LaRouche Speaks on Surviving
the Global Financial Crash
Broadcasting via the Internet and to a live audience of 250 in Washington and at the UN in New York, Lyndon H. LaRouche, Jr. on July 24 pronounced the global "floating-rate" or "post-Bretton Woods" financial system to be in an unsalvageable collapse.
Presidential pre-candidate LaRouche denounced the Bush-Paul O'Neill economic team as not even capable of acknowledging and making attempts to stop the collapse, as President Clinton and Robert Rubin would have tried to do—ironically, a judgment which O'Neill publicly confirmed in statements made the same day. And LaRouche followed up his series of warnings in recent weeks of Israeli war plans, and of potential use of an assassination of Ariel Sharon to trigger all-out war: LaRouche stated bluntly that it is forces outside the region, typified by Zbigniew Brzezinski, who are driving for a Mideast War—to prevent Eurasian nations from carrying out the Eurasian Land-Bridge development and thus surviving this collapse. Again, his warning was notably confirmed the same day, when former Secretary of State Alexander Haig publicly urged Israel to prepare to attack and bomb Iran.
Spelling out the ideas and policies needed by nations to survive the crash, was the major focus of LaRouche's powerful presentation. It was also the focus of the hours of questions submitted to him: They came from diplomats from 25 countries; present and former U.S. elected officials; and active Americans from the labor movement to the medical profession to the Democratic Party. EIR reports here LaRouche's opening presentation, and many of the questions raised and answered live on the webcast. Subheads are added.
Lyndon LaRouche: We are now in the depths of a systemic financial crisis, that, if war does not break out between now and the end of the year, or if there are not assassinations of key figures from among international leaders during this period, by the end of year, purely and simply, the present financial system will have collapsed. And the present monetary system as well. It can not be stopped. We're at the end of the system. What we can do, is, we can save the economy, at the price of sacrificing the existing system.
What we must do is similar, in some respects, to what Franklin Roosevelt did in 1932-33, in running for President, in being elected, and inaugurating a general recovery from the policies of Calvin Coolidge and his types. That is, we must go back to the principle of the General Welfare—recognize the system has been rotten, it's failed, it's produced misery; if it were to continue, there would be no hope for the nation or the world. And therefore, we have to go back to principles that have worked previously, as Roosevelt did. And Roosevelt got us through the 1930s, and got us through the war years. Roosevelt also had a plan for the postwar period. Unfortunately, he died before the war ended, and therefore, the things that he would have done, in many parts, were not done.
For example: Roosevelt was absolutely committed, on the record, at the close of the hostilities, to eliminate from this planet, all vestiges of Dutch, Portuguese, British, and French colonialism. That was not done when he died. Truman, together with Churchill's friends, restored colonialism. The Dutch conducted a war, in what we call Indonesia, to restore colonialism. The British sent Japanese troops in to reoccupy Indochina, to hold it for the French, to restore colonialism there. The intention to free India was postponed one year, with very serious consequences, as a result of that. And so forth and so on.
But, nonetheless, what Roosevelt did, continued to the degree that we had, in the relations among the United States, Western Europe, Japan, to some degree South and Central America, and so forth, we had a postwar system that worked. It was called a Bretton Woods system. It was based on fixed exchange rates; it was based on capital controls; it was based on credit controls; it was based on exchange controls; it was based on financial controls; it was based on low interest rates—that is, basically between 1% and 2% prime interest for international long-term loans.
Through that system, up until the middle of the 1960s, Europe prospered, and the United States prospered as a result of helping Europe. Some nations in South and Central America benefitted significantly from that system, despite the abuses which occurred under it.
Post-1967 System Does Not Work
However, after the death of Kennedy, the assassination of Kennedy, and after the introduction of the Vietnam War, and after the appearance of the Wilson government in England, changes were made in the world system which led to a disaster. We can say, that as far as relations between the Americas and Europe, the Americas and Japan, during that period, it worked, with all the shortcomings. What we can also say, is that, since 1967, it has not worked. Therefore, what we have is the wrong system. We had a system which from 1945, the end of the war, to the middle of the 1960s, worked for us, who were part of the system. We've had a system since 1967, since Harold Wilson pulled down the pound in November of 1967, and since the dollar followed with a collapse in March of that next year, since that time, we've had a system that does not work, and has never worked.
In 1971, Nixon destroyed the system, by going to a floating-exchange-rate system, rather than the fixed-exchange-rate system. Under Carter, we destroyed, pretty much, everything that Nixon had not destroyed. And the U.S. economy has been going down ever since.
For example: As we mentioned before, if you look at the condition of life of the lower 80% of U.S. family-income brackets, the conditions of life today are far worse than they were in 1977. Since Carter became President, we've had, consistently, a tragedy, in terms of the conditions of life of our people, particularly those in the lower 80% of family-income brackets. We've lost our railroads. We've lost our transportation systems. We've lost our industries. We've lost our power systems. We've lost our medical system. We've lost our health-care system, as a result of the measure that Nixon put in, with the help of Moynihan, at the beginning of the 1970s, the HMO system, which destroyed the Hill-Burton system that worked so well for us. So, we have been destroyed, by policies, and by a philosophy of policy-making, which has ruled us for 35 years.
With the collapse of the Soviet Union, the people in Washington and New York and London, decided they had an opportunity, a free hand to rule, and loot the world. And the rate of destruction of the world's economy has accelerated since 1989. What should have been a triumph for cooperation, among two systems that had been at each other's throats, and now had a chance to cooperate, was turned into a folly.
No Recovery Under This System
So, we don't have a cyclical crisis. We don't have a system that has problems, such that when it goes down, it will bounce back. There will be no recovery from this system, under this system. As long as the IMF and its present policies continue to be in authority, as long as the current policies of the U.S. government continue to reign, as long as Wall Street and the Federal Reserve system continue to reign, there is no "up" for anyone in the United States, not even George Bush—who may not be President for long. Some day he may get disgusted with his inability to function, and quit.
Now, part of the problem is the fact that the system is no good. It's been no good for a long time. But economic systems are funny things.
For example: They don't collapse all at once, at the moment you make bad policies. For example, in the case of long-term infrastructure investments, in terms of education policies. It takes a generation to educate a child, to develop a child into a functioning adult. It takes a generation, or about 25 years or so, to realize the full benefits of infrastructure policies. Ten to 15 years to see an investment program in industry work out, and balance out. So that you don't see the effects of bad policies immediately. You see the effects down the line, when the failure to make certain investments catches up with you. When allowing certain industries to collapse, catches up with you. When you let the agricultural system collapse, that it catches up with you. When your rail systems collapse, because you didn't maintain them. When your power systems collapse, because you didn't maintain them—all in the name of deregulation.
Then later, down the line, the bad policies you made, 10, 15, 25 years ago, catch up with you. And then, all at once, you're faced with a terrible crisis. And silly people say, "Don't worry, it will bounce back. There's always an upturn after a downturn. It's always that way. Don't talk about a depression—you'll talk us into a depression! Even if you know the system is collapsing, lie! Say you believe it's going to go up. Because maybe if you say you believe strong enough, maybe the system will go up." That's the kind of insanity you hear around you, these days. Lies.
All right, the system is finished. Under the present system, under the present policies of the United States—economic policies; under our infrastructure policies, under every policy proposed by the Bush Administration, this nation is going to Hell, and most of the world with it. So, those things have to be changed suddenly, and we have to go back to a standard that worked. Because you can't change things all at once. You have to take, from past experience, those things that worked, and use those as model for the policies you want people to quickly adopt. That's why I say we're going to have to go back to a Bretton Woods model of the type we had during the period 1945 to the middle of the 1960s. Only this time, instead of just having the United States, the Americas, Western Europe, involved, we have to bring the entire world into a cooperative system of that type.
Now, we have a good chance. As some of you know, I was just in Russia, invited to lead the testimony to the Economic Commission of the Russian Parliament, the Duma, which is a committee that is headed by one of the leading economists of Russia, Sergei Glazyev. And we discussed these things there, as we had discussed these policies earlier.
You may have observed that President Putin of Russia has been busy lately. He was in China, where he negotiated a new agreement among a group of nations, which is called the Shanghai Cooperation Organization. That Russia and India and China, other countries, are working together to build a new system of cooperation in Eurasia. Russia is reaching out to Eastern Europe, to Germany, to Italy, to France—with partners in Europe, to create a Eurasia-wide system, which will include things such as: magnetic levitation railway systems, sooner or later, connecting Rotterdam in the Netherlands, to Shanghai.
Already, the Chinese government has committed itself to build magnetic levitation rail systems from Shanghai City to the airport. A similar plan is in existence between Beijing, the capital of China, and its airport. There's also an intention to extend that system, to connect Shanghai to Beijing. There are other large-scale transportation systems planned, across Eurasia. There's an intention to develop corridors of development, through large-scale infrastructure development, across Eurasia. Japan is negotiating with Russia, on developing a bridge, from the mainland of Russia, to the northern islands of Japan, the Sakhalin island, down into Japan.
We have the possibility, now, of connecting Pusan, the southern part of Korea, to the mainland, main islands of Japan. We have, if we get peace in the North—as it's being sought by the President of South Korea, with North Korea—the railroad system of Korea will not only be linked together, it will be connecting to China, and will be connecting also to the Trans-Siberian Railroad network. So you will begin to have the emergence of systems of transportation and development along those corridors, from the Pacific Ocean to the Atlantic Ocean, across Eurasia.
This is a part of the world which dominates the world's population. China has who knows how many billion now—it's 1.2, 1.3 billion people, or more. India is now over a billion people. Pakistan is a large country. Bangladesh is a large country. The nations of Southeast Asia, this group of ten, in Southeast Asia, are planning to cooperate. Japan is interested in cooperation, with the nations of Southeast Asia. Korea wants to be part of that cooperation. And so, what is afoot now is, nations such as around the triangle of India, China, and Russia, systems of cooperation throughout all Eurasia, are in the process of being built, or already established, and to be developed, which will transform this planet.
A New Bretton Woods
Now, what does that mean?
If we create a new Bretton Woods system, by doing that kind of reform, we can save the economies. But we need a lot of growth. How are we going to get growth?
We have to have a system of low-cost credit, on the long term, so that we can produce, sell, and deliver to countries that need high technology for their development for their people, on the 25-year term, that sort of thing. We will turn countries which are now going bankrupt, like the United States, like the nations of Western Europe, Germany, France, Italy, nations that are going bankrupt in the West—. The United States is a bankrupt nation—don't kid yourself, don't believe a thing O'Neill tells you. He's either lying, or he doesn't know what he's talking about. This nation is bankrupt.
South America—look what's happened there. Just think back 10-20 years. Think about the nations in Central and South America that you used to consider independent and powerful nations in their own right.
Mexico, for example—not the same. Panama—it doesn't exist any more. Ecuador doesn't really exist; they closed it down—they call it dollarization. Colombia is destroyed. Venezuela is on the way to be destroyed. Peru was marked for destruction, and was being destroyed before Clinton left office. Argentina's disintegrating. Brazil is on the chopping block for disintegration. Chile's ready for a financial collapse. Bolivia's in trouble; Paraguay and Uruguay: in big trouble.
Look at Africa. Africa is a case of genocide, condoned by the United States, and conducted by the British and people in the United States. It's pure genocide. This is not an error. These are not local wars—this is intentional genocide!
For example: The former President of the United States, George Bush—the father of the present Bush, in that collection of family trees—in partnership with the former Prime Minister of Canada, was involved with a firm called Barrick Gold. They're sitting in part of Congo, where there are diamonds and there's a lot of gold. And they're looting that area, for profit, and maintaining their looting with the aid of private armies. Throughout Africa, private armies, owned by large multinational corporations, and including people, British Commonwealth figures, like Mulroney, or U.S. figures like Bush, are engaged in witting genocide against the peoples of Africa, for the purpose of trying to make a profit out of stealing their raw materials, and reducing the population. That's the situation.
So, we have a rotten world. But we have all these people in China; they wish to grow, they need to grow. They need infrastructural development, they need technology. They've got some technology, they've got some good technology. But they need more of it, because they have a lot of people, and a lot of poor people, and a lot of interior regions that need development. India's a somewhat different case, but it has a similar need. Africa, we could do something about, if we had something going in Eurasia. I've had plans on this for years. They're plans that will work, and can work, if Africa's given a chance.
What we have to do—in addition to creating a system that works, like the old Bretton Woods system, between 1945 and the middle of the 1960s—. We have to have a program, a development program, an economic development program, of the kind that Franklin Roosevelt represented in his time. We have to take a mission—say, a 25-year period—and we have to say, what are we going to do for humanity, during the coming generation of 25 years? What we should say, is, we are going to rebuild our industries, to produce the kinds of products that are needed in parts of the world, that need the kind of things we ought to produce. And we're going to create a system of credit—not money-lending—but credit, where they can come to our store, and, on credit, buy what they need today, to build a future for tomorrow.
That relationship can be the security of the next generation of our people. It's also true for Europe, Western Europe. Russia is in-between. Russia is a peculiar nation. It's the nation which is the only really Eurasian nation of the world. That is, since the Russians freed themselves in the Fifteenth Century from the last vestiges of Mongol occupation, Russia became a nation which was European on the one side, but also Asian. It's the typical Eurasian nation.
This nation has several links to Southeast Asia, South Asia. One, it has a middle area of Asia, which is poorly developed, but with some vast resources. It has water resources, which are underdeveloped. If we make a connection from Europe, as by rail links and other links, across Eurasia, to China, down to India, into Japan, and so forth, this means that we will have opened up the last real, big frontier of this planet, for development.
This is an area with rich natural resources, but they're not rich unless you can develop them. To develop natural reources, you require infrastructure. You require the technology. With the cooperation among Western Europe, Russia, China, India, and the other countries of Asia, we can do that. And the United States should be a leading partner with that kind of effort. And with that kind of effort by the United States, in cooperation with the nations of Eurasia, we will have the power, the economic power on this planet, to bring justice to areas like Africa, and rebuild Central and South America.
That should be our program.
Why Not a Qualified President?
Now, the problem today is twofold. First of all, we have a government that doesn't work. We don't seem to be able to elect Presidents that are worth anything, recently. We had a choice between Gore and Bush, and both were equally disastrous, in different ways, but both were a disaster, a pure disaster.
Why can't we choose a person for President who's qualified for the job? Why can't we select someone for President who's not trying to please the suburbanites, who are now going bankrupt because their Internet investments are collapsing? Why don't we have a President who meets the needs of all of the people, and their posterity? Why don't we choose one, on the basis of that kind of selection, one who is committed to all of the people and posterity, to the nation, and one who's competent to do the job? Why do we keep picking people who are dedicated to the wrong purpose, dedicated to a particular interest, not the nation as a whole, and people who aren't even competent to do an incompetent job?
What's happened is this: The governments in Western Europe are not too good these days. They're not like de Gaulle, they're not tough people, like Adenauer in Germany, or the people we had in Italy, and so forth. These are pretty poor governments. Maybe not as bad as the one we have in Washington right now—the President we have in Washington right now—but they're pretty bad.
One of the things that bothers the world, and threatens the world, is that not only do we have a crisis, but we have a situation now, which is worse than if this crisis had hit while Clinton was still President. Be frank about this. You may have your criticisms of Bill Clinton. But while Bill Clinton and Bob Rubin, his Treasury Secretary, were on the job, and if you had a crisis hitting the world and the nation, such as the crisis hitting the United States right now—and we're in a collapse phase, don't kid yourself. There's not going to be a bounce-back on this one. There is no recovery in sight under the present policies—it will never happen. We can have a recovery, but you're going to have to change the policies.
But, under Clinton, and Bob Rubin, they might not have had the ability or willingness to take the measures needed to deal with the problem, but at least you would have had someone in charge who would have responded to the fact that we have a crisis. They might have made a mess of it, but at least they would have tried. And people would have a sense, that there's somebody in the White House, who had the brains to recognize the problem, and at least was going to try to do something about it.
We have a situation now—the worst financial crisis in modern American history, worse than anything we experienced in the Twentieth Century, and you have O'Neill, Bush's man: "We're not going to do anything about it," they say. Bush, the most under-misestimated man in the White House: "We're not going to do anything about it. We're just going to go on, with our program. We're going to stick to our program," says Bush. And Europe reacts the same way.
You have, in a sense, the most powerful nation on this planet, the United States, and the President isn't worth shucks.
Now, that's not merely an indictment of the Presidency; that is a problem for the world. The world has trouble pulling itself together. The United States has been a dominant power in the world for some time, especially since World War II. The world looks to the United States, as a willing partner to talk to, about the common problems among nations, and expects the United States to respond, with some degree of understanding, and competence, to the fact that there's a crisis going on. And do something about it. And you've got a Presidency now that doesn't care. It just plain doesn't care. And if it cared, it'd probably be worse, because it doesn't know what to do—and it'd probably do the wrong thing.
Which is demoralizing the world. We're in a very dangerous situation. As I said before, if a war breaks out, or one of several key leaders of nations in the world is killed, assassinated, in the coming weeks and months, then you might have an incalculable situation in the world, where you couldn't tell exactly what was going to happen.
G-8 Took No Important Action
For example, right now, you have Ariel Sharon, the present dictator of Israel, who's committed to a war in the Middle East. It's not because there's some issue there. It's because he has a policy of going for war, a policy of killing people. And there are people behind Sharon, if he were assassinated, who are much worse. Worse people. I'm even afraid that he might be assassinated, in which case something might be unleashed in the Middle East that's worse than Sharon.
What do you say? You've got all these nations in Europe. You've got the government of the United States. Can't they do something to influence the Israelis to stop making this war? Not George Bush. Not George Bush. Won't do it. Oh, he might make a few noises, but he's not going to do anything. They had a discussion at the so-called G-8 meeting in Genoa, where you had these people floating on a ship while there were riots going on in the city. They didn't do anything. They said they were going to do something. But they didn't do anything. They just watched the riot and said, maybe we won't have any more of these meetings.
That's the situation. We have a sense of the world going to Hell, and no one's in charge.
So, the issue here is, where in the United States, are we going to find somebody who represents the role that the United States must play? We've got some good things going in the world. I've been involved in this. I've been dealing with people in foreign countries, in many parts of the world, influential people, people who make and shape policy. We have policies that can be accepted and will work. We have to have somebody in the United States, who represents that policy—forget who's President right now—someone who represents that policy, around which people in the United States can unify, to say, "The United States needs this policy." And says that to the people in Europe, says that to the people in Russia, says it to the people in China, and so forth.
Under those conditions, we can reach agreements. For example, the New Bretton Woods system. We had leading politicians in Italy, members of government, Senators and Deputies, who have supported me, publicly, internationally, on a resolution to have a New Bretton Woods system, that is, a return to the old Bretton Woods system, or something like it. That exists. But we need something in the United States.
There are many Democrats, as leaders, whom I respect as persons. But right now, they're not doing their job. The Democratic Party has no clear leadership. When Senator Lieberman, who was the Vice Presidential candidate with Gore, is sitting in the middle of the biggest economic crisis the United States has faced, and says, "It's not the economy, it's the culture," "We've got to join the Moral Majority," he says, in effect—when Democrats line up behind that kind of leadership, you say, nobody's paying attention to reality. There is no leadership.
We had a fight on this, and it's still going on, on this D.C. General Hospital. The health-care system of the United States is being destroyed, systematically. That means, people are being killed! You kill the health-care system, you shut down public hospitals, you do what's being done with the HMOs: You are killing people! You are killing Americans! Systematically, calculably. Don't say it's good policy. Don't say it's necessary for free trade, or this or that. It's murder! And they're doing it.
Americans don't like that. We got a lot of support for the D.C. hospital. We had members of the Senate, other members of Congress, who supported it, Democrats, and others. And then suddenly, they backed away! And let D.C. General hang, saying "Well, it's a done deal. There's nothing we can do about it." And people are dying as a result of that!
Now, I have a lot of personal regard for some of these Democrats who backed away. But they are not showing leadership! Leadership does not mean waiting until you're elected to be President to lead the people. Leadership means seizing the issue, and mobilizing the people, mobilizing politicians. mobilizing others, as a political force to get our government to take the action that our government must take.
Government is leadership of the people. It comes from leadership of the people, and that's where we stand.
War To Stop Eurasian Land-Bridge?
Now, what's the danger, the biggest danger at this moment?
First of all, if what I've proposed is not done, I can guarantee you, that either we're going to be in a war, by the end of the year, or you're going to see a depression beyond what most of you believe possible, an economic depression, and chaos.
But there's something worse than that. And let's look again at this Israel situation. Don't try to understand the problem in Israel and the Middle East from the standpoint of the Israelis or Arabs. That's not where the problem lies. The Israelis are the Israelis, and the Arabs are the Arabs. But they are not the cause of the great danger which may come out of the Middle East war.
The problem is this: Call it the "guns of August." Now, if you look back into the Twentieth Century, you'll recall that in August of 1914, a great world war began, a war that could be seen coming, that was planned by most of the great powers. The first planner of the war was Britain; the British monarchy planned World War I. Not the Germans, the British monarchy. The British monarchy got an agreement with the French, got an agreement with the Russians, and conducted some Balkan wars to heat the story up, and got World War I started—to stop economic cooperation throughout Eurasia.
It was a horrible war, and Europe has never fully recovered from the effects of that war, to this day.
Then, in August of 1939, as the 1st of September approached, the Wehrmacht under Hitler moved to launch World War II, which was also another geopolitical war, to destroy the possibility of cooperation in Eurasia.
Now, we have the possibility of cooperation in Eurasia. You look at the agreements which I've seen, which some of you should have seen, the agreements among China, discussions with Japan, India, and so forth, Russia, other nations—you see that there's now a thrust for cooperation in large-scale projects, and trade projects, which will build up Eurasia, which will really start a world economic recovery. Somebody wants to stop it. August is now approaching. For various reasons, August is a good month to start a war, in Eurasia. And we're on the edge of a war.
The war is not coming from the Israelis. The war is certainly not coming from the Arabs, who don't want any war. The war is being orchestrated by people chiefly in the United Kingdom, Australia, and the United States. There are people here who say, if we do not; the only way—. Remember, Zbigniew Brzezinski is one of these people. Brzezinski has said, the only way to prevent China, Russia, India, and so forth, from cooperating in Eurasian economic cooperation, is to do what? Is to start a war between Islam, and the West. And how do you trigger such a war? You trigger it by getting a religious war started in the Middle East.
That is, if the war in the Middle East explodes, as it's about to explode—it could explode on Sunday—if that war explodes, and let's suppose that Sharon is assassinated by some Israeli madman in the process, and blames it on some Arabs, then the madmen who will take over in the heat of battle in Israel, will not hesitate to use weapons of mass destruction, against targetted cities, such as Damascus, Baghdad, and Tehran, which are already targetted.
If that were to happen, and were to happen in the context of an Israeli seizing of the mosque site in Jerusalem, you would have a general religious war—which would rage in repercussions throughout Eurasia, and could destroy Eurasia, and lead to incalculable results. There are some people in powerful positions, in the United Kingdom, and in powerful positions inside the United States, who want that to happen. These people include Zbigniew Brzezinski, who has stated his position on this repeatedly.
And therefore, what you need at this point, is, we need a movement for leadership inside the United States, which says, "We in the United States are not going to tolerate this." People who will not fink out, as they did on the D.C. General Hospital fight. People who will not fink out as they did on the question of putting caps on energy prices. Who will not fink out on the fight to restore a regulated system of energy supply in the interest of the general welfare.
I assure you that if the United States, if a movement in the United States, emerges around that idea, you will have support in other parts of the world, and if the United States puts some serious political muscle behind the determination to avoid that war, it can be stopped. The guns of August can be stopped.
Look at the history of European civilization during my lifetime, which is significant. We've had two world wars, which have almost destroyed civilization in each case. We're now in a situation where the world economy has been destroyed. The economy of the United States has been largely destroyed by the system which is now operating. The economies of Europe, destroyed; of South America, Central America, are either destroyed, or being destroyed. Civilization is in danger. And now we come again to the point that August is coming, and the threat of a new war, this time perhaps a religious war, is about to break out.
It's time in the United States, that some of us step forward with me, and say, "We're not going to let it happen."
And I think that if the American people see the kind of leadership that will not capitulate, as too many otherwise good Democrats capitulated on D.C. General, as too many good Democrats capitulated on repeal of the Voting Rights Act of 1965, as they did in 2000, that the world will pay attention. And I know the world—they'll pay attention. And I'm getting a lot of heat from around the world, on me personally, "Please do something about your country," and I'm appealing to you, right now, to help me do it.