|This transcript appears in the August 9, 2013 issue of Executive Intelligence Review.
Why Wall Street Must Be Shut Down
by Leandra Bernstein
When Glass-Steagall is re-enacted, the U.S. government will orchestrate the largest market crash in human history. We have the authority to do it on the basis of national security; we have the power to do it in an orderly way; and we must do it to defend the nation from an axis of modern-day fascists centered in London and on Wall Street.
Banks and non-banks operating in the U.S. will have a period in which to choose: Either they divest themselves of their gambling operations and receive Federal protection as commercial banks under the Federal Deposit Insurance Corporation (FDIC), or their investments, securities, and other speculative operations will be cut off from the government safety net, and they will fend for themselves on the free market. Most of them will fail as hopeless bankrupts, but no one of relevance will shed a tear.
At the time of its enactment, every asset, every X, Y, and Z-backed security that the Federal Reserve and U.S. Treasury have financed through a government/taxpayer guarantee, will be either called in for repayment, or allowed to float on the market, inducing the fiercest margin call Wall Street could ever have imagined. This action of removing the government backstop on Wall Street losses will not be another Black Monday, or a Black Tuesdayit will be White, that is, lower Manhattan will be the epicenter of the detonation of a financial H-bomb.
At that time we, the U.S. government, will gain the upper hand, and have options to maintain the functioning of society. For example, we will be responsible for stabilizing and guaranteeing the means of existence, which had been traded as gambling chips on Wall Street and in other shadow markets. Therefore, the day Glass-Steagall is enacted, we shut down Wall Street. To avoid a bloodbath, or a mass-murderous selling spree, we simply shut down trading for the day, and the day after, and the day after thatand indefinitely. Prices will be frozen until further notice. Nobody moves. Wall Street takes an indefinite Bank Holiday.
The people, the companies, and the institutions which relied on the free market (which we now know is a euphemism for the rigged market), will be supported under Glass-Steagall. Enacting Glass-Steagall in this way, and only this way will ensure that material goods and services are priced within reach, to promote continued economic activity, on a rational exchange, established by sane government officials, which fixes prices on the basis of physical costs to producer and consumer. We are going back to what Franklin Roosevelt did and what worked. And we're going to do this, because if we don't, millions of Americans will diejust as they are slated to die in Detroit.
A Systemic Failure
The idea that we have to prevent a crash of global systemically important financial institutions (G-SIFIs) is over. The days of G-SIFIs blackmailing governments, by arguing that their failure would lead to the unravelling of the whole economy, are over. The economy is already shot. And the day of the crash of these institutions will inevitably comeno system could preserve them. FDIC Vice Chair Thomas Hoenig made a crucial point in testimony to the House, when he said that there won't be a situation where a single G-SIFI fails; it will be a systemic failure. And that is what we are facing right now.
The fact is, Wall Street and its international partners have known that, as a cold hard reality, since 2007-08. Lyndon LaRouche forecast that in July 2007. When it came to the bailout, these institutions were already bankrupt. The bailout was simply a way to rope the nation into the collapse, to bring the government and the people down, while trying to save Wall Street. And the blackmail has worked, so far, to keep that system going under the two complicit presidencies of Bush and Obama.
There are still some people who believe that the Wall Street bankers didn't plan for this day. Frankly, their foot-dragging and self-consoling delusions are the reason the United States will lose everything; the reason you lost your high-paying job; the reason your family member was cut off from health care; the reason your neighborhood is rotting. You see, Wall Street already has a planactually it's a law. It's called the Dodd-Frank Act, and it endows the Executive Branch, through the FDIC and the Financial Stability Oversight Council (FSOC) to enact ad hoc crisis-management rules, which have not been defined in law, to ensure "financial stability."
As LaRouchePAC has reported in other locations, what is meant by financial stability is: The people, the depositors, the pensioners, the government workers, anything but the hyperinflated financial instruments, will be liquidated. The banks and financial institutions will be resolved and allowed to stay in operation, and the United States of America will be sold for scrap to finance it.
Now, if you want to die, then say: "We can't shut down Wall Street. We ne-e-e-e-ed the free market. Give Dodd-Frank time to work. The government has no place in the economy! We have to respect the investors!"
If you want to live, we are are prepared to run the American economy. And we are prepared for the outcome of reenacting Glass-Steagall.
The following six detailed steps drafted by EIR economist Paul Gallagher, are a preliminary course of action that will be taken by us in enforcing the reestablished Glass-Steagall law:
First: Prosecute Wall Street and Eurozone banks for crimes of looting the public.
Second: End the bank holding company status of Goldman Sachs and Morgan Stanley.
Third: Enforce the legislative section that bans banks or holding companies from putting non-bank-qualified securitiesincluding derivatives and MBSson their insured commercial bank's books.
Fourth: Enforce the legislative section prohibiting commercial banks/bank holding companies from owning commodities, commodities broker-dealers, like MFGlobal, or commodities production or transportation infrastructure.
Fifth: Enforce the closure of branches of banks whose parent banks or holding companies are outside U.S. banking law, and thus have investment practices that can't be limited by the U.S. Glass-Steagall law.
Sixth: Break up the largest U.S.-based bank holding companies.
The Hard Facts
These are the hard truths of Glass-Steagall that are not being discussed, even by those who are the greatest champions of the Act. The American people have a right to know the benefits and security they will be guaranteed through the restoration of Glass-Steagall; and Wall Street has a right to know how they are going to be shut down.
We are at a crossroads, either we stand and fight with this knowledge, and demand our representatives in Washington do the same, or we prepare to sacrifice everything, our lives, our fortunes, and our sacred honor, to our enemy.