 Million Cases in Haiti's Cholera 'Tsunami'

Dec. 1 (EIRNS)—While the Pan American Health Organization (PAHO) asserted today that Haiti's cholera epidemic is now "less lethal," with a smaller percentage of cases dying today than at the start of the epidemic, a different, and probably more accurate view comes from Dr. James Wilson, executive director and co-founder of Praecipio International, an NGO focussing on "operational biosurveillance" from the standpoint of national security. As one Canadian doctor put it, Haiti has only seen the first wave of the cholera "tsunami."

Dr. Wilson, who has attacked USAID and the incompetent and negligent U.S. government response to Haiti, warns that "the upper bound of the estimated total (sub-clinical and clinically apparent) case counts to be nearly 1 million," adding, however, that "from a practical operations point of view, these estimates are academic. The bottom line is the epidemic continues to spread completely out of control."

This figure is based on information gathered by HEAS, the Haiti Epidemic Advisory System, a network of Praecipio's "operational biosurveillance" partners in Haiti.

What is not reflected in the official numbers, Wilson argues, "is the continually documented 'first contact' pattern of daily clinical mortality seen by rural communities and urban environments such as Gonaives." There remain "vast areas of the mountainous, rural areas of Haiti (i.e., two-thirds of the country) that are 'off the grid' where people die in their homes without access to care. Forced walking distances from 8 hours to infinity are the reality for these people. Being forced to walk on a difficult mountain trail while medically deteriorating with cholera is a major facilitator of death.... A silent death where lack of reporting does not indicate 'no death.' "

"In some areas of Haiti, we have confirmation that in-patient statistics are under-reported by as much as 400%," Wilson reports. "In many areas, we are documenting outbreaks that are not being accounted for in the official statistics...."

An HEAS map of Haiti's cholera epidemic, on Praecipio's website, divides the country into red, orange, and yellow regions. Of the three, HEAS describes yellow—Haiti's southern peninsula—as the "next battle front." Cholera has been confirmed there at multiple sites, but the majority of the international response is focussed on Port-au-Prince, Artibonite, and, more recently, the North. "The South is relatively untouched in terms of response," but HEAS suspects "far more activity than what is reported because of very low NGO presence. We also note very large time lags in official reporting from this area. The southern peninsula is the next battle front, where we expect the 'war' to go very badly given the low availability of response assets."

Dark Ages Breakdown in Haiti

Dec. 3 (EIRNS)—As cholera rampages through Haiti's rural areas, where clean water and sanitation infrastructure are nonexistent, reports of actions reflecting a Dark Age breakdown have begun to circulate. Last week, in a village in the remote Grand Anse region of southwestern Haiti, a machete-wielding mob killed 12 people and burned their corpses in the streets, charging that they had used voodoo to create a magic powder that spread cholera.

According to a local prosecutor, similar incidents have occurred in the surrounding towns of Chambellan, Marfranc, Jeremie, and Dame Marie, all in Haiti's southwest.

The likelihood of such incidents would have been far less, had Barack Obama taken up Lyndon LaRouche's proposal last February to order an emergency deployment of the Army Corps of Engineers and affiliated agencies, to deal with the post-earthquake disaster, and later, the cholera outbreak.

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