LaRouche: Financial System Is Dead,
Cannot Be Saved
July 13, 2008 (EIRNS)This release was issued today by the Lyndon LaRouche Political Action Committee (LPAC).
With the U.S. and British financial press full of wild speculation about how the Bush Administration is going to intervene Monday morning, to bail out Fannie Mae and Freddie Mac, Lyndon LaRouche today issued a sharp, preemptive warning: "The financial system is already dead. It cannot be saved."
LaRouche expanded: "If any of the reports of a planned bailout of the two big mortgage lenders, by the Treasury Department or the Federal Reserve are true, I say, 'Forget it.' Any such efforts to delay the funeral of the present global financial and monetary system will only make matters worse. A bailout will cause an accelerated hyperinflationary explosion, far worse than the hyperinflation that hit Weimar Germany in the autumn of 1923. Back then," LaRouche continued, "Germany had a gun pointed to its head. The gun was called the Versailles Treaty, and Germany had no choice. Today, the United States has a choice. I spelled out the choice in numerous recent locations."
LaRouche cited his recent call for the Federal Reserve to immediately raise interest rates to 4 percent, as a stop-gap measure to prevent a massive flight of institutional capital from the banking system. He demanded that this move be accompanied by clear statements from the Fed that there will be no more Bear Stearns-style bailouts of the speculative bubble. Instead, the Fed will protect the chartered Federal and state banks, through bankruptcy reorganization, on the model of what Franklin Roosevelt did, when he first took office in March 1933, and faced the same kind of collapse of the banking system that we face now. "Only, today's crisis is orders of magnitude worse," LaRouche added, "due to the massive leveraging by the banks and other financial institutions."
LaRouche warned that Bush Administration and Fed officials, like Hank Paulson and Ben Bernanke, may be on an "ego tripunwilling to admit that they have failed miserably. But the reality is that they, like the George W. Bush Administration, have failed, with wretched incompetence. For one thing, they failed to reverse the Alan Greenspan monster bubble, which is now blowing."
LaRouche added that there is no way to even estimate the magnitude of the financial bubble, that has now blown. "The collapse of Fannie and Freddie means the end of the system. And that has already happened, and nothing can be done, within the rules of the current system, to solve that problem. We can keep Fannie Mae and Freddie Mac alive, but only through actions reforming the system, in terms echoing the precedents of President Franklin Roosevelt, that in ways appropiate for the actual conditions of today.
"The only alternative is to implement my three-step solution to the crisis," LaRouche concluded. "If the so-called leadership in Washington is unwilling to do that, then this financial system, and, by extension, these United States, are finished. It may be a tough reality to swallow, but it is the only reality that there is."
Lyndon LaRouche will be delivering an international webcast on Tuesday, July 22, 2008, at 1:00 p.m. (EDT). The webcast takes place on the first anniversary of LaRouche's July 25, 2007 Washington, D.C. webcast address, in which he announced that the financial system had already crashed. Days later, the collapse of Countrywide, and other major mortgage lenders, and the blowout of Bear Stearns, illustrated that LaRouche was 100% correct.