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This presentation appears in the January 23, 2009 issue of Executive Intelligence Review.

LaRouche's Historic Webcast:
President Obama's Options

Lyndon LaRouche addressed an international Webcast Jan. 16, just days before the historic inauguration of President Barack Obama; it was simultaneously carried on the Internet at, the website of the LaRouche Political Action Committee (LPAC), where the webcast and discussion are on file. Here are his opening remarks, followed by an excerpt from the discussion which followed. The event was moderated by LaRouche's spokeswoman Debra Freeman. A PDF version of this webcast and part of the discussion published below,can be found here.

Debra Freeman: Good afternoon. My name is Debra Freeman, and on behalf of LaRouche PAC, I'd like to welcome all of you to today's historic presentation. As I think most of our listeners know, Mr. LaRouche will be giving a live broadcast from Washington, D.C., just two days after Barack Obama takes the Oath of Office. That broadcast on Jan. 22, at 1 p.m. Eastern Time, will be before a live audience.

But, the demand for Mr. LaRouche to address the nation and to address the world, prior to President Obama's inauguration, in the midst of what is unarguably the worst crisis that our nation has ever faced, was overwhelming. And in meeting that demand, we scheduled today's Webcast.

We have questions that have already come in, from our nation's capital, from Moscow, and indeed, from all over the world. We will continue to field questions as today's historic broadcast proceeds.

Without any further introduction, Ladies and Gentlemen, I'd like to present to you, Mr. Lyndon LaRouche.

Lyndon LaRouche: To begin with, before getting into the questions and my response to them, I would remark that I'm focussed, at this point, in my direct remarks here, on the situation posed by the appearance of Paul Volcker, in the committee, the 30 Group, which recently met (see "Failed Bailout Ploy Heading Into Desperate New Phase," in Economics).

Now, the significance of that is this: No one knows exactly what President Obama is going to conclude on the issue of the international monetary-financial crisis. I haven't talked with him; and he has, of course, restrained himself on a number of matters, pending the time that he is the actual President, as opposed to speaking as a President-elect. So my concern is to try to clarify exactly what President Obama must consider, in making crucial decisions which bear upon international relations, particularly those affecting the world economy.

Now, the problem here is, that as most of you know, the President has not spoken on the actual, crucial issues of world economy. Nor has anyone else, really. A few people, hither and yon in the world, have talked about it; but before the public, there has been no competent discussion, of the most crucial issues which threaten and face the world today. And I'm certain, from the performance of the people in the U.S. Congress, that virtually none of them is competent in any degree, to deal with this.

LaRouche's July 2007 Forecast

You will recall, that on the 25th of July in 2007, I forecast the imminent collapse, the breakdown of the international monetary-financial system, as an oncoming process. Three days after that, the breakdown occurred. Idiots and liars, variously, referred to that as a "special kind" of subprime mortgage crisis. It was not. What happened in particular, which bears exactly on what I have to say to you right now today, is that what I was forecasting was not a mortgage crisis, but something quite different: I was calling attention to the fact that the world has been destroyed, in terms of world economy, by a growth of what are called financial derivatives. This plague of financial derivatives took off, shortly after Mr. Volcker's leaving office, under the direction of his successor, Alan Greenspan. And Alan Greenspan did something which no decent man should ever have done, which was to create the financial derivatives bubble which dominates the world today.

Now, what I was forecasting, on the 25th of July, was a breakdown of the international financial derivatives bubble, a bubble which is on the order of magnitude, equivalent to, nominally, about $1.4 quadrillion dollars. And this bubble is still growing, implicitly, until we put it to sleep, and get rid of it.

Now, what we have to do, we are never going to bail out $1.4 quadrillion worth of inflating claims against the world economy. We are going to have to wipe out most of the financial claims from the books! We are going to put the world, which we have to save—a physical world—we're going to put the world into protection. And we're going to put it into protection, by eliminating the greatest part of the nominal financial claims, held by financial institutions of the world today. If you don't do that—which is what most people are afraid to even talk about—if you don't do that, if you don't wipe most of the things that have been subject to bailout, from the books, you can not save the world physical economy from a general breakdown, which would mean that the world's population would probably sink from about 6.5 billion today, to about 1 billion or less, within a matter of a generation or two.

So therefore, if you have any care for humanity, you're going to wipe financial derivatives off the books!

What I warned about, on July 25 of 2007, is that the rate of increase, of self-increase, of hyperinflationary increase, of these financial derivatives, was growing at such a rate, relative to a physically collapsing economy, that the thing was going to break at the weakest point in the system.

Now, what happened, because, again, because of Alan Greenspan's playing with Fannie Mae (and you should never play with your fanny!), but because of that, we'd reached the point, where the subprime mortgage factor had become the reflection, the leading reflection, of the breakdown of the international financial/financial derivatives system!

So, what I was forecasting was not a spinoff from a breakdown of one sector of the mortgage sector, into the world economy, but the world economy's collapse causing, symptomatically, a breakdown of the subprime mortgage sector, which was the most corrupt and weakest part of the whole mortgage system; which Alan Greenspan had used as one of his drivers, for his role, together with the City of London, in creating this hyperinflationary crisis. What is happening is that the rate of self-growth of the financial derivatives bubble, had reached the point, relative to a collapsing physical level of productivity per capita and per square kilometer, which was toppling the whole system.

A Breakdown of the Industrial Powerhouses

The secondary factor in this, was the fact that the United States economy, actually since 1968, the U.S. physical economy had been collapsing, in physical terms—per capita and per square kilometer—especially since 1989; the European economy has also been collapsing, as the former Soviet Union's economy was collapsing.

So what we have, is a process of a collapse, of the physically productive economies, of the United States, in particular, of Europe in particular, and the former Soviet Union, at the same time, that we have been exporting production to cheap labor markets, in places such as China and elsewhere. China is a particularly crucial case, because China has become dependent upon, largely, doing the production for the United States, and in part, Europe. China is the most extreme case. India, for example, has a lower ratio of its total economy that depends upon exports. China has a great part of its present economy that depends upon this export market.

So therefore, as this market collapses, financial market collapses, then inevitably, China collapses. Russia is collapsing, for similar, related reasons. The economies of Western and Central Europe are collapsing. The economies of Eastern Europe, formerly part of the extended Soviet system, actually have been living under worse physical conditions—maybe politically they've somewhat improved—but worse physical conditions than they were under the Soviet system. Poland, for example, is worse off today, than it was under Soviet domination of the Comecon.

So what you have is a breakdown, of what was formerly the agro-industrial powerhouses of the world, including the United States, which have become more and more post-industrial societies, falling to lower and lower levels of technology per capita. While on the other hand, we have been going into cheap labor markets, but we underpay the actual costs of production, as in China and elsewhere, which is in this so-called, "globalized world."

So therefore, we have been operating under an insane trend, since 1967-68, which is the last time that the United States was operating physically, at a net rate of growth. And since that time, as typified by the breakdown in the U.S. basic economic infrastructure, the United States economy has been disintegrating! The level of productivity, the level of scientific progress, have all been collapsing in terms of production. Europe, since 1989, since 1990, in particular, Europe has been collapsing. We have been expanding the markets for production, for a while, in China and elsewhere, in so-called Third World or related kinds of economies. Now, the whole shebang, which was based on hyperinflationary investment and speculation, has now come into a chain-reaction collapse. There's nothing you can do, in terms of reforming the present system, to prevent the entire planet from going into Dark Age.

You can get out of this mess, very simply: Go back to our Constitution, and go back to the thinking of Franklin Roosevelt, as of 1944. We go to that kind of thinking, and put the world through bankruptcy reorganization, and change away from this monetary system we have, which you can not save! You can not save the world monetary system, you can not save the world banking system in its present form: It's impossible!. What you can do, is you can save the physical economy, and return to the principles of the U.S. Constitution, as best understood in the early days by Alexander Hamilton, and go to a credit system, based on the U.S. principle of a credit system, rather than an international monetary system.

The Anglo-Dutch-Saudi Empire

Now, to do this, will require another step: The basic problem of the world today, is what some people call the British Empire. But the British Empire is sometimes a misleading term. Because it is certainly not, if you look at the faces of Britons, it is certainly not the empire of the mind of the British people. What you're looking at is an international, speculative, banker control of the international monetary-financial system.

Now, this empire, through globalization, extends all over the world, and it is a world empire! You can call it an Anglo-Dutch-Saudi Empire, especially since 1973, when that great oil swindle was pulled off, and we've been living under it ever since. But this is the empire! It's like all great empires in European history: They have not been, really, national empires, or empires of nations. They've been empires of financial interests—usurious financial interests. And what's running the world today, is a usury-ridden, financier system, which is now breaking down. The world, the planet, will no longer tolerate this system. And if we try to support the system, the world will no longer tolerate us. That's the problem.

So therefore, the United States must, because only the United States can do this, through our Constitution and our tradition, we can do it! We put the world monetary-financial system into bankruptcy reorganization! Which means that some things that are essential will continue to be paid, or ordered. Our investment in these things will expand. Other things, which people have been using as substitutes for production, in this kind of crazy market, are going to be frozen, just as you do, in any attempt to salvage a business, which is financially bankrupt.

So we're putting the entire world system through bankruptcy reorganization. Doing that, will, in effect, eliminate the present world empire: the Anglo-Dutch-Saudi empire, that is, the banker, the financier empire.

What is required, therefore, is that the United States, under this next President, has no sane choice—none! It's not a matter of what you like or what you don't like: Do you like to survive? Do you wish the United States to continue to survive? Do you wish European civilization to come back? Do you wish to save China from chaos and possible breakup? Do you wish to stabilize and protect India? Do you wish to save Russia, and what it represents in its key role in the world? Do you want a partnership among these forces, who in their common interest, as separately sovereign states, agree to unite, against the forces of empire, and say: Bankers who have swindled, financiers who have swindled, or have engaged in wild speculation, who've now driven the world physical economy to the point of breakdown, these people are going to eat it!

We're going to put the world through bankruptcy reorganization, and take the viable part of the world, and bring great nations together, together with relatively weaker nations, and bring a world system of the type envisaged by Franklin Roosevelt in 1944, and we're going to create that system of cooperation among nation-states, end all traces of imperialism, end all globalization, and go back to the sovereign nation-state and its people. And do it on the basis of the famous principle of 1648, the Westphalian Principle: a group of nations, each of which is dedicated primarily to the interests of the group of nations as a whole. And we're going to build the kind of world that Franklin Roosevelt had intended, in 1944, at Bretton Woods. We use the model of the U.S. credit system, the Hamiltonian conception of the credit system, an introduction of national banking, as a policy, as Hamilton had prescribed this; and use this in cooperation with other nations, to create a sufficient combination of power, to force through the needed bankruptcy reorganization of the world.

Do You Wish To Survive?

If you don't like that, I'm sorry. You either do it, or you're not going to survive.

This is not one of those cases where it's a matter of your choice, your tastes, your prejudices, your traditions, in the ordinary sense: Do you wish this nation to survive? Do you wish this planet to survive? Are you willing to step forward, as in the case of incoming President Obama? Is he prepared to step forward, to make an unprecedented decision, putting the entire world into bankruptcy reorganization, putting the most powerful financial interests in the world into receivership, in bankruptcy reorganization? Shut down the whole derivatives market; freeze it! Save everything that is essential, in terms of infrastructure development, in terms of production, in terms of physical standard of living; and bring together a coalition of nations, which, as a combined power of sovereign states, have the power to take the British Empire, or similar empires, and tell 'em, "You guys are in receivership. You can live, but you're going to live in receivership." And break this present monetary system, which has dominated us, especially since about 1968.

We've got to do that, if we wish to survive.

Now, there are many problems involved in this. What I've just said, is true: There is no sane alternative, existing on this planet, to what I have just said. I don't care what your degrees are, what your opinions are—this is reality! This is not choice, this is reality! This is like the position of a person in command in warfare; and the President of the United States, the incoming President, faces the challenge that the greatest military commanders and leaders of nations have faced in general warfare: this kind of responsibility to act for mankind, with everything that's in you, to act that way.

We do it, or we don't survive! And the President of the United States has to be presented with that fact: We do it this way, or we don't survive! Don't talk about other people's suggestions. They have failed! The leading institutions, of education, and professions, relative to this problem, have all failed: They have failed for over 40 years! And actually much longer. Either we change our ways, reject those traditions of 40 years, and go back to the United States as conceived by the Founders, and as affirmed by President Franklin Roosevelt, or we are not going to survive!

Do you wish to survive? That's the question! Not, "is your opinion going to be honored?" But, "is your opinion worth honoring?" Does it correspond to the requirement of survival?

We are now at that point: We're at the point where the inauguration of the next President of the United States, this coming Tuesday, will largely answer the question: Is this nation going to survive? Is civilization, globally, going to survive? Do we have a President with the backing needed, to make the kind of decisions from the United States, which will enable this planet to survive, and outlive the greatest financial collapse ever imagined, globally.

Physical, versus Money Economy

Well, that involves some other questions: Because what this signifies is that our culture's been wrong! Our educational systems have failed! Our popular opinion has been a tragic mistake. Most things that people have taken for granted and assumed, were wrong! Because, if they had not been wrong, we wouldn't be in this mess! When the Titanic is sinking, don't negotiate for a better stateroom—that's not your job. Get off the ship! And this is the challenge we face today.

Now, what are the problems?

First of all, we have failed to understand completely, the basic principle of physical economy. Don't talk about money economy! Yes, money is significant: managing money, organizing it, this is very important. But what's your principle of economy? I mean, physical economy. I'm talking about per square kilometer of territory; I'm talking about per capita; I'm talking about longevity of members of households. These kinds of things. How do we produce?

For example, let's take the case of India. India's an interesting country; about 63% of the population is extremely poor. They mostly have an agricultural base, and their base is shrinking.

For example, water crisis: India does not have, presently, a secure supply of potable water, for agriculture, and human life. Because we've been drawing down there, as in many other parts of the world, we've been drawing down on fossil water resources, and we've been draining them. Now we're going to have to go to large-scale desalination, to produce clean water, in necessary quantities: Which means, we're going to a global, nuclear, physical economy, especially nuclear power. This will mean, uranium fission; it will mean also thorium fission. Now, in both cases, you use a thing called plutonium to charge a uranium reactor, or to charge a thorium reactor. You have to do that. This means that we take this plutonium, which we have, which has been tanked up as a military resource, and we make it available for its function in charging nuclear reactors, using not only uranium, but the thorium cycle.

India's a perfect example: India's a nation which has, like Australia, a fairly large portion of the world's available thorium resources. Therefore, if we wish to save the population along the coasts of southern India, from this kind of threat there, we have to charge up thorium reactors—and the Indians are prepared to produce these reactors—charge them up, and use these as a way of increasing the potential productivity of a population, which does not have, inherently, present skills needed by the population of that nation, for the 63% of the lower-income brackets of that nation.

So it has a right—that nation has a right, other nations have a right, to have the thorium cycle, as well as the uranium cycle, fully utilized, like fourth-generation nuclear reactors, utilized to ensure that we're able to deal with such a simple thing as the fresh water resources which humanity requires.

So, we have to junk all this anti-nuclear nonsense. We have to go to higher-technology. There are some people who think you can count energy in calories—you're an idiot! You don't measure energy, you measure power! And it's the energy flux-density cross-section of the power source, which determines the potential productivity of that application of energy to production. Therefore, we have to go to high-density nuclear power sources, if we're going to develop the kind of sources required to take a population, now, of over six and a half billion people, rising towards seven, and even to provide the freshwater and other elements required to sustain these populations of the world.

If you're not willing to take on the world, you're creating a situation of warfare and conflict: Therefore, you have to act in the common interest of mankind, but through assembling the independent sovereign nations of mankind, in their common interest, in the same sense that the 1648 Peace of Westphalia got Europe out of over a century of religious warfare. We have to come to an understanding.

Therefore, for example, in this case alone, we have to take Russia, which is a Eurasian nation; that is, it has a combination of European history, and an Asian cultural component, which is largely dominant in the northern part of the Eurasian continent. We take China, with 1.4 billion people, estimated, as its current population, which is now threatened with a crisis beyond your imagination, unless we fix it. We take India, which is 1.1 billion people.

Get the British Out of Africa!

We take the other, relatively smaller, but largely populated nations of Asia. Then you look at Africa: We get the British out of Africa! The British are perpetrating genocide in Africa!—they and their accomplices. Get them out of Africa! Give Africa back to the Africans. Repeal decisions made by the United States in the middle of the 1970s. Restore Africa to its right, as a collection of sovereign states. Which means we must assist them, assist them in developing the infrastructure which is needed, to take a population in Africa, which is largely unskilled, in a modern sense, and to utilize infrastructure and other features, to increase the productive powers of labor effectively, per capita and per square kilometer.

Africa has a great agriculture potential; but disease and other factors destroy that. The lack of infrastructure means that the utilization of improvements needed to realize that, are not there. Africa has large sources of natural resources: Enable Africa to use its territory, its agriculture potential, and its related resources, to become a positive factor in world economy. The world needs it!

Africa is one of the major sources of raw materials required for humanity; as is South America; as is Asia, particularly in northern Russia. These resources must be mobilized, through high technology, to, in many cases, take populations which are poor, poor in skills, but committed to productivity, and by use of infrastructural features, such as mass transportation systems, especially magnetic levitation, by high-density power sources, by large-scale water management, and so forth, and use these as factors to increase the effective productivity of people, who in their present conditions, are not too productive. And that's the way we can solve the problem.

This means, again, as was often said, during the earlier times, earlier decades: We speak of the "common aims of mankind." We think as Roosevelt did, Franklin Roosevelt, about building a world free of empire, a world of sovereign nation-states, which are united in common cause, by the Westphalian principle. And build a world of no empires, but a world of sovereign nation-states. And bring forth our greatest resources: And those resources are cultural resources, the resources of people who came from Europe, into North America, to create a nation free of the worst political diseases and social diseases of Europe!

And we succeeded to a large degree. We were corrupted by European influences, but at the same time, we represented the kind of nation-state which does not exist in any other part of the world. We've betrayed that in large degree; we must return to that.

And as I say, specifically, we must, beginning on Monday-Tuesday, we must hope that the President of the United States will emerge as committed to the kind of perspective I've indicated here, and will reach out to nations, in particular, such as Russia, China, and India; China and Russia have immediate crisis problems. India has a longer-term crisis problem, of one kind, but also threats of instability, coming out of Southwest Asia today.

We must bring these nations together, representing a great part of the world population, and use that unity of cooperation—of Westphalian cooperation—among these four powers, and others, to break the power of empire, which we must destroy, if we're going to finish off this financial system which is killing us, now.

We have to change our ways in that sense. We have to have a President who has the courage, and that President must be defended, and supported, as if he were Franklin Roosevelt. We have to go back to what Roosevelt had intended, before he died: We have to rip up the corruption, which Harry Truman and others introduced—to betray us, and to betray our great mission!—which we had going into World War II, and get back to fulfilling that obligation, now.

We Have To Change Our Ways

That means, we've got to change the way we talk about economics: We've got to stop talking about money, as such, and realize that money is merely a means of exchange. We must regulate it; we must regulate banking. We must go back to the kind of banking we had under Glass-Steagall. We must get back to that! We must separate the banking, in which you put your money, if you have it, for deposit, which the local community depends upon for its lending practice and so forth: We must put this section of banking back into business! As chartered banking, under the kinds of protectionism which Roosevelt, for example, exemplified. We must take the other part of banking, the high-risk part, separate it, look at the garbage, and put the garbage through cancellation. Financial derivatives don't contribute anything to a world economy! It's gambling debts, and the policy of the U.S. government is, "We don't pay gambling debts. If you lost, you lost. You gambled, and you lost."

But we must protect those banks, those state and local banks, which are chartered banks, which are banks of deposit, which are the reference point for investment. We must provide the credit, generated by a Federal credit system, to ensure that those banks which are now mostly bankrupt as a result of recent policies—especially the policies of the U.S. Congress!—under George W. Bush, since the Summer of 2007: Those banks have been bankrupted. But we must save the chartered bank element within those banks! Restore it! We must freeze claims of other kinds, and probably cancel them, because they're simply gambling debts, and we are not obliged, as a nation, to pay other people's gambling debts. Let them go bankrupt.

We then, in turn, having cancelled these claims against the economy, must create a new flow of credit, under our Constitution. And that flow of credit must ensure that the local chartered bank, and the local national bank, are able to perform their traditional function, in cooperation with government, for creating a system of long-term credit, to generate the rebuilding of our economy: agriculture, industry, infrastructure.

We have a population which has largely lost skills. People who have not worked at skilled labor, over the past 40 years nearly, certainly are not very productive. They know how to push a pencil, they know how to play with a computer, and play with other things: But they don't know how to produce, in the way we used to produce. Therefore, we have a largely unskilled population, with a shrunken section of the machine-tool-sector skills, and we have to amplify the productivity of an unskilled population—which is what most of our population is, in terms production—we have to amplify their productivity by increasing the infrastructure which affects productivity. We must increase, we must concentrate on high-energy-flux-density power sources, which means nuclear power largely!

We must go to mass transportation—forget the automobile as a mass transit unit! Automobiles are for local transportation. High-speed rail and similar kinds of transport are the way to go. We overuse air travel, for relatively short-term travel. Air travel is strictly for long-term. We can produce, now, we can produce systems of over 300 miles an hour. Efficient systems for mass transportation. We're using too much aircraft travel. We're using too many cars on the street. Too many cars on the highway. We should have efficient mass-transit systems of various kinds, where people can be transported.

For example, I've spoken of this before: You have, outside of Washington, you have an area around Washington, D.C.—it's a market area. You look at it as a market area, it's an area from which people come as far as two and a half to three hours each way commuting, into the Washington area, or that approach. Now, just think of what that means: Suppose we're talking about three hours; that's six hours a day, five days a week. Now what does that mean? If you're taking a person who's working eight hours a day, and not being paid for lunchtime and things like that, and now has five to six hours a day spent on commuting time, what kind of a family life do they have? What kind of a society do you have?

We need efficient, high-speed mass-transit systems. We need to go back to much more distribution of production away from a few large centers of mass industry, into regional development; smaller industries, more emphasis on closely held corporations, on smaller, high-tech corporations in industries. We need to rebuild the idea of a community, where you can walk to work in a quarter-hour or half an hour each way, at most, each day, which is what we used to have, years ago. That's the way we were organized. And leave these extra hours we're now wasting, sitting in a useless car, smelling up the gas fumes from the other guy's pipe, and getting sick, and having no family life, and leaving children, if you have any, at home, without much cultural backing and development. We're crazy!

A Mission Orientation

So, we have to go now, to a shift toward long-term investment, in high-technology, mass-transit systems, power systems, water systems—remember the time you could safely take a drink of water from a faucet? In an average home? In an average community? Can you do that now?

We have to reverse those trends which have led us to that effect. We have to go into long-term investment; we're talking about 25-year investment for industries; we're talking about, for power systems and things like that, you're talking about 50-year investments. For larger systems, you're talking about 100-year investments. We in the United States, and other nations must cooperate with our credit systems, to assure that the technology is mobilized, and that the credit is created, low-cost credit is created to fund these changes, for the better—back, for the case of the United States, to what we used to think, back while Kennedy was still alive, President Kennedy; and back to those standards which most of us accepted in this country, then. And that's all we have to do, is go back to the kind of mentality which built the space program. Which we can't do any more! When did we last put a man on the Moon? We lost the capability to do that.

We have to invest again, with a mission-orientation, which is multi-generational: 25, 50, 100 years. And we have to mobilize the credit, at low interest rate, and commit to improvements in technology, to do that. We have to enter into cooperation, with nations such as China, Russia, and India, and other nations, as a bloc, to create the kind of world that Franklin Roosevelt envisaged before he died: To rebuild a world, free of imperialism, and he meant British imperialism—free of imperialism, which is what our destiny was, and commitment was, among many of us, going into what became known as World War II. We have to think that way. And we have to have leaders who will think that way, and will talk that way. We need above all, a President, who will think that way.

Thank you.

[An excerpt of the dialogue which followed the webcast.]

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