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A Crisis by Christmas, or My Solution

Dec. 9, 2010 (EIRNS)—Speaking on the LPAC Weekly Report yesterday, LaRouchePAC founder Lyndon LaRouche issued a stark warning about the current political and economic situation.

"The key thing is what we've been getting from Europe for some time now, a number of weeks: The best estimate is, and I can qualify that, with certain facts, that the entire, present world financial-monetary system is going down, by about Christmastime....

"The usual profile is this: You have Germany in the background, and Germany has a very big problem in tolerating what's coming down as demands upon it. Then you have the Irish situation, which is very much up in the air, and it's one way or the other, the doom of the British-Irish game is over. Then, while Ireland is still fulminating, you have the situation in Portugal, and Portugal is quite significant, but it is not, as of this moment, the chosen point for breaking the system. What is presumed, is that when the next round comes around to Spain, that the magnitude of the Spanish debt will be a load that will crack the system.

"And the general feeling, which we're getting from informed sources, and a great number of them, in Europe, especially in Germany, originally, is that this system is going to be hanging on your Christmas tree. Which means that all the game-playing which is being done in the United States, is that. And the minute it hits Spain, the expectation is—and there's a very good argument for that—at that point, the Russians will start dumping European currencies, Western European currencies, the system."

LaRouche then outlined, once again, the precise remedies which he has put on the table, as the only alternative to a New Dark Age. That involves, first of all, a Glass-Steagall reform that will simply wipe out the trillions of dollars of gambling debts now clogging up the banking system.

"The Glass-Steagall proposition will immediately take all this trash, and put it in a special category of a failed institution. In other words, when merchant banks fail, they either reorganize themselves, and take a beating for what they did; or, they're just wiped out. We're in a situation, where the likely thing is that Wall Street, as such, will be wiped out; so will the City of London be wiped out. That does not mean all the institutions will be wiped out. It means, by going to a Glass-Steagall system we will take these banks, which are mixed commercial, other banks—we're going to separate them.

"That means, as I've said before, we're going to find that the banks that survive, the merchant banks that survive, and are reorganized and protected, under Glass-Steagall, will actually still be bankrupt, because they don't have sufficient assets against their viable obligations, to cover themselves. This means, the U.S. Federal government, is going to put them under protection, and it's going to be protection in the same form, principle, as what the reform was which founded the Constitution of the United States: the Alexander Hamilton reform.

"What we'll do, is, we will go from a monetary system, which we will eliminate, to a credit system, which means that we will not count on the assets, presumably closed assets, established assets, on the books. We're going to create Federal credit, the way Hamilton and company did, in devising the U.S. Federal Constitution, and we're going to give that credit, as an asset, to be put through our commercial banking systems in its revised form. Which means that the assets from the future, are going to be the basis of saving, the commercial banking system of the United States. So, that's the basis for the solution.

"That means that we have to have a specific kind of physical investment, which qualifies for the Hamilton standard: In other words, the Federal government is going to put up credit. The credit will be run directly through the Federal government, but a lot of will be run through, directly or as a second pass, through these commercial banks. So, suddenly, these commercial banks will have in them, assets, which are worthwhile.

"What will they be? NAWAPA, for example. The NAWAPA project—if it involves the Canada, the United States, and northern Mexico—will create, actually, the potential, both in the NAWAPA project itself, and in the ancillary projects, such as the other systems, the magnetic-levitation systems, other systems which are necessary for the implementation of NAWAPA, this will create 4 million jobs. And it will create the credit system for 4 million jobs, of highly productive jobs, immediately.

"That will give us the margin of credit, needed to take the banking system, as reorganized by Glass-Steagall, just as Roosevelt did, with TVA—but this is a much bigger operation than TVA—and that credit will put the United States back in balance, just the way the Hamilton reform did, in the formation of U.S. Federal Constitution. And it will be completely U.S. Federal Constitution. No fruity-fruity! This will be strictly U.S. Federal Constitution, from the outset. And that's our solution."

LaRouche's full presentation, and dialogue with hosts Jeffrey Steinberg and Matthew Ogden, is available online.