THIS WEEK YOU NEED TO KNOW
LaRouche Assessment: Late-Summer Financial Blowout Means Danger of General War
This week, travelling to Sao Paolo, Brazil for a series of high-level meetings, Lyndon LaRouche offered his assessment that the world is facing, in the immediate weeks ahead, a period of increased political and financial turbulence, in which it will become impossible to manage the financial/economic system. LaRouche expects that this period of turbulence cannot go much beyond late August, September, or, at the latest, Octoberand that therefore, we will likely be seeing some horrible military adventure by that time.
The Anglo-American financial establishment has exhausted all financial and monetary policy options, and they know that they can't maintain the fakery around the exploding economic system much longer.
Driving this process is the fact that the world is in a new phase of the global financial bubble, a phase that began in 2000, wherein the cost of rolling over the debt, far exceeds the debt itselfexactly as was the case in Weimar Germany in 1923, the period of astronomical hyperinflation and the pauperization of an entire people, within a matter of months.
Because of this crisis, and because the financial oligarchy knows the system is a goner, LaRouche evaluates that the world can expect to confront some hair-raising military deployment by the period September-October. Thusdespite what some commentators are saying about the U.S. attack on Iraq having been put off, or this or that war danger having been reducedthe logic of the situation is such that it demands military adventure; the logic of the situation is such, therefore, that we face the danger of generalized war by September. The financial system can't go on; it's going to blow out; and therefore, this step for war is what the oligarchy is going to have to dowhether or not they themselves realize it at this moment.
In this context, the policies that the International Monetary Fund is pushingfor example, for Argentinaare completely destructive; insane, murderous policies. The conditions the IMF is forcing upon Brazil and Argentina, to take two notable cases, are creating precisely that Weimar German type of hyperinflationary situation, wherein the amount of money that must be pumped in, to roll over the debt, is rising at a more rapid rate than can be maintained.
In the context of LaRouche's assessment, the EIR economics team has been reviewing the U.S. debt picture, and one thing jumps out: Just as LaRouche indicated, the United States is going into a major inflationary spiral, driven by skyrocketing debt and debt service. According to the 2001 data, the total U.S. indebtednessgovernment, corporate, and householdwas $31.2 trillion: $7.16 trillion in government debt; $16.3 trillion in corporate debt; and $7.72 trillion in household debt. Corporate debt, led by financial institutions, rose at an incredible rate throughout the 1990s, while household debt rose steadily and sharply. This $31.2 trillion in total U.S. indebtedness compares with the total GDP of the United States, for 2001, of just $10 trillion! What's more, by the most conservative estimates, the $31.2 trillion in U.S. debt would have required, at minimum, $5.7 trillion in debt service payments. In other words, approximately 55% of the entire U.S. GDP would have gone to debt service! This ballooning debt hits at the same time that the U.S. manufacturing sector is contracting, rapidly. Figures released this week by the Commerce Department showed an 7.1% decline in manufacturing sales, compared to the same quarter in 2001, with the biggest hit coming in the durable goods sector.
And what next, when the hyperinflationary debt bubble bursts?
The U.S. mess is soon going to be made much worse by the financial and monetary explosions in Ibero-America. The Wall Street Journal was forced to admit, in a banner headline June 11, that "Brazil Faces a Threat of Financial Contagion," spreading from neighboring Argentina. The headline was an understatement, with the risk premium on Brazil's government bonds now driving them above 20% yields, and with OAS Secretary General Gaviria and the head of the Economic Committee on Latin America and the Caribbean of the UN, Jose Antonio Ocampo, both warning that the Argentine contagion has already spread to Uruguay, Paraguay, Bolivia, Brazil, and Chile.
By the end of last week, the major stock markets of the world were in disastrous straits, at the levels of last October, just after the Sept. 11 attacks. The Dow Jones index and Nasdaq are at that level; the London FTSE hit similar levels, with its technology index dropping to "another" all-time lowdown 84% drop from its bubble highs. Likewise in Germany, where the Kirch holding company completed the biggest bankruptcy in Germany since World War II.
Last Friday's financial events capped a week of disasters the "magicians" can't cover up. The U.S. dollar hit a 17-month low against the euro; "consumer confidence" in June saw its biggest drop since Sept. 11. Ironically, Attorney General John Ashcroft, mouthing off in Moscow about the arrest of the alleged "dirty bomber," Jose Padilla, was chastised by others in the Bush Administration for driving down the stock market by fomenting panic fears of new terrorist attacks; Ashcroft's panic-mongering cancelled frantic efforts by the "Plunge Protection Team" to keep the stock market afloat.
And against this backdrop of financial frenzy and chaos, the danger of generalized war grows greater.
Through the diplomatic efforts of the U.S., Russia, and China, the potential flashpoint between India and Pakistanthreatening the first use of nuclear weapons in a live battlefield situation since Hiroshimawas postponed. If the crisis doesn't re-erupt before the upcoming monsoon season (when war operations become almost impossible), it will be merely deferred, to precisely the period LaRouche has projected: September-October.
War Focus: The Mideast
But, with that postponement, attention now shifts back to the real focus of threat of waronce again, the Mideast.
While pundits speculate about the contents of President Bush's upcoming speech, in which he is to lay out his vision of how to achieve the solution of two states, Israel and Palestine, living side by side in peacethe Israelis are moving to provoke a general war in the region.
Thus, as the June 15 Washington Post reports, Israel is arming three newly acquired diesel submarines with newly designed cruise missiles capable of carrying nuclear warheads, giving Israel, for the first time, a triad of land-, sea-, and air-based nuclear weapons.
Israel is openly targetting Iran and Iraq, two of the states named by President Bush in January as part of the "axis of evil." Last month Israel launched a regional military surveillance satellite giving it an unimpeded view of military targets in Syria, Iran, and Iraq.
Meantime, the Post also reports that during his recent trip to Washington, Israeli Prime Minister Ariel Sharon told President Bush that Israel might hit Lebanon and Syria, if rocket attacks from Lebanon target northern Israel. Sharon gave the President reports of a weapons buildup along Lebanon's border with Israela buildup by Hezbollah that augurs a "second front." The danger is very great that Israel might move into Lebanon and perhaps Syria, spelling an end to any U.S. efforts to organize a political dialogue between Israel and the Palestinians, and threatening to explode into allout, generalized warfare.
Iraq Attack Is On
Second, sources in the media and sources in the Bush Administration say that the President has either signed off on, or is very close to signing off on, an operation against Iraq, to be conducted before the end of this yearwith all the attendant catastrophic consequences.
It is no wonder that political circles all over the globe, as in Brazil and the Persian Gulf, are turning to Lyndon LaRouche for the kind of leadership that only he can provide in this crisisa crisis that LaRouche alone has been forecasting for the past decades. Focus on the financial and monetary blowout, and the war danger becomes clear. The desperation of the Anglo-American financial oligarchy is at the point where they represent the greatest source of the war dangerfar beyond Saddam Hussein or Osama bin Laden.
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