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RE: LaRouche - Admin - 11-11-2007

Helga Zepp-LaRouche

Most retirees, Hartz IV[1] recipients, and other low-income families have known it for a long time: For them, the inflation rate is much higher than the official rate of a little over 2%. So these population groups, which constitute nearly two thirds of the total population in Germany—56.6% of households, or about 46 million people—make at most 150 euros per month more than the fixed costs of living; they seldom buy products that have become cheaper, and figure into the average inflation rate, such as computers, cell phones, or trips abroad. Most of their income goes for products that have become much more expensive.

With slight adjustments, the recently announced figures from the Statistical Office in France (INSEE) apply to Germany as well: In September, the price of grains exploded by 20.5%; the price of soft wheat doubled within a year, and rose in September alone by 23.2%. Soy, which among other things is used for animal fodder, rose by 24.7%; beef by 12%; poultry by 14%; fruit by 23.7%; and milk products are expected to rise by about 20%. In addition, the prices of gasoline, heating oil, and natural gas have risen by 13-16%, and a 10% price rise for electricity in January has already been announced. If we include the price increases for raw materials and crude oil—which is now over $90 per barrel—for industrial production, and which eventually affects consumer prices, then it becomes clear that we are already in the middle of a hyperinflationary trend.

Financial insiders estimate that in the last three months alone, as a result of the "reverse leverage" caused by the collapse of the U.S. mortgage market (losses with borrowed money), there was some $2.4 trillion in losses of unsellable financial securities. The investment banks are having the greatest difficulty in admitting their losses; the third largest U.S. bank, Merrill Lynch, has only hesitantly admitted to preliminary losses of $8 billion, while Citigroup, through the creation of the MLEC "Superfund" (Master Liquidity Enhancement Conduit), is trying to shift the damage to credulous and greedy investors. Instead of admitting the collapse of the policy of "creative financial instruments" à la Alan Greenspan, and shutting down the hedge funds, venture capital companies, special purpose enterprises, etc., the central banks—including the Federal Reserve—are trying to hide their losses by massive injections of liquidity. This hyperinflationary operation is enhanced by speculation on the food-commodity exchanges, such as the Chicago Board of Trade. Even more devastating is what the Italian pasta producer Guido Barilla called "the insane decision" of President George W. Bush, to replace 20% of gasoline consumption with biofuels, over the next ten years. This policy, according to Barilla, has led to a chain reaction of price explosions hitting all agricultural commodiites.

The fact is, that this inflationary tendency has clear parallels in the hyperinflationary policy of the Reichsbank in 1923, and no one should forget the statement of Federal Reserve chief "Helicopter Ben" Bernanke, that the central bankers, if necessary, would throw money out of helicopters over the cities, in case of a threat to the world financial system. And what everyone in Germany knows, at least from the stories told by their grandparents and parents about the 1923 hyperinflation that devoured the savings of most of the population, is that that's what is being experienced today by a considerable portion of the population, for whom price rises in basic commodities are pulling the rug out from under their feet.

In view of all this, and the fact that in Germany one out of every six children is poor, and even at the age of eight can see no future for himself, how irresponsible are the leading politicians who defend the current system of globalization! When Finance Minister Steinbrück continually defends the role of the hedge funds, as he did again recently at a meeting of the Hans Böckler Foundation, then this underscores how far he has abandoned social democratic principles, his oath of office, and the Basic Law.

The political establishment, which has apparently become much too accustomed to the priviliges of this system, is out of touch with the reality faced by the majority of the population. That such professional blindness has a social price, is nowhere more clear than in the case of the American Congress, where the Democratic Party in November 2006 won a resounding victory in both Houses, and had a popular approval rate of around 70%; yet in less than a year, it has completely lost that, and its approval now is under 11%.

The fundamental problem with politicians like Mr. Steinbrück is that he belongs to a generation that has neither the knowledge nor the memory of how any system could exist, other than that of the free market economy linked to globalization. According to the motto, "It cannot be, what must not be," they think this system cannot collapse. And they refuse to comprehend that globalization is not only destroying what were once called the developing countries, but is also plunging most of our own people into poverty.

Nothing in the world will save the hopelessly indebted world financial system. But it would still be possible to defend the real economy, and, through multilateral cooperation among nations in the tradition of Franklin Roosevelt and his New Deal, to bring about a new economic miracle. But this requires a radical change in economic and financial policy, a return to fixed exchange rates, an affirmation of scientific and technological progress, according to the principles of physical economy—that is, saying "yes" to the Transrapid maglev train and the inherently safe modular high-temperature gas-cooled reactor—and an absolute commitment to the Common Good.

The BüSo is at present the only party that stands for such a change.

RE: LaRouche - Admin - 11-15-2007

Professor Rodrigue Tremblay

"If these items [promised benefits in Social Security, Medicare, Veterans Administration and other entitlement programs] are factored in, the total [debt] burden in present value dollars is estimated to be about $53 trillion. Stated differently, the estimated current total burden for every American is nearly $175,000; and every day that burden becomes larger."

David Walker, comptroller general of the United States

"The economic forces driving the global saving-investment balance have been unfolding over the course of the past decade, so the steepness of the recent decline in long-term dollar yields and the associated distant forward rates suggests that something more may have been at work."

Alan Greenspan, former Fed Chairman, July 20, 2005

“The subprime black hole is appearing deeper, darker and scarier than they [the banks] thought. They’ve worked through ... about 40 percent of the backlog of the leveraged loan side, and there’s definitely some signs of thaw there.”

Tony James, president and CEO of Blackstone Group LP

The global dollar-based financial system is in crisis and is threatening the prosperity and stability of many economies. Financial excesses of all kinds have undermined its legitimacy and its efficiency. The U.S. dollar is losing its preeminence as the main international reserve currency while many banks are caught in the turmoil of the subprime credit crisis.

The overall background is the unprecedented real estate bubble that took place worldwide, from 1995 to 2005. In the United States, for example, owner-occupied home prices increased annually by an average of about 9 percent. The market value of the stock of owner-occupied homes in the U.S. rose from slightly less than $8 trillion in 1995 to slightly more than $18 trillion in 2005. It has been contracting ever since, confirming the working of the 18-year Kuznets realestate cycle, which has gone from the top of 1987 to the 2005 top.

What makes this period especially dangerous is the fact that the average 54-year long inflation-disinflation-deflation Kondratieff cycle is also at play, having begun in 1949 after prices were unfrozen. World inflation then rose for twenty years, until 1980, which was followed by a period of disinflation under the Volcker Fed. The entry of China into the World Trade Organization (WTO) on December 11, 2001, with its abundant labor and low wages, unleashed strong deflationary forces worldwide. This in turn led to lower inflation expectations paving the way for the Greenspan Fed to keep interest rates abnormally low.

Persistent low interest rates and low inflation expectations led to a binge in borrowing and to a vast increase in market valuation, not only in real estate but also in stocks and bonds. Banks and other mortgage lending institutions took advantage of the opportunity to introduce some financial innovations in order to finance the exploding mortgage market. These innovations resulted in the severing of the traditional direct link between borrower and lender and the reduction in the lending risk normally associated with mortgage loans.

Thus, with the connivance of the rating agencies and of the Federal Reserve System, large banks invented new financial products under various names such as "Collateralized Bond Obligations" (CBOs), "Collateralized Debt Obligations" (CDOs), also called "Structured Investment Vehicles" (SIVs), which had the characteristics of unfunded short term commercial paper. In the residential mortgage market, for example, mortgage brokers and retail lenders would sell their mortgage loans to banks, which in turn would package them together and slice them into different classes of mortgage-backed securities (RMBS), carrying different levels of risk and return, before selling them to investors.

Indeed, these new financial instruments were the end result of a process of "asset securitization" and were slices of bundles of loans, not only of mortgage loans but also of credit cards debts, car loans, student loans and other receivables. Each slice carried a different risk load and a different yield. With the blessing of rating agencies, banks went even one step further, and they began pooling the more risky financial slices into more risky bundles and divided them again to be sold to investors in search of high yields.

By selling these new debt instruments to investors in search of high yields and higher yields, including hedged funds and pension funds, banks were doubly rewarded. First, they collected handsome managing fees for their efforts. But second, and more importantly, they unloaded the risk of lending to the unsuspected buyer of such securities, because in case of default on the original loans, the banks would be scot-free. They had already been paid and had been released from the risk of default and foreclosure on the original loans.

The banks' residual role was to collect and distribute interest, as long as borrowers made their interest payments. But if payments stopped, the capital losses incurred because of the decline in the value of unperforming loans would instead be carried by the investors in CBOs and CDOs. The banks themselves would suffer no losses and would be free to use their capital bases to engage in additional profitable lending. In fact, the end of the line investors became the real mortgage lenders (without reaping all the rewards of such risky loans) and the banks could reuse their capital to pyramid upward their loan operations. These were the best of times for banks and they gorged themselves without restraint. Some of them paid their employees tens of billions of dollars in year-end bonuses.

Indeed, and it is here that the Fed and other regulatory agencies failed, first line mortgage lenders became more and more aggressive in their lending, with the full knowledge that they could profitably unload the risk downstream. This explains the expansion of the "subprime" mortgage market where borrowing was done with no down payment, no interest payments for a while and no questions asked as to the income and creditworthiness of the borrower. These were not normal lending practices. Such Ponzi schemes could not last forever. And when housing prices started to decline, foreclosures also increased, thus shaking the new financial house of cards to its foundations. Banks became the reluctant owners of some of the foreclosed properties at very discounted values.

Why then are so many banks in financial difficulties, if the lending risk was transferred to unsuspecting investors? Essentially, because when the housing boom burst, the banks' inventory of unsold "asset-backed securities" was unusually high. When the piper stopped playing and investors stopped buying the newly created risky investments, their value plummeted overnight and banks were left with huge losses still not fully reflected in their financial balance sheets. Indeed, banks that did not unload their stocks of packaged mortgages were forced to accept ownership of foreclose properties at very discounted values. With little or no collateral behind the loans, bad-debt losses became unavoidable.

Since noboby knows for sure the value of something which is not traded, it will take months before banks come to terms with the total losses they have suffered in their stocks of unsold pre-packaged "asset-based securities". It is more than a normal "liquidity crisis" or "credit crunch" (which results when banks borrow short term and invest in illiquid long term assets); it is more like a "solvency crisis" if the banks' capital base is overtaken by the disclosure of huge financial losses incurred when the banks are forced to sell mortgaged assets in a depressed real estate market.

This is this financial and banking mess which is unfolding under our very eyes and which is threatening the American and international financial system. There are four classes of losers. First, the homebuyers who bought properties at inflated prices with little or no down payment and who now face foreclosure. Second, the investors who bought illiquid mortgage-backed commercial paper and who stand to lose part or all of their investments. Third, the holders of bank stocks who profited when the system worked smoothly but who now face declining stock values. And, finally, anybody who stands to fall victim, directly or indirectly, to the coming economic slowdown.

RE: LaRouche - Admin - 12-02-2007

Recommendations for Reform of the US Monetary System

Richard C. Cook

We hold these truths to be self-evident, that all men are created equal,
that they are endowed by their Creator with certain unalienable rights,
that among these are life, liberty and the pursuit of happiness.

What We Must Do Today
“Life, liberty, and the pursuit of happiness” are, or should be, the fruits of democracy. But the political democracy defined by the Declaration of Independence and the Constitution has not been achieved because economic democracy has not been achieved. The attainment of real economic democracy is the next task for the American people.

In the midst of the most productive economy in history, the U.S. and much of the world today are in crisis, with stagnant or falling incomes, rising prices, and skyrocketing debt. Many experts are predicting an economic collapse, and people with money are scrambling for safe places to protect it. No one in an official capacity has provided a convincing explanation; few have even tried.

We are taught that economics is a “science” and that it operates under unchangeable laws that are understandable only to specialists. People speak with reverence of “market forces” as existing beyond the reach of human intelligence and will.

None of this is true. There is no such thing as “laws” in economics.

Of course there are plenty of habits and conventions, myths and prejudices. But the “laws” are the ones created by governments, usually under the control of powerful people who work the levers of power to acquire greater wealth through legislative favor. These laws are man-made. In some cases the laws may provide benefits to those who work for a living, but in many cases not. What we forget is that any of these laws can be changed and that many of them should be changed.

Besides, haven’t we learned by now that what has aptly been called “market fundamentalism” is really shorthand for the tyranny of money? It is a fact that control of economic life, at least in most of the Western nations, has been turned over to the monetary elite who control the world’s industry and resources through the private issuance of credit that originates from the privilege of fractional reserve banking.

This vestige of the financial systems of the Middle Ages allows the banks to produce credit “out of thin air” and lend it at a profit. They lend to consumers, businesses, investors, speculators (such as hedge funds), and to federal, state, and local governments. Under the banking laws, they generate this credit against a small “reserve base” consisting of customer deposits, government debt, overnight deposits from corporations and government agencies, and even—as has been well-documented—by laundering the proceeds of drug dealing and other types of crime.

The dependence of economic life on debt has assured that there has been a steady flow of wealth from the producing economy of goods and services into the financial web which surrounds it. Debt from lending at interest grows at an exponential rate.

Further, every period of economic growth in the last generation has been largely a bank-created bubble. Each time a bubble bursts, the financiers gain more wealth by buying assets at bankruptcy prices. The latest is the housing bubble.

Now we are about to see the bursting of an even larger bubble consisting of stocks and other business assets. In fact, the financiers are now positioning themselves to take advantage of a broad economic collapse.

Control of wealth by high finance is the main reason the bounty of science and technology has not assured a better life to the majority of the people of the world.

Politicians stand by and do nothing. In fact their campaigns are financed by the monetary elite. Should any of them mention economic themes that are even remotely “populist,” they are immediately denounced by the financier-controlled press.

Despite the power of industrial processes which have the capability of providing a decent living to everyone in the world—contrary to the myth of global overpopulation—the world still lives under an illusion of scarcity. This tends to justify the senseless struggle for wealth and control of resources. But it’s one of the most glaring examples of the condition of mass hypnotism that has weighed humanity down throughout the ages.

Ethically, the illusion of scarcity leads to the law of the jungle, survival of the fittest, the fight for dominance and supremacy. “Economic man” still lives at the animal level. The higher laws of human ethics, including the injunction to “love our neighbors as ourselves,” have been ignored. But they need not be ignored if we wake up to the fact that we have it in our power to live in a much different and better world.

The present situation is just as harmful to the wealthy who hold their fellow human beings in bondage as it is to the debtors they oppress, for the rich as well are deprived of the benefits of living in a world where human beings are free, happy, generous, and productive.

One answer to the problem is monetary reform, combined with the realization that science and technology have removed the need for everyone to work all the time just to survive. We have earned the “leisure” and “peace” dividends that are often mentioned but have yet to be realized.

For the last eight months I have been publishing essays on these themes on Global Research and other internet sites. I was inspired to write and publish these essays after I retired from the U.S. Treasury Department following thirty-two years of working for the federal government.

My research showed that the U.S. actually had a reasonable approach to monetary matters for much of our history. The thirteen American colonies built a dynamic economy without the presence of a single bank. Throughout the nineteenth century, we developed the most powerful economy on earth without a large national debt.

Then Congress gave away its constitutional authority over money through the Federal Reserve Act of 1913. The Sixteenth Amendment to the Constitution which was enacted the same year, created an income tax to pay the interest on the national debt. Throughout history, government debt and excessive military spending have gone hand-in-hand. Not accidentally, the Federal Reserve Act marked the beginning of the century of world war that still afflicts us.

We now need to reclaim our monetary system before our government makes the fatal error of engaging in more useless foreign wars, besides the travesty in Iraq, because they continue to think that the way to solve our internal monetary problems is taking other people’s land and resources. This is another effect of the illusion of scarcity.

A lifetime of involvement in public finance with the federal government has led me to call for one basic reform.

We should abolish the privately-controlled Federal Reserve as a bank of issue and re-establish constitutional control of credit as a public utility. Public creation of credit would be reflected in two basic policies: 1) direct issuance of credit to citizens through a basic income guarantee, a periodic National Dividend, and low-interest bank lending; and 2) direct spending by government for essential services—i.e., restoring the Greenback—combined with public low-interest financing of infrastructure investment. Taking these steps would also allow us to reduce much of the onerous burden of taxation at the federal, state, and municipal levels.

Also, people who advocate a gold standard are often confused about the definition of “fiat money,” which they deride. There are actually different types of “fiat money.” The debt-based credit created by the Federal Reserve, often called “fiat money,” is not money at all. It is simply temporary credit with a lien against it for repayment with interest. But real “fiat money,” like the Civil War Greenbacks or the American colonial paper currency, was true democratic money that was spent into circulation by government and was never inflationary. Rather it allowed commerce to expand and people to prosper. This type of fiat money is actually the key to economic democracy.

II. Monetary Reform Recommendations

The articles compiled in the essays referenced above contain numerous recommendations for actions that would restore the issuance and management of credit as a public utility under the Commonwealth of American citizens as established by the U.S. Constitution. Following is a comprehensive list of reforms.

The immediate purpose of this program would be to correct the conditions that have brought us to the brink of economic catastrophe due to the cession of control over credit by Congress to the private financier elite through the Federal Reserve Act of 1913.

The unconstitutional abdication of monetary responsibility by Congress has contributed directly to a century of world war, the near-destruction of the U.S. as a constitutional republic, and the transfer of much of the nation’s wealth into the hands of the monetary controllers who have acquired it through inflating and deflating financial bubbles, by mis-using their fractional reserve banking privileges.

The recommendations which follow would be a start in bringing about change. A few of them have been suggested by some of the 2008 presidential candidates, though none of the candidates from either party has presented anything close to a program this comprehensive. The recommendations are divided into immediate, near-term, and long-term actions. Note that monetary reform will make possible a large number of additional economic and political changes, including a transformation of the military posture of the U.S., since we no longer will have to fight the rest of the world to compensate for our monetary weaknesses.


Abolish the Federal Reserve as a bank of issue and reconstitute it as a financial processing bureau servicing the public and private financial sectors under the authority of the U.S. Treasury Department.
Place all U.S. monetary operations under a Monetary Control Board that shall operate as a federal regulatory agency under the administrative supervision of the U.S. Treasury Department.
Abolish Federal Reserve open market operations by authorizing credit directly issued by the U.S. Treasury as collateral for all U.S. bank lending.
Restore private banking operations in the U.S. to the “real bills” doctrine and abolish all lending for financial asset and securities speculation.
Outlaw hedge funds.
Replace all Federal Reserve notes by U.S. Treasury certificates.
Place the entire U.S. national debt under bankruptcy reorganization.
Authorize the executive branch to begin direct Greenback-type funding of selected operational programs.
Establish a self-collateralized Federal Infrastructure Bank to lend to state and local governments for long-term projects at zero percent interest.
Restore the pre-2005 federal personal bankruptcy law.
Utilize an off-budget national credit account to issue an annual guaranteed basic income to all legal U.S. residents in the amount of $10,000 per adult and $5,000 per dependent child.
Establish a National Price Commission to work toward a system-wide fair pricing policy for the U.S.
Freeze budgets and hiring for all federal government agencies, including the military and all contractors.

Establish policies to maintain a stable dollar with minimal inflation allowances.
Adopt as a primary monetary goal the backing of our currency with domestic production within the physical economy rather than the “print, loan, charge, and spend” policy of bank-centered monetarism.
Extend the authority of the Securities and Exchange Commission to investigate and eliminate predatory financial practices within U.S. capital markets that are destructive to U.S. industry, infrastructure, and labor.
Use the findings of the National Price Commission to establish an annual National Dividend that provides citizens with their rightful benefits accruing from the appreciation of national productive capacity through the application of science and technology to productive processes. The National Dividend shall utilize the amount of the guaranteed basic income as a floor in calculating benefits and shall consist in both direct payments to citizens and pricing subsidies for products sold in U.S. markets.
Establish a new federal agency to oversee and regulate mortgage funding, assure low-interest lending for housing, and protect the housing markets from predatory financial practices, including the inflation and deflation of housing bubbles.
Assure funding and legislative support to implement energy-conservation actions such as those contained in the 2005 report of the Rocky Mountain Institute entitled, “Winning the Oil End-Game: Innovation for Profits, Jobs, and Security.”
Provide increased federal R&D funding for hydrogen technologies and for technologies that replace the internal combustion engine.
Provide funding for free college-level education for all U.S. citizens.
Reverse privatization of public utilities and re-regulate on a fair-price basis.
Protect and extend union collective bargaining rights.
Restore public service requirements for media broadcasting.
Establish public funding for all U.S. elections along with mandatory free air time for political candidates.
Depoliticize all agencies of the executive branch from undue corporate influence in decision-making and establish new and meaningful programs of public access and participation.
Establish federal support mechanisms allowing community banks to provide low-interest loans at one percent interest to small businesses and consumers.
Utilize a federal-state partnership to establish a series of ten regional mega-universities within the United States to serve both U.S. and international student audiences.
Reconstitute the federal budget by eliminating programs supplanted by the guaranteed basic income, utilization of direct Greenback-type funding where appropriate, and selective users’ fees.
Eliminate collateralization of private sector banking with federal debt securities. Emergency borrowing by the federal government will take place only through direct sale of Treasury bonds.
Eliminate all federal, state, and municipal income taxes and replace with a national sales tax.
Establish a mandatory annual income ceiling for individuals and corporations.
Establish a mandatory national building and zoning code that provides for affordable housing, use of renewable energy resources, and expanded mass transit.
Recreate and revitalize the nation’s railroads.
Establish a system of universal health care that draws heavily on concepts of lifestyle and prevention.
Establish meaningful programs of center city renewal to transform “death zones” into vibrant centers of urban culture.
Abolish the International Monetary Fund, the World Bank, the World Trade Organization, and the North American Free Trade Association and replace them with an international monetary authority under the U.N. whose function is to regulate international currency exchange to the mutual benefit of all parties.
Place all outstanding loans by the IMF under bankruptcy reorganization.
Support models of sustainable economic development among developing countries.
Begin the withdrawal of U.S. military forces from overseas bases.
Outlaw all covert warfare carried out by U.S. government agencies.
Eliminate all military programs of domestic surveillance and all overseas surveillance, detention, and torture contrary to established international law.
Reduce U.S. arms sales abroad to essential defense requirements.
Eliminate all U.S. funding of mercenary or contractor military forces.
Reconstitute the CIA and NSA as supporters of a defensive military posture and depoliticize their operations in order to assure accurate professional data-gathering and analysis.  
Reconstitute the State Department as an agency to support the democratic aspirations of the people of the world.

Eliminate the entire U.S. national debt.
Carry out a general demilitarization of American culture.
Reduce the military budget by elimination of wars of “choice,” abandonment of “full spectrum dominance,” and restoration of a military devoted to multilateralist defense of the U.S.
Work with the nations of the world on establishing democratic economic systems based on the utilization of credit as a public utility in accordance with U.S. constitutional traditions.
Undertake reclamation and desalination programs to bring water supplies to drought-stricken areas.
Accomplish a permanent long-term conversion to renewable energy sources, including water-fueled hydrogen cells suitable to provide all power needs for homes and businesses.
Refocus the U.S. space program on activities that support space science and the economic development of space resources.
III. Conclusion

One final recommendation could be made, which would be to restore to our citizens the money they have been forced to borrow during their lifetimes rather than enjoy the benefit of a National Dividend which could have been implemented decades ago. At a current estimated value of over $12,000 per year, the lifetime amount would average around $500,000 per adult. This figure represents the amount of debt we have had to incur, not including interest, due to a financial system that benefits the monetary controllers, not the people of the nation.

As monetary reformers of the past have affirmed, a program like this represents a spiritual vision. It cannot be achieved by moving pieces around on an economic or political chessboard. It requires a new way of looking at humanity—as individuals, who, like oneself or one’s family or one’s nation or those of one’s religion, also have a right to a life of abundance and security on the planet earth.

This abundance and security are both available, not by accumulating money, power, or influence, but by looking to the spirit within and allowing the splendor of that vision to manifest in the outer world. This vision was reflected in ideals of our republic expressed in the Declaration of Independence and the Constitution, and is now reflected in the program of reform described by monetary reformers both past and present.

Of course no one can say how much more time must pass before such a program can be implemented. The illusion of scarcity has society in a stranglehold. Will it take a nuclear war to get us to wake up? A worldwide revolution? Catastrophes from pollution or global warming?

For now, enlightened individuals must do the best they can to acquire and maintain a spiritual perspective and be prepared for the time when conditions ripen. Measures such as getting out of debt, creating local currency/barter systems, forming conscious communities, and acquiring manual skills are some of the economic actions people can take to protect themselves.

Also, people can take action through their state and local governments. Before the Civil War we had state-owned banks. During the Depression, cities experimented with their own currencies. The states could even initiate a constitutional convention to amend the Constitution to restore citizens’ monetary control.

Finally, don’t feel badly about being in debt and wanting to get out. Almost everyone is in debt to some extent, millions of people are over their heads in debt, and the situation is going to get worse.

But remember that before long, monetary reform based on public control and issuance of credit will be recognized as the most fundamental requirement of economic democracy and will be implemented. It’s been said that the tyranny of money “is the last tyranny.” Eventually the time may come when we will be more developed spiritually and perhaps won’t even need money anymore.

Then people will be able to walk into any store and take what they need, free for the asking. We’ll do what work is required just for the enjoyment and adventure of it. No one will desire what another has because we finally will have understood that the bounty of God’s universe is infinite. That will be the ultimate monetary reform.

RE: LaRouche - Admin - 12-08-2007

Prof. Rodrigue Tremblay

"The problem [of loan defaults] will be significantly bigger next year [2008] because 2006 [mortgages] had lower...standards."

Henry Paulson, U.S. Treasury Secretary

"The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."

John Maynard Keynes (1883-1946)

Questions from the Turkish Daily News, Istanbul, Turkey.

Question No 1- What triggered the US subprime crisis? can you compare it to past crises such as the 80s crisis?

Answer by Dr. Tremblay:

Four interrelated factors are responsible for creating the ongoing [subprime mortgage] financial crisis that is raging in the United States today.

First, monetary policy. After the technology dotcom bubble burst in 2001 and brought about the March to November 2001 recession, the Greenspan Fed aggressively lowered the Federal Funds rate from 6.5% to 1% in 2004, the lowest it had been since 1958. it is considered now that this was excessive, and that the Fed should not have lowered the Federal funds rate below 2%, and that it should have begun to raise it sometime in 2002. Indeed, from 2002 to 2004, the American central bank pursued a monetary policy that was too expansionary. Former Fed Chairman Alan Greenspan has argued to explain his policies that he was afraid of an onset of deflation, but few economists agree with him. Between 2002 and 2004, the Fed had no need to keep real short term interest rates so negative for so long, especially as the Bush administration was cutting tax rates and increasing military expenditures with its military invasion of Iraq.

Second, the housing boom. Abnormally low interest rates in the U.S., but also elsewhere because of the interconnections between money and capital markets, fed a housing boom world-wide which was unsustainable because partly based on price speculation. Indeed, mortgage rates in the U.S. remained low, even after the Fed started to raise the Federal funds rate from 1% in mid-2004 to 5.25% in June 2006. This was brought about by Americans borrowing huge amounts abroad. —In 2006, the U.S. current account deficit even reached 6% of GDP. China, Japan and oil-producing countries were the main buyers of U.S. Treasury bills and bonds.

Third, new banking rules. With ever rising house prices, lending institutions relaxed their lending rules as the housing collateral behind the loans was gaining in value. Mortgage banks and other lenders began to accommodate subprime borrowers with dubious credit by extending mortgage loans to homebuyers who would not have qualified in other times. Nontraditional home loans were advanced to borrowers who had no documented incomes. Some loans were interest-only loans with down payments of 5% or less. Some were adjustable rate loans (ARMs), with low rates for one or two years to be reset later at much higher rates. In 2006, about 25 percent of American mortgages were subprime and close to 20 percent were adjustable rate loans.

Fourth, new financial instruments. With the demand for mortgage loans increasing, large banks resorted to some inventive financing of their own in order to economize their capital. They began repackaging loans and slicing them into some exotic new types of securities, and in so doing, shifted their lending risk to the buyers of such securities. Thus came into being a new class of securities—often rated AAA by credit rating agencies —that money market funds, insurance companies, pension funds and other investors could purchase.

These new "structured investment vehicles" (SIVs) came under various names such as "Collateralized Bond Obligations" (CBOs) or "Collateralized Debt Obligations" (CDOs). They had the characteristics of unfunded short-term asset-based commercial paper (ABCP). It is this ABCP market which is unraveling presently in the United States and elsewhere, and which is at the center of the current financial crisis. At its peak in the summer of 2007, the U.S. ABCP market was valued at some $1.170 trillion. It has fallen now to some $900 billion and is still contracting, as banks write down bad debts. [N.B.: This process of financial disintermediation may last many years.]

The savings-and-loans crisis of the early 1980's was also a serious blow to the U.S. economy. Over 1,000 savings and loan financial institutions failed, and losses were estimated to have totaled around $150 billion. As well, the crisis was a contributing cause to the 1990-1991 recession. This time around, the financial crisis is at the very least as bad, if not worse, because it involves the integrity of the entire American banking sector. The extent of the losses this time is not yet fully known, but everybody agrees that it will be very substantial.

[Another 1990 example is the near failure of the hedge fund Long-Term Capital Management (LTCM), in September 1998. The Federal Reserve (FED) had to intervene in panic and provide liquidity in order to prevent a forced liquidation of the large positions held by LTCM, which would have depressed bond prices and hike interest rates, at a time there was a financial crisis in Asia. —N.B.: Hedge funds are essentially speculative private entities that take risky financial positions in interest rate, currency and commodity derivatives, and in financial markets in general.]

Question No 2- How will the average American be affected?

Since home ownership is a large portion of the average American's net worth, declining house prices and foreclosures on delinquent mortgage loans are bound to reduce private consumption spending in the coming months through a negative "wealth effect". The loss of jobs and incomes in the construction and financial industries is also going to negatively impact consumption spending. Above all, the average American may have to reduce his debt load. Together, mortgage debt and consumer debt account for some 125 percent of disposable income. These are historically high levels.

Question No 3- How do you assess Fed's policies after the outbreak? What is your opinion about the scepter of inflation?

Well, as I wrote on my blog of last September 21, I think the Bernanke Fed panicked when it announced a larger than expected half percentage point cut in both the federal funds rate and in the discount rate, and this after having slashed its discount rate by a half point, on August 17 (2007). The purpose was to facilitate distress borrowing by America's largest banks and to facilitate the bailout of their affiliates (known as conduits) and other operators, such as hedge-funds, caught in the sub-prime loans crisis. In so doing, the Bernanke Fed is, to a certain extent, following Walter Bagehot's advice for aggressive discounting in a situation of financial crisis. The only problem is that Bagehot's rule calls for the central bank to lend copiously in times of critical credit stringency ... but at a high rate of interest. By lending to troubled lenders at reduced preferential rates, the Fed has been acting as their "government" or their 'insurer", i.e. subsidizing their risky loans operations and innovative finance, while taxing anybody else who holds American dollars. It is not only attempting to make the banks more "liquid", but also more "solvable" and less likely to fail.

In so doing, and especially with its policy of abandoning the dollar in foreign exchange markets, the Bernanke Fed is sowing the seeds of future inflation. All the new money that has been injected into the financial system will be difficult to retrieve and inflationary pressures should begin to show in a few years, after an expected economic slowdown. The more so that the 54-year average long inflation-disinflation-deflation Kondratieff cycle is about to run its course by 2010-11. A new inflation phase should begin thereafter.

Question No 4- When the US coughs, the world gets flu, they say. What will happen when the US gets a flu such as this? What are the prospects for emerging market such as Turkey, which rely on exports, plus have seen massive foreign capital inflows during the past 5 years?

The U.S. economy accounts for about one quarter of the world economy, so it is reasonable to expect that an American slowdown will impact other economies. As of now, Europe and Asia are still booming. However, the decline in the U.S. dollar and the concomitant appreciation of the euro and most other currencies, coupled with the rise of the price of oil, is bound to have a negative impact on these economies. In fact, it can take as much as two years for a currency over appreciation to impact the real economy.

The danger for Turkey is to be caught with an overvalued currency while pursuing an export-led growth strategy. Indeed, in the last few years the (new) Turkish lira has risen against the U.S. dollar and even against the euro. This has had beneficial effects in the fight against inflation, but this also could hurt future growth. The most recent example of such a predicament was Argentina, in the late 1990's, which was forced to abandon its peg to the U.S. dollar.

Question No 5- Do you perceive a difference of approach between the Anglo-Saxon economies and continental Europe economies, which have, for the most part, come out unscathed?

As you know, some European banks had to be bailed out after suffering huge losses coming from their asset-backed commercial paper operations. As a consequence, the Bank of England and the European Central Bank have injected huge sums of new money in their banking sectors. In the U.S., the Fed has a double mission, which is to contain inflation but also to accommodate economic growth. In Europe, the ECB's central mission is to contain inflation. This does not mean that there are not political pressures to abandon the fight against inflation in order to spur growth, as Mr. Sarkozy's campaign against Mr. Trichet's policies well illustrates. On the whole, however, it would seem that the rush toward irresponsible banking practices was less prevalent in Europe than in the United States, and that the negative impact should be less prevalent in Europe than in the USA.

Question No 6- What is the lesson to be learned from this crisis, and what kind of precautions should be taken?

Obviously, there was a lack of diligence and supervision on the part of central banks and of other regulatory agencies, especially in the United States. Former Fed Chairman (1951-1970) William McChesney Martin once said that "The job of the Federal Reserve is to take away the punch bowl just when the party starts getting interesting." —As the subprime financial crisis was getting up steam, the Greenspan Fed seemed to have been too close to the Bush administration and its political objectives and not enough aware of the danger that new financial rules were creating for the health of the financial system and of the economy as a whole. The Fed should have taken the monetary punch bowl away in 2003-04, but it did not. We still do not know the extent of the damage that has been done to the real economy. I hope it can be contained and will not spread.

Question No 7- Do you foresee a US recession?

Fed Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson do not see a recession in the U.S. in 2008. As for myself, I think an economic slowdown is unavoidable in 2008. I do hope that the worst-case scenario will not materialize. However, I expect nevertheless a mild American recession in 2008, to be followed by a more severe one in 2010-2011 (at the trough of the 10 year cycle).

Question No 8- What will be the impact on a- The dollar?

Well, the U.S. dollar has been declining for many years and is hitting all-time lows against the euro. In 2000, the euro was worth less than 83 cents, but it is now close to $1.50, a 45 percent depreciation for the dollar. I think the current phase of the dollar decline is close to have run its course. Baring some big geopolitical shock, the U.S. dollar could rebound in the months ahead. It is presently very much oversold.

Over the long run, we have entered a period where the demand for energy and resources is going to be strong relative to supplies. This should favor the currencies of resource-based economies, such as Canada, Australia and the emerging economies in general.

Question No 9- What will be the impact on  oil prices?

Oil prices have been the mirror image of the decline of the U.S. dollar. At close to $100 a barrel, the oil market is either close to a top, or is factoring in a Bush-Cheney bombing of Iran and a resulting serious disruption in oil shipping in the gulf of Hormuz. If there were to be a conflict between the United States and Iran, oil prices could go much higher, before plummeting down due to a worldwide recession. If it turns out that there is no hot conflict with Iran and no disruptions in the supply of oil, the present high prices would logically ratchet down.

RE: LaRouche - Admin - 12-08-2007

Lyndon H. LaRouche, Jr.

These remarks were presented by Mr. LaRouche, and translated into Chinese, for a conference titled, "Forum on the U.S.-China Relationship and the Peaceful Reunification of China," sponsored by the Institute of Sino Strategic Studies, which took place in Los Angeles on Nov. 24. See also the transcript of the dialogue which followed Mr. LaRouche's address.

As I reported in an international webcast, broadcast from Washington, D.C. on July 25th this year, the present world monetary-financial system has entered the most deadly crisis of recent centuries. At that time, I emphasized two things about that forecast: that the end of the present world monetary-financial system were inevitable, unless that system were replaced by a new world system during a relatively brief, remaining time available.

Since that time, evidence bearing on all relevant leading developments from around the world, has confirmed the essential accuracy of my July 25th forecast on all relevant points. Since that time, nothing visible has actually been done by any government to change the present world system in ways which would tend to solve this crisis. For example, every action taken, since that date, by the U.S. Federal government and the U.S. Federal Reserve System, has been an intrinsically tragic mistake. So far, every reaction of the governments of the U.S.A., and of western and central Europe, in particular, to deal with their crisis, has been worse than a failure. The crisis has an inherently hyperinflationary form which should remind us of developments like those of 1923 Weimar Germany, but, this time, on a world scale.

However, we must not ignore the crucially relevant fact, that any monetary-financial system, when considered by itself, is, essentially, only the equivalent of a "paper system." Fortunately, monetary-financial systems can be replaced. In the long term, it is the choice of the ruling form of social system on which the design of the physical economy is based, which is essential.

When we take into account the knowledge which we have available to us today, the following rule applies: whenever a powerful combination of national governments can arrive at a suitable agreement to change a failed financial-monetary system, a solution for any modern financial crisis can be found.

Therefore, my leading point in this report today, is that: Specifically, were the government of the U.S.A. to propose cooperation on a suitable reform, to an initial sponsoring group made up of the governments of the U.S.A., Russia, China, and India, it would be possible to bring the present international crisis under control, and, therefore, to rally a majority of the world's nations to join in measures which would stabilize the world system, and provide the foundation for a general economic recovery.

The last general recovery of the economy of the U.S.A. and western and central Europe, was initiated within the United States under President Franklin Roosevelt. The death of President Roosevelt was a great loss to humanity; but, despite his death, although the policy-changes made under his successor were, generally, a big mistake, the U.S. economy continued to prosper under the continued benefit of the then deceased President Roosevelt's policies until the assassination of President John F. Kennedy on November 22, 1963 (despite the bad policies introduced under President Truman).

The effects of the 1964 U.S. entry into the long war in Indo-China, like the more recent, very foolish wars which were launched by the Tony Blair and George W. Bush governments of the United Kingdom and the U.S.A., have led, successively, into the wrecking of the international monetary system in August 1971, and a general physical-economic decline in the economies of Europe and the Americas. This decline over, approximately, the 1968-2007 interval, has led into the consistently worsening physical-economic situation in those nations up to the present time.

The decline in those economies of Europe and the Americas, has had many contributing causes, but it was chiefly the result of the introduction, beginning 1971-1972, of a presently continuing, ruinous, pro-Malthusian type of global floating-exchange-rate monetary system. Despite some important trends for improvements in some leading national economies in Asia, the per-capita level of net physical-economic strength in the world as a whole has collapsed.

Thus, despite the improvements for a significant portion of the total economy in some leading nations of Asia, the deficit in development for the largest fraction of the populations is critical, at the same time that the productive powers of labor in western and central Europe, and in North America, continue to collapse catastrophically. Therefore, the needed development in even progressive economies in Asia, requires a mobilization of the physical capital and technology needed to raise the level of basic economic infrastructure and physical productivity throughout Asia and Africa, and also in the dangerously decadent, present form of the national economies of western and central Europe and of the Americas.

The most crucial among the urgently required actions to be taken jointly a group of nations led by the U.S.A., Russia, China, and India, are the following.

The present world monetary-financial system must be placed in a prevalent, juridical status of reorganization in bankruptcy.

This means that: As provided by the U.S.A.'s Federal Constitution, all central banking systems heretofore independent of sovereign governments, are placed under the sovereign powers of the relevant constitutional government.

This means that: The government, through an institution equivalent in authority to the constitutional design for a Federal Treasury Department elaborated by U.S. Treasury Secretary Alexander Hamilton, will assure that: under rules for reorganization in bankruptcy, those payments authorized either specifically or categorically by the Federal authority will be treated in a normal fashion, as prior to placing the old monetary-financial system into receivership, but subject to supervision in the matter of regulating the retirement of outstanding capital-financial obligations.

The included objective of these reforms of a system in bankruptcy, is to maintain, and to elevate the level of existing essential levels of employment, payment of ordinary pensions, and so forth, and production of essential goods and services, this with a view to accelerating rates of growth of net physical output, per-capita, and per-square-kilometer productivity of the economy.

The physical-economic recovery and net growth of these economies, per capita and per square kilometer of total territory, requires an emphasis on the application of physical improvements in basic economic infrastructure, and the use of capital-intensive investments in basic economic infrastructure as the physical-economic driver for the other forms of production in the economy.

The success of such intentions by governments, and others, demands a fixed-exchange-rate system not much unlike the design for the Bretton Woods fixed-exchange-rate system under President Franklin Roosevelt.

In other words, the needed reforms must be premised on the equivalent of a pervasive science-driver policy for the economies and territories as a whole.

Science & Raw Materials
The possibility of success for such required programs, depends to a very large degree on two global considerations, considerations which bear on each part of the world, and the world's necessary development viewed as a whole.

The first, is development and refinement of raw materials supplies.

The second, is science as defined in terms of fundamental, universal physical principles.
The two are functionally inseparable: there can not be sustained development of needed raw materials supplies without emphasis on fundamental physical-scientific progress measurable in terms of characteristic energy-flux density of modes of production.

The realization of those crucial objectives demands a clearly defined shift from what has been, hitherto, the strategic advantage of maritime powers over the quality of power of continental interiors. For most of a period reaching as far back into the times prior to the last glaciation in the northern regions of the northern hemisphere, ocean-going and related development of maritime power has been economically and strategically at a great advantage over the economies of inland habitations. This began to be changed with the so-called "geopolitical" implications of the appearance of the transcontinental railways of the U.S.A. Since that time, the related clash of maritime powers, such as those of the British Empire, with the nations and peoples of continental Eurasia and the U.S.A. had been dominated, strategically, by the challenge to this domination, which had been represented by the victory of President Abraham Lincoln's U.S.A. That victory had been the root of the reaction against the U.S. success, a reaction reflected as Prince of Wales Edward Albert's launching of the 1895-1945 war of Japan against China, and by those related imperialist wars of the 1905-1945 interval, which illustrate the challenge which continues in either similar or relevant other expressions still today.

As in the case of China, the elevation of the conditions of life of the entire population of China (and, also, relevant other nations), demands a scientifically very advanced approach to development of raw materials supplies in presently poorly developed northern Eurasian territories. Improvements of management of water supplies throughout Eurasia, extended and qualitatively improved forms of global (e.g., transcontinental/intercontinental) transport systems, and "crash program" qualities of emphasis of both power supplies and production technologies based upon nuclear-fission and thermonuclear-fusion modalities, are now indispensable.

This urgently needed transformation of policies within the Eurasian territories and beyond, is beyond the present resources of Asian nations by themselves. Western and central Europe, for example, must be mobilized to earn their livelihoods by producing an immense volume of physical products of very advanced technologies as supplements needed for the appetites of the densely populated regions of Asia.

For example, the potential for such developments is illustrated by the present implications of the reopening of the rail-systems leading from Korea as a whole, into China and Russia. The implicit common physical-economic interest of Japan, Korea, China, and Russia (among others) in this opening up of systems in North and East Asia, is to be regarded as one of the presently great opportunities for the benefit of humanity.

The Obstacle to Sanity
Today, the world as a whole is menaced by a kind of threat to the continued existence of civilization, which is to be remembered from what became known as the "New Dark Age" of Europe's mid-Fourteenth Century. Then, as in places such as Southwest Asia now, civilization is destroying itself through the predatory actions of a reigning social class of predatory financiers, financiers, like those of the Lombard bankers of the Fourteenth Century, who used the financial profits taken from the financing of wars, as in Southwest Asia now, as a mode of financier life.

These predatory descendants of the Venetian financier tradition of Europe's so-called "Middle Ages," have created vast amounts of accumulated purely fictitious financial gains from predatory speculation. These accumulations have reached levels at which the entire financial bubble created in this mode is now collapsing in a way which mimics the experience of Weimar Germany during the latter half of 1923.

These financier interests, are not merely predatory, but have entrenched themselves as a powerful, controlling interest over the governments and leading political parties of leading nations. As a result, there is presently, an existential clash of the appetites of that class of predatory financier interest with the most vital interests of not only the majority of the population within nations, such as the U.S.A., but the very continued existence of anything resembling a reasonable order throughout our planet.

That medieval legacy of predatory power of usury has gained such power that it can not be defeated except through a concert of clearly defined, mutual self-interest among a combination of powerful nation-states.

That is the common interest which we in the U.S.A. and China, share at this juncture. That is the crucial importance of those within the U.S.A. who typify that common interest of the people of the U.S.A. and Asia. It is our awareness of this common interest, which is therefore a crucial factor in world history at this juncture.

Dialogue with the participants.

This is a transcript of the dialogue which followed Lyndon LaRouche's speech at a conference titled, "Forum on the U.S.-China Relationship and the Peaceful Reunification of China," sponsored by the Institute of Sino Strategic Studies, which took place in Los Angeles on Nov. 24.

Q: I admire Lyndon LaRouche very much, and I have admired him for a long time. Now I have a question concerning, from the point of U.S.-China evolving economic relations, we know in the United States there are so many, many [inaudible], many parts are made in China, through their hard labor, and leading to damage to the environment and the character of wealth. The United States' corporations, at the upper level, are profiting so much from this process.

Is there any force in the world that can stop this process?

The United States and China Need Each Other
LaRouche: Yes, this is something I've concentrated on a great deal. In China, you have a mass of dollar obligations, which are held by China. These dollar obligations are important to the people of China, for investment in infrastructure. People talk about environmentalism: This is nonsense talk. Yes, if you do not develop infrastructure, you have an environmental problem. If you do not develop water systems, if you do not develop improved systems against contamination, to clean the air, to clean the water: If you do not do these things, you will have a problem! Therefore, the capital for transportation systems, for water systems, for power systems, and so forth, is essential to the people of China, without which the interior areas of China can not be developed, and the coastal areas can not be cleaned up of this smog. Hmm? Therefore, it's important that China have the use of its dollar holdings, to purchase assistance, in terms of capital goods, for these missions. If the dollar collapses in value, and the Chinese currency collapses as a result, then the Chinese people are cheated of their possibility of a good future.

Therefore, the solution is, to take the advantage [of the fact] that the United States government is going to become terrified in the coming weeks. Because the U.S. dollar and the U.S. economy are now in the process disintegrating! And that will become apparent to everybody in a short period of time. The great asset that the United States has, is China: Because China has become the leading trading partner for the United States, and the ability to maintain the economy of China, depends on getting the economy of the United States to fix its value, and to get back to increasing its exports into China.

A stabilized relationship on this basis, between China and the United States, would change the world! Every part of the world would have to cooperate. They would have no choice. Because the whole world is bankrupt, not just the United States; the entire world system is bankrupt. Money, today, is not worth anything! You think it's worth something, but it's not—you'll find out tomorrow, it's not worth anything. The collapse of the housing crisis, the collapse of the banks—every bank of the United States, major bank, is bankrupt—hopelessly so—not just Citibank. They're all bankrupt! The U.S. is bankrupt! The Federal Reserve System is bankrupt!

The U.S. dollar is fictitious, there's no backing for it. We've been printing dollar obligations all over the world, and there's nothing to substantiate it. This has been a criminal insanity.

So therefore, what do you do?

Well, very simply: The governments of China and the United States—assuming the United States government is going to be increasingly terrified, every person in the Senate who voted against China, is in trouble right now, politically, when they come to back to office, because the U.S. economy is collapsing: Therefore, the solution is, if the United States and China negotiate a treaty agreement, to fix the value of the yuan and the dollar, now, as a fixed-exchange-rate system, every leading economy in the world will have to join. If we go to a fixed-exchange-rate system, shut down all so-called central banking systems, because they're all bankrupt—the British are bankrupt, hopelessly bankrupt. The Bank of England is bankrupt, the whole system is bankrupt! The Queen's personal bank, Coutts, and the Bank of Scotland are bankrupt. Every country in western Europe is bankrupt, hopelessly so.

So they have no choice: The world is bankrupt in financial terms. The only thing we can do, is get agreements among governments, to return to a fixed-exchange-rate system of the type of that Roosevelt created during the end of the 1940s.

Then we say, we freeze everything. We have national banking systems in every country—you can not have the money running free, you have to have regulated systems: national banking systems. And you negotiate long-term treaty agreements, of a 25- to 50-year duration, as packages among countries. And that way, we can get out of it.

We are going to wipe out many claims to dollars. We're going to wipe them from the books, or they'll wipe themselves from the books. We will simply say, "We're going to pay the essentials, and the other debts are going to be frozen, until we investigate them." We're going to have an operating economy.

But the key thing here, is the interdependency of China on the United States, and the United States on China, is such, that the Chinese economy would suffer, internally, from a lack of development if these dollars, if these claims were devalued. The United States would collapse without China as a market. Therefore, these two nations need each other. They are prisoners locked as in a marriage that can not be broken. And they have to legalize the marriage.

We Are in Crisis Politics
Q: I have a very crucial question to ask. My question is how do you promote, most emphatically, how do you promote and convince the government or any other parties to adopt your idea, your philosophy, and your perspective on that strategy? Or the people of the United States?

LaRouche: Well, the people in the United States are suffering. They're suffering—the people of the United States have a 10% popularity for the present Democratic Party leadership. The people of the United States have contempt for the Congress, where they did not have contempt last November, a year ago. The people of the United States do not like what the Congress is failing to do right now, with the housing crisis. And the housing crisis is not only a housing crisis—that's a lie. It's a banking crisis: The institutions of government and every bank are in crisis. The people of the United States have interests, such as housing, such as jobs, such as health care, things which they're now losing! The people of the United States are ready to revolt—maybe not tomorrow, but two days from now, or three days from now.

Therefore, you go to the Congress. Now, I have many friends in the Congress—they're cowardly friends, but they're friends. And in the institutions of government, in the professionals in government, you have a better quality than you do, actually, in the elected officials, in many of them. They understand these kinds of problems.

Let me speak very frankly: You have a predator who controls the Speaker of the House, [Nancy Pelosi] is controlled by a fascist banker, Felix Rohatyn, who also controls Sen. [Dianne] Feinstein from out here, which is what much of the politics in California suffers from. And good Democrats are afraid to act politically, because of the control exerted by these forces, which are actually fascist forces, like Felix Rohatyn, the man who helped put Pinochet in power in Chile! He was part of the administration. And George Shultz, who is no better, was also part of it.

So the question is, as I said here today: You have a powerful financier interest, which is a predatory financier interest, which is fascist, in point of fact. Just as fascist as Hitler. They don't yet have the dictatorship Hitler had, but they have the same direction of thinking.

The power lies with the people. The problem is, that the lower 80% of family-income brackets of the people of the United States have been for over two, three decades, they've been shut off from real access to their government, as their government. Now, they're losing their housing, they're losing their employment, they're losing everything; they're losing their health care, they're losing their pensions. They want an answer! We can provide answers, and I find that our going directly to the people on the state level, and the county level, the county politicians, the elected ones, the state officials—you get a response there, you don't get in the Congress now. The Senate and the House are totally controlled by the predatory enemies. So therefore, it's a matter of power: The system is collapsing, the leading power in the world that controls the world is losing power. Those in powerful positions in elected office, are losing power, especially at the Federal level.

So therefore, if we mobilize the people at the base, that is, on the state level or the county level, find officials who are honest and who are responsive, we can get a change. We're on the verge of the greatest change in modern history, either for the worst or for the better. And what we do in organizing the base of the population is going to determine that.

If we get cooperation, in spirit, between the United States and China, among the people of the United States and China, the people of the United States and Russia, the people of the United States and India, and so forth, then we will find that we have power, in a time of crisis.

But this is crisis politics. And that's the only answer to your question: We're in crisis politics. Are we prepared in an understanding way, as to what we must do, practically, in these circumstances. We can win. If we don't win, we're not going to have much of a planet.

The Solution: Nuclear Energy
Q: What do you think, Mr. LaRouche, about this Iraq and Afghanistan war, where the U.S. spends billions and billions in dollars, [while] only those people like Cheney benefitted from such a war? What do you think? That's number 1.

Number 2: about the environmental situation. The U.S. is the largest CO2 producer in the world. And it's actually on an increase, the CO2 production. What do you think in that respect?

LaRouche: Well, let's take the second one first, because the first one has more substance to it.

The idea, the environmental rage associated with Al Gore, the former Vice President of the United States, spread among the people of the United States today, is a fraud. It's based on the shrinkage of the number of leading people with scientific qualifications in the population.

My generation, as you know, is the generation—I was born in 1922. Some years ago, we had a science [foundation] called the Fusion Energy Foundation. It was one of the leading scientific institutions in the United States, and was influential internationally. Then, we find, as that generation, my generation, has died out, the younger generation, the generation that is now in power in Congress, between the ages of about 50 and 65 years of age, are scientifically incompetent and inert. And they appeal to a similar stratum in their own age group in the population, which is similarly anti-scientific, inert. These are the 68ers, and they have a 68er ideology, which is against science, and which is against progress, it's against agriculture, it's against industry, it's against blue-collar workers. And this is part of our acute problem.

Now, there is no scientific competence behind what Al Gore says: It's a fraud. His famous television address contains an absolute scientific fraud. This is nothing but Malthusianism! It's the same kind of thing: of reduction of population through starvation and similar things. This is a complete fraud: This is the enemy of civilization. And I think Bill Clinton has recognized by now, that Al Gore was no friend of his, as President. He was a nuisance; he's a right-wing fascist, and he should be exposed as that. He eats too much, among other things.

But, on the actuality of this: Most of the heat in the Solar System comes from only one source, the Sun. The idea that carbon has something to do with heating is nonsense! If you cut down the carbon, you're going to increase the heat! By converting to methods which use biological materials instead of other kinds of materials for power. Because if you take a beam of sunlight, and you inject it into agriculture, or the forests, by the magic of chlorophyll, you transform solar radiation into viable, living biomass. This transformation by chlorophyll, lowers the temperature of the planet, through this growth.

Whereas, if you allow this sunlight to just float around there, or use these methods that he [Gore] talks about, the environmentalists talk about, you will actually raise the temperature, by having less development.

So what we need, is a high-technology [solution].

Now, back to the question of the war. The war policy is related. The war policies come largely from Britain, because the United States under the present President is simply controlled by largely international British financier interests. And the problem is, as has often been the case in our past history, that the United States has been controlled from the top, by alien interests from outside the country, usually associated with the dirty side of finance—as is the case, in this case.

The policy we're dealing with, is that for a long time, there's been a policy called the "Revolution in Military Affairs." This was denounced by President Eisenhower, in his outgoing speech, as President, and it came from a certain section of what he called the "military-industrial complex." The idea was to get rid of regular armies, regular military forces of the United States, and introduce privately funded warfare, and private wars, of the type like the British East India Company used to run, in the world of the 19th Century, and [the British empire] still runs today.

The policy behind these wars, in Southeast Asia, and more recently in Southwest Asia, all comes from London. Dick Cheney, for example: His career was made by the British interests which are behind Tony Blair, the former prime minister. We got into a war in the 1960s, in Vietnam—it was a fraud. It was voted by a fraud, under the terror conditions arising out of the assassination of President Kennedy. The war in Indo-China was that.

The subsequent wars we've gone into, are all the same thing. This war was started by fraud, it was initiated by the British. I was involved personally in fighting against this; I was personally victimized on this thing. This came from London, and Cheney and his wife are instruments of London. And also there are other people in the United States, like Rohatyn and like George Shultz, and so forth, who are essentially more British than they are American.

And you know what the President is—he's a piece of waste material, politically. He has no control over his own government. He's an idiot, he's a mental case, and he was put in there because he was a mental case, that would enable other people to control him.

So you're right, this is evil. We have to stop it. It has to be stopped. We can stop it. And the way to stop it is very simple: If we build, in the context of what I already said, cooperation among the United States, Russia, China, and India, we have a combination of power, which would be the most powerful combination of power on this planet. If those powers agree, on a common interest, it will be realized. The problem is, these nations are divided against each other, on one issue or another. If we can unite these nations, and others, around a combination of power which can change world policy, we can solve that problem.

In the case of the environment, the solution is: Go to high technology. More nuclear power, more high tech, more promotion of greening of the desert. All of these things, which will control the climate quite nicely. And scientists know how to do it. Unfortunately, we have people in government who are of an age group that don't know what science is any more.

Harley Schlanger

"We are winning," is the concise summary offered by Lyndon LaRouche, in response to developments following his participation at a major conference on U.S.-China relations, which took place in Los Angeles on Nov. 23-24. LaRouche was a featured speaker at the press conference which opened the meeting on Nov. 23, and then, the keynote speaker at the luncheon the following day.

The weekend conference, titled "Forum on U.S.-China Relationship and Peaceful Reunification of China" brought together scholars, journalists, and activists from the People's Republic of China, Taiwan, and the United States, and included prominent participation by representatives of the Chinese Consulate in Los Angeles. Sponsored by several organizations, including the Institute of Sino Strategic Studies, it was preceded a week earlier by a similar event in Maryland, which was also addressed by LaRouche (see "LaRouche: A New Pacific Relationship Emerges," this issue).

LaRouche's summary referred to the prominent coverage in the Chinese press of his remarks at the press conference, and articles on his keynote, which were featured in the leading press of China, including the news service Xinhua, People's Daily and China Daily . This reporting zeroed in on his most important comments, which included his analysis of the present collapse of the global financial system, and the urgency of joint U.S.-China action to solve the problem, through adopting fixed exchange rates, as a first step toward creating a Franklin Roosevelt-style New Bretton Woods monetary system.

The coverage represents an acknowledgment that leading circles in China recognize that the financial system is now in a terminal stage of disintegration, and that they are open to exploring cooperation with responsible elements in the United States. LaRouche's role, as a senior "wise man," acting on behalf of the true national interests of the United States, in an alliance of principle with China, stands in sharp contrast to the belligerent demands of the financial interests of the City of London and Wall Street, trumpeted by their puppets in the Bush-Cheney Administration and among key Democrats, that China engage in self-destruction, by accommodating to the anti-industrial, Malthusian policies of so-called globalization.

'This System Is Gone'
It was LaRouche's insistence that "this system is gone," which he stated emphatically in a webcast on July 25 (excerpted here), that triggered a renewed interest among relevant figures in China, in his proposed solutions to the breakdown of the global financial system. His authority as an economist has been established through his accurate forecasting for more than 50 years.

However, bankers, brokers, government officials, and most financial commentators in the United States and Western Europe have been engaged in hysterical denial that the "post-Bretton Woods Era" has entered its last days. For policy-makers in China, such a denial is not an option, especially as China has become increasingly dependent on the United States, both as a holder of large amounts of dollars and dollar-denominated financial instruments—which are rapidly depreciating in value—and as an exporter to the U.S.A., which is the largest market for goods produced in China. A rupture with the United States, leading to a dumping of the dollar, is clearly not in the best interests of China.

Following his July 25 webcast warning, that the system has already collapsed, LaRouche was interviewed on Aug. 16, by a Chinese reporter, who asked him to clarify his forecast, and to discuss his proposal for cooperation among the United States, China, Russia, and India, to establish a new monetary system (see "LaRouche Talks With Chinese: It's Time for Solutions," EIR, Sept. 7, 2007, or excerpts here).

From the time of that interview in mid-August until the conferences these last two weekends, official denials that the system is finished have lost all credibility. LaRouche's analysis of the breakdown has been confirmed, in full, leading to the next, obvious question: What option exists, besides chaos?

U.S.-China Interdependence
In his opening remarks at the press conference, LaRouche went right to the heart of this issue, pointing out that the interdependence between the United States and China—viewed by many in both countries as a negative reason for cooperation—i.e., that the collapse in the value of its dollar reserves is the price China must pay for membership in the club of "globalization"—can, and must, be turned into a positive.

China, LaRouche said, "needs to invest in capital improvements, over many generations to come.... Much of this will depend upon China's investment in U.S. dollars, either to buy U.S. goods, which is good for the U.S. economy, or to buy goods from other countries, using U.S. dollars to buy those goods. This means infrastructure investment that would benefit the Chinese people as a whole. It is also in our national interest to defend our dollar.

"So this creates a great bond of common interest between China and the U.S." After challenging members of the U.S. Congress to reverse "some very silly antipathy toward China," he concluded by saying that, in this way, "the crisis of the U.S. dollar can be solved. It will require important, sweeping, deep changes in current U.S. policy, but these measures are possible. They are feasible, they will work."

This optimism, based on a coherent plan for addressing the global breakdown crisis, combined with the strong and clear message that present U.S. policy must change, drew a lively response from participants in the conference. His keynote, which expanded significantly on this theme of positive interdependence, elicited serious questions. One question came from an individual who prefaced his comments by saying that he has admired LaRouche very much, for a long time. "Is there any force in the world that can stop this process" of breakdown? he asked.

In response, LaRouche reiterated his main theme: "The great asset that the United States has," he said, "is China: because China has become the leading trade partner for the United States, and the ability to maintain the economy of China, is to get the economy of the U.S. to fix its value, and to get back to increasing exports into China."

After developing how the U.S. and China could negotiate a treaty to establish a fixed exchange rate between the yuan and the dollar, LaRouche added that "every leading economy in the world will have to join" that fixed-exchange-rate-system. Thus, the future of the world economy depends on the change in relations between the two nations.

He concluded his answer with a quip that brought great laughter and applause: "Therefore, these two nations need each other. They are prisoners locked as in a marriage that cannot be broken. And they have to legalize the marriage."

How To Change the United States
The second question after the luncheon took up the other concern of most conference participants. While most expressed confidence that China would do what is necessary for the good of its people, to create a better future, there was pessimism about the political situation in the U.S.A. A participant from San Francisco asked LaRouche what must be done to get the U.S. government, or either political party, to adopt his policy.

The power to make this change lies with the people, he said. They have been kept from participating in their future. "Now, they're losing their housing, they're losing their employment, they're losing everything.... They want an answer! We can provide answers, and I find that our going directly to the people on the state level, and the county level ... you get a response there, you don't get in the Congress...."

What we must communicate, he said, is that "we're on the verge of the greatest change in modern history, either for the worst, or for the better. And what we do in organizing the base of the population is going to determine that."

By the end of the conference, it was clear to all participants that, not only was LaRouche's analysis of the economy right, but he was offering the only viable alternative. As word spread among participants that his luncheon address was covered in a straightforward fashion by the leading press outlets in Mainland China, there was a growing appreciative buzz, summed up by one of the conference organizers, who said, "We made history here this weekend."



LaRouche - Admin - 12-08-2007


Dom Armentano

Presidential election years usually are not recessionary but next year will be an exception. Several economic factors are colliding in an almost perfect storm to markedly slow the general economy and the stock market.

The most important signal flashing recession is, of course, the sub-prime mortgage fiasco. After years of monetary inflation on the part of the Federal Reserve, individuals and families with poor credit were suckered into low-down-payment/low-interest adjustable mortgages that simply cannot be maintained or repaid under current conditions. Their incentive is to sell the property quickly before their equity evaporates and/or the financial institution repossesses it. Yet the massive oversupply of homes and condos for sale has pushed prices down at a record clip and made additional foreclosures even more likely. Next year, unfortunately, will be the Year of the Auction.

The financial institutions have also been punished…well sort of. Various institutions including hedge funds that hold these poorly performing debt obligations have been forced (by accounting rules) to "write down" the value of these assets, take huge paper losses in the bargain, and pull in their financial horns. Thus, any near-term recovery in housing must now fight a record supply availability, falling prices, higher insurance costs and restricted credit…a near-term impossibility in my view.

Moreover, the slowdown in residential and commercial construction will send secondary ripple effects throughout the economy. Laid-off construction workers don't spend money. Construction and home furnishing suppliers sell less output and make fewer investments. Even local governments will be pinched by declining property-tax assessments and fewer developer fees. Things are likely to get worse before they get any better.

The second major factor indicating a near-term recession is the sky-high price of crude oil and refined product. Pushed upward by world-wide speculative Mid-East war fears and increases in demand (especially from China), increasing energy prices act as an inflationary "tax" on domestic production and consumption throughout the market economy. Higher costs of production will lower profits; higher prices will reduce some consumption. The only good news here is that any substantial economic slowdown in 2008 will eventually moderate the price of oil and other commodity prices as well.

The third factor in the current recession scenario – and the real wild card – is the continuing decline in the value of the dollar in international money markets caused by our Iraq blunder and the Federal Reserve–generated oversupply of dollars. Some economists would argue that a devalued dollar is good for U.S. exports, and thus positive for the economy as a whole. I disagree for three reasons.

First, the bulk of crude oil purchases takes place in dollars; a falling dollar translates into still higher crude oil prices. Second, the U. S. dollar is the major reserve currency of the international monetary system and dollar-paying investments (such as U.S. Treasury bills and bonds) are held in massive amounts by foreign banks and governments. Dollar devaluation makes these investments less attractive and any disinvestment in these areas would sharply drive bond prices down and increase interest rates.

The third reason why dollar devaluation makes recession more likely is that it effectively prevents the Federal Reserve from pushing U.S. interest rates much lower. Any additional Fed easing (inflation) would be seen as a signal of even further future dollar devaluation and even higher dollar prices for oil. Unfortunately, we will not be able to "inflate" our way out of this recession this time. We will simply have to take our lumps and let market forces liquidate the bulk of the malinvestments caused by the unprecedented Greenspan money bubble. This liquidation process will not be pretty but it is necessary to restore a sustainable economic recovery in the years ahead.

RE: LaRouche - Admin - 12-09-2007


"The near meltdown of the financial system produced by the subprime mortgage crisis in the United States is the outcome of the entrapment of the poorest sections of the population, in loans they could never repay, by the banks and lending institutions. It is indicative of the growth of financial parasitism on an unprecedented scale."


America is a war zone; our people are being cannibalized 1 before our very eyes.  Looting and plundering the world is the primary goal of the criminal cabal that controls America. We've previously demonstrated how they amass wealth by the destruction of people and material through the tactic of unending war.

     In the late nineteenth and the early part of the twentieth century, their destruction was primarily targeted at foreign peoples such as the Cubans and Filipinos (Spanish-American War), Germans (World Wars I and II), Japanese (World War II), and Soviet citizens (Cold War). Beginning in the early part of the twentieth century, this international gang turned on Americans and began in earnest to cannibalize us.

     Economic collapse is one of the final stages of the cabal's overall policy of cultural devastation. Many of their earlier phases of contrived collapse have been largely unseen or ignored by most Americans. But the final economic breakdown--now in its first stages with the bursting of the housing bubble and the collapse of the dollar--are realities U.S. citizens can no longer turn a blind eye to, because many Americans are literally being thrown out on the street through foreclosure and eviction.

 Through real estate shell games, the super-rich have looted at least $10-$15 trillion from workers. "Buy a house with a low interest loan," they lied to the workers, "and it will rise in value indefinitely."
     Workers were swindled into buying property with interest-only loans--or other predatory financing--deluded into believing that with their increased property value they could later refinance to pay off the balloon payments and sky-rocketing mortgages.

 Since 2000, outstanding mortgage loans have more than doubled: up over $5 trillion. Unpaid mortgages soared and lenders were falling all over themselves handing out sub-prime loans 2 for up to 125% of the value of the property.

  Now the real estate bubble has burst: property owners can't sell their homes or refinance them. They can't pay their mortgages so the banks foreclose and the house is sold on the courthouse steps. Within days they receive an eviction notice and they're out on the street. Since 2006, vacant dwellings have increased by more than 40% for existing homes and more than 20% for new homes. The personal tragedy these people face is overwhelming and heartbreaking.

    Since private banking interests created the scam of the "Federal" Reserve System in 1913, seizing control of American financial powers, their ability to lend money at usurious interest rates has meant that they feed on American debtors. Until recently, they've been content to reap huge profits through ordinary money-lending means--as outlined below:

Bank Home Mortgage Scam  
Mortgage Loan: $100,000.00  Interest Rate: 7.21%  
Monthly Payment $679.47  Total of 360 Payments $244,609.20  
Total Bank Profit $144,609.20  True Total Bank Profit Rate 144%

     But reaping huge profits through interest wasn't enough for them; they decided they'd not only make money on interest but loot workers of their hard-earned savings and income--and then financially destroy them: foreclose and keep the property for sale to another sucker.

Something New in Housing Bubbles
     The new real estate scam launched in the latter part of the twentieth century was the first in U.S. history to impact the economy in a much broader way than previous housing bubbles. Homeowners, using their rising house prices as collateral for mortgage equity cash withdrawal ("Use your home as an ATM machine!"), plunged as never before into additional debt to finance other kinds of spending (primarily credit card). Under the impact of this kind of financial insanity, the entire nation metamorphosed into a fantasy financial and political infrastructure built on nothing but shifting sand.

     From the 1.5 million housing units in 2001, new single-family homes and multifamily homes increased in 2005 to 2.2 million units. Meanwhile, the constant quality price index for new homes rose 30% and the purchase-only price index of existing homes published by the Office of Federal Housing Enterprise Oversight (OFHEO) rose by 50%.

     The "Federal" Reserve System set interest rates so low that they inflamed consumer borrowing, seducing workers into buying property and other goods and services they couldn't realistically afford. The increase in the net worth and the borrowing power of their houses drove workers to deranged consumption beyond their income growth. Americans were spending insanely, having been deluded into believing that their property "wealth" would continue to increase and would cover any future contingency. In contrast, personal saving in the U.S. dipped below 0% for the first time since the Great Depression, hitting negative .5% in 2005.

Having been miseducated to the point where they cannot think rationally, Americans began using their houses as cash machines, refinancing as they went. In 2005, private households raised $1.08 trillion through mortgages. Of this amount, they only spent $95.1 billion on higher-priced homes. Spending on goods and services rose in total by $539.9 billion, relative to an increase in disposable income of only $354.5 billion. In other words, about one-third of the increase in consumer spending was based on home mortgage borrowing.

The real estate bubble began to burst in the third quarter of 2005, with mortgage borrowing peaking at $1.23 trillion per annum. Falling steadily, by the second quarter of 2006, borrowing on home equity was down to $819.6 billion. Some of this sharp decline was also caused by increases in consumer credit costs.
     If you want clear evidence of the incapacity of Americans to think reasonably, just listen to the large number of homeowners, faced with a 45% loss of value in their homes, saying: "I won't accept one penny less for my house than I paid for it." A recent survey showed that only 1 in 7 Americans believes that house prices will go down. These benighted souls are being forced out of their homes by the police who come to serve eviction notices.

     Because mind-destroyed homeowners resist downward price adjustments, the market becomes illiquid, with unsold homes becoming a glut on the market. In many instances, only after foreclosure and eviction are prices lowered to realize necessary sales. Predatory lenders are happy to adjust their lending and selling practices to fit the changed market.

     Unlike previous housing downturns, this current bubble burst hasn't been caused by credit tightening. The "Federal" Reserve has merely returned short-term interest rates to more normal levels and long-term rates are unusually low relative to those short-term rates. Unlike previous downturns caused by tight money that were followed by vigorous recoveries, this present real estate collapse, occurring despite low interest rates and loose money, will likely take a great deal of time for recovery, if there is ever a recovery at all.

How the Real Estate Scam Worked: Interest-Only Loans

Interest-rate only (IO) mortgages are a new variation of the Adjustable Rate Mortgage (ARM). 3  IOs are loans that permit the borrower to pay only the interest on the mortgage for a specified period of time—usually five or ten years. During this period, the monthly payment contains no principal.

 How do these loans really work? Consider as an example a 30-year loan at a fixed rate of 6 percent on $200,000.

 In a regular full amortizing (FA) loan, the homebuyer will make monthly payments of $1,199. In an IO mortgage with a five-year IO period, the homebuyer will pay instead $1,000 for the first five years, that is, 17 percent less than the FA loan. In exchange for initial lower monthly payments, however, the holder of an IO mortgage will see his or her monthly payments jump once the five-year IO period ends—in our example it would rise to $1,288, an increase of 29 percent over the initial payments and of 7.4 percent over the traditional FA loan.

     Adding an IO period to Adjustable Rate Mortgages (ARMs) can reduce initial payment even further. The added risk on this loan is that following the IO period the loan holder will bear the risk of any interest rate rise. In our example, if interest rates climbed to 8 percent in five years and remained stationary for the rest of the mortgage’s life, our home buyer would have to make average monthly payments of $1,543 (a 54.3 percent increase) and if interest rates go up to 10 percent, he or she would have to pay $1,817 (an 81.2 percent increase).

     Because IOs and IO/ARMs carry more risk, lenders should require higher standards for borrowers than the traditional FA mortgages. But this prudent rule is rarely followed. Always seeking to maximize profits, lenders have focused on homebuyers’ capacity to make payments today—and worry about higher future payments—and possible foreclosures—tomorrow. The lenders know that even if the borrower defaults, they (the lenders) will have the money already paid in plus the repossessed house which they can resell. 4

A Typical Real Estate Cannibal

To get a feeling for how economic predators propagandized hapless American workers into the real estate con game, let's examine a typical example of a con artist at work.

"How long can the real estate boom last? No one knows the answer, but this is the most exciting time in real estate during my almost thirty years in the business. The world is awash with liquidity, and real estate is capturing much of it for three reasons.
"First, because of the stock market crash of 2001, real estate has become a legitimate asset class and a good diversifier from stocks and bonds. Second, with graying populations in the West and Japan, real estate is particularly appreciated because it is a strong generator of current cash flow needed to pay pensioners. And third, the returns relative to all asset classes have been enormous.

"The boom may end when interest rates rise from a falling dollar or if there is a surge of commercial overbuilding around the country. A political or terror event could bring things to a halt. Most likely, it will be something unexpected that stalls real estate. It's anyone's guess. But history has taught us one lesson: In the end, even real estate will revert back to a mean and return to earth just like every other asset class."

Arthur Segel is a professor in the Finance and Entrepreneurial Management units at Harvard Business School.
This article, "The New Real Estate," appeared in April 22, 2007, months after the housing bubble had burst.

Mea Culpa

Unfortunately, as we examine how lower and middle-class Americans have conspired mindlessly in their victimization, it's no wonder that Bush and other cabal predators are eating American workers alive. Just consider what Americans have done in terms of debt in recent years: 5

Americans have increased their borrowing on their credit cards to the point that the credit card industry took in $43 billion in fee income from late payments, over-limit, and balance transfer fees in 2004, up from $39 billion in 2003. In 2005, credit card late fees alone totaled over $11 billion.

Consumer debt has doubled since 1990, to $7.5 trillion—-more than $50,000 per household, over $25,000 for every man, woman and child in America.

Average household credit card debt has increased 167% between 1990 and 2004.

The average American had over seven payment cards in their wallet including credit cards, retail store cards, and bank debit cards in 2004.

The average interest rate paid on credit cards was approximately 14.54% in 2005.

45% of American cardholders were only making minimum payments in 2004, up from 42% who did so in 2003.

A typical credit card purchase is 12-18% more than if cash was used (as of 2004).

30 million Americans (40% of homeowners) refinanced their mortgages during the 3 years (prior to Q3 2005), with over half applying the proceeds to eliminate credit card debt.

Seven out of ten low and middle-income households, reported using their credit cards as a financial safety net, i.e., to pay for car repairs, rent or housing repairs and medical expenses, rather than relying on savings in 2005.

According to a national survey, the most significant predictor of financial stress is if households rely on using credit cards to cover non-discretionary living expenses like rent, groceries, and medical expenses.

In 2004, the average college student graduated with $16,500 in student loans, up 74% since 1997. (While this figure is an average, an incredible number of graduates leave college with more than a year’s salary in debt.)

In 2004, 65% of teens failed a financial literacy test according to Jump$tart Coalition.

In 2004, the average debt for Americans 65 and older was $4,000, up 89% in the past decade.

In 2004, the average personal wealth of a 50 year-old American was less than $40,000 including home equity.

In 2004, most credit card debt of older Americans was driven by healthcare expenses and the increased cost of prescription medication.

Examples of Consumer Stupidity  
Example 1  Example 2  
In Waretown, NJ, a single mother has lost her house through the fraud of a company named FundingForeclosure. The woman said she had sought to take out a $27,000 equity loan in 2005 after she quit her job. She said she had been emotionally affected by her parents' divorce and other life events. A mortgage originator referred her to FundingForeclosure because her credit was poor.
She said she was not aware she was selling the property. Two mortgages, worth $204,250, were taken out in the name of two straw buyers.

The woman said she simply signed the papers where a local notary told her to sign. She said she did not read them, but relied on what she was told by a friendly woman from FundingForeclosure.

"I don't know these things," she said. "Nothing looked like a deed. Nothing. This was my house. I bought this house for my son and me. I worked two jobs to get this house."

The woman, who is cleaning houses, said she's learned some lessons through the hardship.

"I wasn't always assertive," she said. "I've learned."
Homeowners struggling to make mortgage payments or in foreclosure, were contacted by a mortgage scam company and persuaded to agree to what sounded like a wonderful deal: An investor would buy their property temporarily, and then they would pay rent to live in their own house and buy it back within two years.
Most homeowners were unaware they were selling their property. The rent was uaually lower than their earlier monthly mortgage payments, or an influx of cash from the deal would pay off debt. Bottom-line, the scam clained to allow distressed homeowners time to catch up on bills, find new jobs and earn better credit ratings.

Third-party investors, or straw buyers, were excited, too. They were promised an income of $5,000 to $40,000 a year in exchange for lending their names and good credit scores to people who needed a hand. The company said it would make mortgage payments for the investors through the rent proceeds. Everyone would win, the company promised.

The criminal mortgage companies, unbeknownst to the victims, took out new, larger loans on the properties well above the mortgages they replaced. In most instances, these fraudulent loans were resold among mortgage companies and investment banks in the subprime, or high-interest rate, markets. Homeowners and straw buyers unwittingly signed waivers to wire the proceeds to the scam companies, such as Creative Loans LLC.

No More Safety Devices for Working Americans

A Vicious Cannibalistic Practice
Trailing interest is the practice of charging interest on an entire bill no matter what percentage of it is paid.

Suppose a consumer who usually pays their account in full, and owes no money on December 1, makes a lot of purchases in December, and gets a January 1 credit card bill for $5,020. That bill is due January 15. Suppose the consumer pays that bill on time, but pays $5,000 instead of the full amount owed. What do you think the consumer owes on the next bill?

If you thought the bill would be the $20 past due plus interest on the $20, you would be wrong. In fact, under industry practice today, the bill would likely be twice as much. That's because the consumer would have to pay interest, not just on the $20 that wasn't paid on time, but also on the $5,000 that was paid on time.

The consumer would have to pay interest on the entire $5,020 from the first day of the billing month, January 1, until the day the bill was paid on January 15, compounded daily." In our example, using an interest rate of 17.99 percent ... the $20 debt would, in one month, rack up $35 in interest charges and balloon into a debt of $55.21.

In a March 7, 2007 Congressional hearing, Senators and consumer advocates battled with three of the most powerful men in the credit card industry. Bruce Hammonds, president of Bank of America Card Services, Richard Srednicki, chief executive officer of Chase Bank USA, and Vikram Atal, Chairman and CEO of Citi Cards, all said that "trailing interest" is a practice shared by various lending schemes but were unwilling to give specific examples.

 You might wonder why homeowners don't get out of debt through the age-old escape-hatch of bankruptcy. The answer takes us back to the cannibals we're examining in this essay: the super-rich members of the cabal.  From the beginning of our nation's history, debtors were able to find relief through bankruptcy. But that meant that the moneyed predators were losing out when their victims escaped them by forfeiting everything--including debts.

  The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was in fact the rewriting of bankruptcy laws to reduce the ability of those laws to protect consumers from predatory lending practices on the part of MBNA 6 and other credit card companies and to stiffen the capabilities of those corporations to collect from consumers already suffering from extreme financial hardships. MBNA, not incidentally, is the largest single contributor to the Republican party. Under the new law, poorer folk can't afford the new attorney fees and court costs, since it now costs roughly twice as much as it used to. Court fees were increased almost 50% (from $209 to $299 for chapter 7 and from $179 to $274 for chapter 13). Attorney fees also increased by about the same percentage. It used to be possible to prepare the paperwork in about an hour. Now things are completely different. An attorney has to have three different meetings with the potential client:

One free consultation on the ramifications of bankruptcy, wherein they receive disclosure forms mandated by the new law, informing them of the cost, telling them about the credit counseling requirement, etc.
A separate meeting wherein the attorney collects their 6 months of pay stubs for the Means Test calculations (which itself takes a couple of hours). Then the rest of the paperwork takes another hour or two to prepare.
A third meeting to re-review everything before filing as the new law creates a new liability on the attorney personally to verify that everything the customer tells him is true.

Debtors--Including Hurricane Victims--Are Raw Meat
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was a massive restructuring of federal bankruptcy laws which punishes middle-class debtors and awards increased payouts of as much as $4 billion a year to their creditors, mainly banks and credit card issuers.

     The cannibal corporations spent $40 million and eight years lobbying Congress for legislation that makes it virtually impossible for individuals to escape debt repayment. The 500-page bill was largely written by bank and credit card lobbyists. The law imposes a two-stage means test on bankrupt debtors that will reduce the number permitted to file for bankruptcy under Chapter 7, which provides for liquidation of most debts, and force more debtors to file under Chapter 13, which requires significant repayment.

     The new law requires that debtors who have sufficient discretionary income to pay at least $100 a month to creditors and whose incomes are above the median for their state will be required to file under Chapter 13. Under Chapter 13, filers are required to follow a three-to five-year debt repayment plan to pay off some of their creditors. In 2004, over 1.1 million filed under Chapter 7, while some 450,000 filed under Chapter 13. In 2005, before the new law took effect, 2.39 million U.S. households filed for bankruptcy, a 67% increase over 2004. Under the new law, most debtors will be shifted from the more lenient to the more restrictive regime.

      Bankruptcy judges previously had considerable discretion in fashioning or waiving repayment plans, but they are now required to follow much more restrictive guidelines. Before this cannibalistic legislation was passed, hundreds of judges and law professors expressed their opposition to these provisions, but their views were ignored.

     In October of 2005--in the aftermath of the Katrina disaster--the Bush administration announced that it would not revoke or delay a law that made it harder for tens of thousands of working-class Americans to file for bankruptcy. With the support of the White House, Republican congressmen rejected calls from consumer groups and some Democrats to place a moratorium on the bill’s provisions for victims of Hurricane Katrina.

The Housing Bubble Burst Follows the Devastating 2001 Wall Street Crash
      The March 2001 stock market collapse was one of the worst in U.S. history, totaling a whopping $4.6 trillion in losses for the deluded market players--and, of course, a $4.6 trillion profit for the Wall Street con artists. This crash was nearly five times that of the October 1987 Wall Street collapse.

     U.S. stock market investor-victims suffered their greatest ever one-week losses during the March 2001 fiasco. The Dow Jones Industrial Average experienced three sharp declines in five days, including a drop of over 400 points on Monday and a 227-point drop on Friday, with a total weekly decline of 821 points—a loss of 7.70 percent. The S&P 500, a broader average of Wall Street stocks, showed a 7 percent decline, while the high tech-dominated NASDAQ index fell 8 percent.

     By 2000, uninformed American investors had been so foolish as to put more than 60% of their assets in the stock market crap shoot. So the Wall Street collapse beginning in 2000 meant that U.S. household wealth declined for the first time since the federal government began keeping such figures in 1945. Previous recessions and crashes had only slowed the rate of increase in household wealth, never decreased it. The economic cannibalization effects are beginning to show clearly in the sinews of America.

     The $4.6 trillion already vaporized in the 2001 Wall Street crash—and the trillions more which are now at risk because of the housing bubble burst--constitute the life savings of tens of million of working people in America. Millions of workers are discovering that their 401(k) plans, which have become a widespread substitute for guaranteed pensions, will no longer sustain them in a decent retirement because of recurring stock market collapses. Three-quarters of the funds held by 401(k) plans, about $1.7 trillion, are invested in the stock market.  If you don't believe Americans have allowed themselves to be cannibalized, talk to the millions who've lost savings set aside to buy a new home, finance their children's college education, or protect against the threat of a major illness. American workers are living on the edge of disaster.

    If it doesn't seem like there's cannibalizing going on--the super-rich devouring the poor--look at the fact that the top ten percent of the population--the super-rich--own over 70 percent of the national wealth, much of which they've made by beggaring American workers. The bottom 90 percent of the population, with less than 30 percent of the wealth, owe 70 percent of the consumer debt.

     As Michael Hudson demonstrates, this current situation of American workers being in debt constitutes a new kind of slavery.

"Never before have so many Americans gone so deeply into debt so willingly . . . In the odd logic of the real estate bubble, debt has come to equal wealth.
"And not only wealth but freedom–an even stranger paradox. After all, debt throughout most of history has been little more than a slight variation on slavery. Debtors were medieval peons or Indians bonded to Spanish plantations or the sharecropping children of slaves in the postbellum South. Few Americans today would volunteer for such an arrangement, and therefore would-be lords and barons have been forced to develop more sophisticated enticements."

Michael Hudson, "The New Road to Serfdom,"

How Devastating Is the House Bubble Burst?
In a recent Bloomberg News interview, Kenneth Heebner, manager of CGM Realty Fund (Capital Growth Management), provided a realistic forecast of what we can expect in the near future as mortgage defaults increase.

“What you are going to see is the greatest price decline in housing since the Great Depression.

Question: "Will the losses in the mortgage market exceed those in the savings and loan crisis [$500 billion loss]?"

Heebner: “They're going to dwarf those losses because the losses could easily approach $1 trillion -- that dwarfs anything that has ever happened. Enron was $100 billion--this will be far greater than that . . ."

"So, where is all this headed?
"No one really knows. But when the housing bubble crashes into Wall Street’s credit bubble, we can expect the 'big bang.' That may explain why America’s wealthiest investors are running for cover before the whole thing blows. (A number of investors have already cashed out and put their holdings into foreign funds and currencies).

"One thing is certain, time is running out. With $1 trillion in subprimes and Alt-A loans headed for default, the system is facing its greatest challenge. US GDP has been revised to a measly 1.8 percent, foreign investment is down, and the dollar is losing ground to the euro on an almost weekly basis."

Mike Whitney, "Housing bubble boondoggle: Is it too late to get out?,", Apr 26, 2007

Americans Must Learn From the Past and Plan for the Future
As we review the basic alterations in the very structure of American society, it becomes clear that these crippling changes were carefully planned and created by the criminal plutocrats who seized control of America in the first decades of the twentieth century.

Changes Beginning in the Middle of the Twentieth Century  
Element  Mid-20th Century  After Mid-20th into 21st Century  
Workers  Good wages and training to be
competitive with other nations' workforces  Worldwide low-wage workforce--
no need for American workers  
Soldiers  Intelligent and well-trained
to defeat other military forces  No need for intelligence or training
since there is no intent of victory  
Population  Intelligence and integrity
to create an orderly society  The less intelligent the population
the less awareness or dissent  
Economy  Capitalists and workers receive
somewhat equitable compensation  The super-rich and the cannibalized
poor--forcing people into the military  
Morality  Fairness, justice, concern for
others, and a quest for excellence  Egomaniacal greed, deliberate
ignorance, violence, and illiteracy  

     The demonic cabal that dominates the world at present has always carefully planned its strategies and has never been shy about making them public, since they believe (somewhat correctly) that world citizens are too unintelligent to understand them or discern their implications.

      Had we studied their geopolitical plans in their books and major journals such as Foreign Affairs, we would not have been surprised when the cabal assassinated John F. Kennedy in 1963, seized power illegally through the Bush-Supreme Court coup d'etat in 2000, perpetrated the 9/11/01 atrocity, and started wars in Afghanistan and Iraq, politically and militarily dominating Eurasia and the world.

"America's global primacy is directly dependent on how long and how effectively its preponderance on the Eurasian continent is sustained."

Z. Brzezinski, The Grand Chessboard, 1997

      We would have been aware that they fully intended to create a police state in the United States, destroying Constitutional liberties, and set up a permanent fascist dictatorship under the guise of a two-party democratic system.

"The pursuit of power and especially the economic costs and human sacrifice that the exercise of such power often requires are not generally congenial to democratic instincts . . . Democracy is inimical to imperial mobilization."

Z. Brzezinski,op. cit.

"Now let us suppose that the exigencies of the future, as we shall trace them out, point to the conclusion that only an authoritarian, or possibly only a revolutionary, regime will be capable of mounting the immense task of social reorganization needed to escape catastrophe. Might it not then be argued that the quasi-military devotion and sacrifice of such a task would be vitiated if the masses were exposed to the disagreements and diversions of intellectuals who strayed from, or opposed, the official line? "

Robert L. Heilbroner, An Inquiry Into the Human Prospect,, 1974

     The future is already being planned by the cannibals--they know their victims won't tolerate their own slaughter forever. A 2007 report from the UK Defense Ministry, "Development, Concepts and Doctrine Centre," projects what might happen by 2035.

“The middle classes could become a revolutionary class. The growing gap between themselves and a small number of highly visible super-rich individuals might fuel disillusion with meritocracy, while the growing urban under-classes are likely to pose an increasing threat . . . Faced by these twin challenges, the world’s middle-classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest."
     The life-and-death question is whether Americans can gain sufficient intelligence from studying their past mistakes (as in reflecting on and assimilating the information in this essay):

To be able to plan ahead to fight off the onslaughts of our archenemies

To gain sufficient awareness and power to overcome our destroyers.
     We must recognize the more likely ploys these predators will use in their ongoing efforts to utterly destroy Americans:

The contrivance of a total monetary collapse as in 1930s Germany (image) followed by permanent imposition of martial law

Radicalizing and criminalizing (through co-optation and infiltration) the groups opposing them, as a pretext for putting dissidents into concentration camps

Bringing more foreign people into America with a servile mind-set so there is a cheap workforce--including a ready police and military force--and the impossibility of dissidence or uprising

Accelerating the current trends:

Globalization: increasing the use of cheap foreign labor 7

Barbaric annihilation: expanding the use of war as a means of amassing wealth through destroying war materiel and infrastructure which have to be replenished by "defense industry" cronies

"Capitalism turns men into economic cannibals, and having done so, mistakes economic cannibalism for human nature."

Edward Hyam, Soil and Civilization, 1952

What Americans Must Do to Avoid Destruction
     We can no longer look at our lives as the ordinary pursuit of a career and some modicum of ease in a world where everything is safe and pleasant and everyone wishes us well. We must never again assume that people who appear "normal" are actually moral and sane, incapable of murderous intent.

 We must be savvy enough to recognize that the criminals who seized power at the beginning of the twentieth century--and their chosen successors--literally have and continue to cannibalize Americans; that they are not the "pleasant" smiling, well-intentioned people they want us to think they are.    

  It's going to be necessary to learn to think in reference to long-term strategies and global dimensions. As Americans wake up from their sleep of ignorance and victimization, we must be able to help them learn to think in more realistic and far-seeing terms.

"Consider the wisdom of economist John Maynard Keynes: The rich are tolerable only so long as their gains appear to bear some relation to roughly what they have contributed to society. Think of it as proportional and justified economic success. This can be tolerated by poor and middle class people if they believe the economic system is fair and properly rewards those who work harder or have better capabilities. But truly obscene economic rewards angers people. When most prosperity and wealth is unfairly channeled to relatively few Upper Class people, it is only a matter of time until fuming, resentful people in the Lower Class decide enough is enough and revolt. Perhaps violently, if the political system remains controlled by the Upper Class."

Joel S. Hirschhorn, "Economic Armageddon is Coming,", Apr 26, 2007

     Americans must prepare financially, psychologically, and physically for the further onslaughts of the economic cannibals. Their present domination of the world through the use of economic coercion and preemptive military invasion and occupation will, sooner or later, begin to run up against factors that are more than troublesome for them.

      Currently, they must pressure foreigners to commit 2 billion dollars per day into their markets in order to maintain dollar stability. In addition, they've amassed a total debt of over $8.6 trillion. At present, China is the cabal's manufacturing base, and in turn China buys US securities to finance their trade and war deficits. China now holds $800 billion of US bonds and Treasury bills and $1 trillion in foreign reserves--70% of the reserves in US dollars.

     China may find it advantageous at some point in the future to break its current trade and manufacturing agreements with the cabal and strike out on its own. We're already seeing the rumblings of just such thinking on the part of the Chinese.

Unrestricted War: China’s Master Plan to Destroy America is a treatise for world domination written in 1999 by People’s Liberation Army Colonels Qiao Liang and Wang Xiangsui. In order for China to become a dominant global power over the United States, the PLA emphasizes "The Final War over Resources," must be won.
The Colonels state that the aggressor nation “must adjust its own financial strategy, use currency revaluation or devaluation as primary weapons, and combine means such as getting the upper hand in public opinion and changing the rules sufficiently to make financial turbulence and economic crisis appear in the targeted country or area, weakening its overall power, including its military strength. Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by bin Laden, all of these greatly exceed the frequency bandwidths understood by the American military..."

     According to Bloomberg, foreigners now hold nearly 50% of our publicly traded debt. The major holders of our debt are Japan, China and the U.K. They currently hold $639.2, $342.1 and $207.8 billion of our treasury debt respectively. In all, foreigners hold about $9 trillion of U.S. financial assets. At some point this huge debt burden will collapse and the cabal will try to embroil American citizens in new wars of aggression which they'll spin as patriotic struggles against terrorists. We must be mentally and physically prepared to resist such propaganda and coercion.

     Of the 6.5 billion people living on this planet at present, less than one billion have their home in what is called the "developed" world. Within that "developed" world ten percent of the population own 90% of the wealth. Increasingly, the other ninety percent are merely slaughter animals for the capitalist cannibals. At some point, as American and other workers gain more awareness of their situation, they must begin overcoming the cabal and take back their countries.

 Is the Bush junta doing something about the billions of dollars lost in the U.S. mortgage crisis? You bet! Treasury Secretary Henry Paulson, officials of the Federal Reserve Board, and other US financial regulators met on November 29, 2007 with top Wall Street and home mortgage executives as well as housing counselors to come up with a plan. Will the plan help the millions of Americans cannibalized by the criminal activities of the big banks, hedge funds, and other financial scam institutions? Fageddaboudit! The plan, touted as relief for homeowners, is actually a means of averting a collapse of major US banks and other financial institutions that could be triggered by spiraling home foreclosures and the implosion of hundreds of billions of dollars in speculative investments tied to the subprime housing boom of previous years.
     In essence, the scheme--euphemistically named the "Hope Now Alliance"--aims to contain the home foreclosure epidemic sufficiently to shield the major financial institutions from the full consequences of years of rampant speculation, accompanied by accounting manipulations that concealed the immense levels of risk behind the soaring profits and gargantuan salaries reaped by Wall Street executives. If the plan is implemented, it will allow holders of mortgage-backed securities to put off marking down their assets. In other words, make it possible for the thugs who created the whole housing crisis to continue their criminal behavior.

"Organized crime is now officially legal and combined with the stock and capital markets--all enforced by force and rigged profits. This is the economic infrastructure for fascism."

Catherine Austin Fitts, Former Assistant Housing Secretary
and past Managing Director of Dillon Read

  The word "cannibalism" in this essay is not a metaphor--not meant to be taken in only a figurative manner. The international cabal that weilds political, economic, and military power throughout the world, is literally a group bent on looting as much wealth as possible, to the point of taking the life essence from countless millions of people. We Americans must wake up to the reality of our present situation : we are living under an actual political dictatorship in a fascist, militarist police state.

      The difficulty in realizing this world catastrophe is the enormity of the cabal's devastation of human life; the barbarity and ruthlessness is so hyperbolic as to be hard to grasp. Here are illustrative examples of their staggering outrages:

     The federal government is totally corrupt and tax dollars and dollars borrowed through debt are being siphoned off into the hands of the cabal members. Some of this financial and political corruption is too large to cover up:

"According to some estimates, we cannot track $2.3 trillion in transactions."
Former Secretary of Defense Donald Rumsfeld, September 10, 2001
Under the Bush I, Clinton, and Bush II regimes, all Secretaries of the Treasury have refused to produce audited financial statements and have reported a total of $4 trillion in "undocumentable adjustments."

On May 5, 2006,George W. Bush signed a memo entitled "Assignment Of Function Relating To Granting Of Authority For Issuance Of Certain Directives: Memorandum For The Director Of National Intelligence." In the document, Bush assigned intelligence czar, John Negroponte, the task of waiving Securities and Exchange Commission rules, established in 1934, pertaining to accounting disclosures by publicly traded companies. As a result of no longer needing to reveal financial information to shareholders in the name of national security, the cloning of Enron and World.Com is now complete. Instead of being required to disclose valid accounting information, U.S. corporations have now been given carte blanche to maintain fiduciary deception.

     No sane American can persist in believing that the United States has a legitimate government.
     Personally, you need to do these things:

Help to expose the propagandists and corporate cannibals behind the curtain

Examine honestly the mistakes you've made and learn from them

Free yourself from all unnecessary debt

Avoid making non-essential purchases

Band with persons you can trust in a time of crisis

Transfer most of your dollar assets into gold and silver.

While the Dollar's Long-Term Trend is Down, Gold's is UP  
Stay away entirely from the Wall Street con game

Help as many people as you can to understand how Americans have been and are being cannibalized by economic predators.

Study carefully how these economic cannibals will be defeated through philosophical understanding and activity.

1) How Philosophy Overcomes Tyranny

2) Overthrowing the New Slavery

3) The New American Civil War

4) Realizing a New World

5) Overcoming the Present Dark Age

6) Realizing the New Commonwealth

7) How Philosophy Overcomes Propaganda

"The winning of freedom is not to be compared to the winning of a game – with the victory recorded forever in history. Freedom has its life in the hearts, the actions, the spirits of men and so it must be daily earned and refreshed – else like a flower cut from its life-giving roots, it will wither and die."

President Dwight D. Eisenhower, 1954

RE: LaRouche - Admin - 12-16-2007

Helga Zepp-LaRouche

What is playing out these days on the international financial markets, is unprecedented. Even if ordinary citizens don't yet understand it. the bankers and financiers are finding themselves in a state of shock. The collapse, which began in July with the U.S. mortgage crisis, and in August led into an international credit crunch, is proceeding inexorably and encompassing all sections of the world financial and economic system. The global financial system has "frozen up," and even though the financial institutions have not admitted it, in reality all the beautiful "creative financial instruments" which Alan Greenspan established, and which provided the foundation for "the greatest casino-economy of all times," have evaporated.

We find ourselves in an advanced phase of the greatest collapse in the history of financial markets. There is still the possibility of escaping the most horrific consequences of this systemic crisis—provided that governments are ready immediately to replace the totally bankrupt system of globalization with a new financial architecture: a New Bretton Woods system in the tradition of Franklin D. Roosevelt.

Look back a short time ago: On July 25, the American economic scientist Lyndon LaRouche declared at a webcast in Washington: "The global financial system has already collapsed—what we are now witnessing are only the effects, which are now coming gradually to light." And, in contradiction to the various ignoramuses and specialists in denial, who speak of "small rearrangements and adjustments" of a few small hedge funds, the developments of the past four and a half months have fully vindicated LaRouche.

The dollar has gone into a nosedive, which has been broken, at best for a few days, by interest rate cuts, only to then collapse further. The infusion of more than $750 billion in liquidity by the central banks, and the interest rate cuts, primarily by the Fed, which the other central banks were then compelled to follow, have led to a dangerous hyperinflationary process, which has included, first and foremost, agricultural products, energy, and raw materials prices.

After the longest possible deception maneuvers about their own losses, the banks, bit by bit, have admitted what they could no longer cover up. Only very hesitantly, the big investment banks began to write off billions in debt. Citigroup, for example, wrote off at first $6.5 billion, and then yet another $11 billion. Citigroup alone had $34 trillion in outstanding derivatives contracts, which could detonate the worldwide derivatives markets of an estimated $750 trillion, and with it, the whole world financial system....

A Mountain of 'Junk'
The investment bankers are sitting on a gigantic mountain of so-called toxic waste, unsalable "creative" financial paper; no one trusts anyone else, because he doesn't know whether a newly issued loan can be paid back, and because he doesn't know what losses are still pending. The banks are hoarding liquidity, as if it were their grandmothers' prize preserves.

"What we are currently observing, is no less than a collapse of the modern banking system, a complex of leveraged lending, which is so difficult to understand that the head of the Federal Reserve himself, Ben Bernanke, back in August, needed a private course, face to face, from the hedge funds managers," said Bill Gross, the asset manager of the capital asset firm Pimco.

The mistrust is understandable, because the list of dead bodies that have been hidden in the cellar, is getting longer and longer. An array of investment banks is currently being investigated by the American Securities and Exchange Commission and New York Attorney General Andrew Cuomo, as to whether they sold risky mortgage-backed securities to investors worldwide in bad faith—knowing that they were as good as worthless.

Currently under investigation are Goldman Sachs, Deutsche Bank, Merrill Lynch, Bear Stearns, Morgan Stanley, and also the huge quasi-governmental mortgage insurers Fannie Mae and Freddie Mac. Deutsche Bank alone, which was warned of the junk status of the subprime mortgages in January 2006 by their chief appraiser, Greg Lippmann, had bought, during that year, paper nominally worth $28.6 billion, and then another $12 billion during the first nine months of 2007.

Not only have the mortgage-based securities been exposed as junk, but also the large mass of so-called Structured Investment Vehicles (SIV), from superpowerful investors, is finding itself devalued in the shortest period of time to the level of junk. Several have already found themselves in liquidation. Affected also are communities or schools, such as, the Florida Local Government Investment Pool, in which its reserves, of which now very little remains, have been invested. And there is now no money to pay teachers, or to apply to social programs for the families who are becoming homeless, when their houses are foreclosed on.

Guilty: Alan Greenspan
If there is a person who bears more guilt for this mega-disaster than any one else, it is Alan Greenspan, the former head of the Fed. We have him to thank for the fact that we have all these wonderful "financial innovations," which his successor, Bernanke doesn't understand. When Greenspan took office in 1987, he responded to the then ongoing crash, which was comparable to the Black Friday of 1929, by establishing, bit by bit, all these "creative financial instruments," whose very complexity underlies the problem. To this category belong derivatives, credit-derivatives, the CDOs, the SIVs, the MBSs, and the ABCPs, but also the hedge funds, the investment companies, the special-purpose entities, the conduits, investment vehicles, etc. Thus was the lie spread, that all these instruments "spread the risk on many shoulders," and therefore minimize it—a milk-maid's accounting....

Naturally, as long as the huge bubble of convoluted financial instruments was growing, as long as everyone in the casino-economy was participating in making super-profits, the profiteers could keep up the illusion that they had discovered the "perpetual motion machine." That 80% of the world's population was becoming ever poorer, yes—that was an inconvenient small side-effect, that could be ignored.

The only problem is that the bubble has to keep growing. At the moment there's a break in the market, as in this case of the American subprime mortgage market, the bubble comes to a point of collapse, in which the leverage reverses, which actually threatens what bankers call a "cluster-risk." When in March of 2000, the bubble of the IT market, the so-called "dot-com bubble," collapsed, and about $16 trillion in capital disappeared, Greenspan lowered the interest rates in order to save many of his banker-friends. Thus, he not only created a yet bigger bubble, but, with the subprime market, created such a high-risk business, that its ephemeral nature must be obvious to any thinking human being.

Now, a long while later, it has dawned on several economists, that a total systemic collapse has begun, and that the blue-chip mortgage market, the real estate market, have been affected by the MBS and CDO market, so that massive collapses in consumption and production are imminent, and that it could come to a run on the banks and other financial institutions....

In the face of growing panic among the Wall Street bankers, the White House has recently leaked that the Administration will not fail to provide liquidity in an emergency. The problem is only: This is exactly what the Reichsbank did in 1923, and in November 1923 it ended, because the price rises had reached the absurd. On Nov. 15, 1923, 1 kilogram of rye bread cost 5.145 billion Reichsmarks. As a result of the hyperinflation, first everyone was a millionaire, and then people's savings disappeared. Today the problem is not limited to one country, as then, but spreads through the entire world....

We Need LaRouche's New Bretton Woods!
The casino economy has already created an enormous redistribution of wealth from the poor to the rich. Some have become billionaires and multi-millionaires, and the politicians, who have made this possible through corresponding changes in the laws, have also not fared badly. The overwhelming majority, however, must suffer heavy losses in their living standard.

The reality is that only the reorganization of the global financial system proposed by Lyndon LaRouche can solve the problem. The unpayable debts must be cancelled, the "creative financial instruments," in any case; but the real economy, the general welfare, and the banks must be saved. The only good thing is that LaRouche's ideas are finding an ever broader circulation, as shown in the publication in the official Chinese press about LaRouche's proposal that the United States, China, Russia, and India must cooperate for a new organization of the world financial system. And many other notable politicians and statesmen are also speaking out now for a New Bretton Woods System or a New Deal for the world economy—among them Russian President Putin, Argentine President Kirchner, former Italian Economics Minister Tremonti, and former French Prime Minister Rocard, to name a few. And if Germany is to be saved, then in the coming period, some there will have to find the courage to propose a New Bretton Woods.

This is 1923 Germany' Hyperinflation
Economist Lyndon LaRouche's statement in a July 25 webcast that the U.S. and European banking systems were bankrupt and "blown out," has been repeatedly denied by financial circles, media, and government officials. Today, the banks' panic is on full display, as the world's leading central banks have been forced to scramble to create new money-pumping bail-out mechanisms — admitting that none of their rate-cutting and liquidity-pumping measures to date have done anything to unfreeze credit markets or stop the onrushing financial collapse. The Federal Reserve, whose latest rate cut was "rejected" by panicked international banks yesterday, is hooking up with the European Central Bank and the central banks of Britain, Canada, and Switzerland, to create a new "temporary auction facility" from which banks can borrow in any of their currencies. One financial consulted quoted by the BBC says that the Fed and the other central banks are "providing a ton of liquidity to the market by year-end."

"This is 1923 Germany, July or August 1923," LaRouche said this morning of the central bankers' desperate moves, referring to the notorious hyperinflation caused by 1923 Germany's Reichsbank's attempts to print all the money the banks demanded in the credit collapse of that nation. "I said publicly on July 25, the banking system is blown out. There's one remedy, and I've given it. By their actions, these banks are admitting that they're bankrupt, and must be put into bankruptcy and reorganized. Because that hasn't been done, there is worse yet to come."

Other news of the banks' panic today confirms another of LaRouche's warnings, made on Oct. 31, against the raid on the U.S. Federal Home Loan Bank (FHLB) being carried out by the collapsing mortgage-lender Countrywide Financial Corp. and other predators. The Financial Times reports today that the FHLB is continuing to pump hundreds of billions of dollars into the hands of banks and mortgage lenders. The amount of funds handed out by the FHLB vastly exceeds the amount of direct lending to banks by the Federal Reserve. The Financial Times suggests that this is the only thing which has prevented runs on U.S. banks, like the one which hit Britain's Northern Rock Bank.

In late November, Sen. Charles Schumer (D-N.Y.) protested these hand-outs in a letter to the head of the FHLB, accusing Countrywide of using the FHLB system as a "personal ATM." With everybody now feeding at the trough along with Countrywide, we wonder what Schumer is saying or doing now.


Today, less than 24 hours after the Fed, the European and other central banks announced their plan to pour tens of billions of dollars into the bankrupt system, the system crashed further, led by the banking system itself. As Lyndon LaRouche put it, "the crash has occurred. This is not the first crash, nor will it be the last, but it represents a new level of the crash of the system. They are out of options. None of these desperate efforts are going to work. Nothing will work except what I have proposed. It is the nature of the situation. People just don't want to admit it. If you want someone to hate, blame Felix Rohatyn. He can bear the blame. The situation is comparable to Germany in 1923. It is time to wake up before it's too late."

What follows is a summary of today's worldwide collapse:

In France the CAC 40 Index dropped 2.65 percent. Societe Generale, France's second biggest bank by market value dropped 4.2 percent. BNP, the country's largest bank, declined 3.3 percent;

In Japan, shares fell the most in four months with the Nikkei falling 395.74 points or 2.48 percent. Mitsubishi UFJ, the nations's second biggest bank by assets fell 7.9 percent;

In Germany, the DAX declined by 1.83 percent;

In the UK, the FTSE fell 2.98 percent. HSBC fell 1.4 percent after ABN Amro Holding reiterated its "sell" recommendation; HBOS, Bitain's biggest mortgage lender, fell 6.7 percent after saying it would take a $367.7 million hit, and the Royal Bank of Scotland fell 4.5 percent;

In Ibero America, the stock market in Brazil fell 2.9 percent and in Chile 2.6 percent, the biggest drop in 8 years;

In Switzerland, UBS fell 2.6 percent.

In the United States, the banking sector was also hardest hit: Morgan Stanley, Bear Stearns Cos. and Merrill Lynch & Co. led declines in financial shares after Lehman Brothers said some precautions against mortgage losses were ineffective;

Lehman Brothes Holdings Inc. itself said quarterly earnings fell 12 percent, hurt by write downs in bond trading;

Countrywide Financial Corp. said mortgage loan funding fell 40 percent to $23 billion in November, sending its shares tumbling;

On Wed. Bank of America and Wachovia Corp. warned of further write-downs for the fourth quarter;

Capital One Financial Corp, the credit card company, fell after saying debts would exceed forecasts;

Washington Mutual, the biggest U.S. savings and loan fell after it was cut to "sell" from "neutral" at Bank of America.

LaRouche - Admin - 12-18-2007


The European Central Bank (ECB) announced today the latest unprecedented move, probably destined to be unprecedented until tomorrow. As part of the deal struck by five central banks last week, unlimited amounts of short term money are being made available to any bank, at the cheapest possible rate of 4.21%. This is bare 21 points above the European official interest rate, and way below the interbanking rate which has recently been around 4.9%. The Financial Times reported that the ECB expected a demand for the two-week money of Euro 260.7 billions, but by mid-afternoon they were reporting that Euro 348.6 billion - $502 billion - had been grabbed up.

This is the largest single money injection by the ECB in history. Last week's announcement of auctions for about $100 billion had been judged "too little" by the financial markets.

Parallel to the ECB's idiocy, today, the Fed will start the first of a series of "universal" money auctions, i.e. where all banks can participate and borrow anonymously, for an amount of $20 billion. This is also the first auction in which the Fed will really implement the decision (announced last August) of accepting subprime and CDO assets as collateral, despite the fact that no one knows what they are worth, if anything at all. All this money is theoretically to be returned to the lender, but in practice such loans will be refinanced again and again, so that the money stays in the system and feeds hyperinflation.

While liquidity injections keep the corpse of the financial system on a life-support scheme, the general insolvency of the system cannot be cured. An extraordinary summit of the heads of state and government of Britain, Germany and France has been called by Gordon Brown during the first two weeks of January, in London, to address the financial crisis.


Lyndon LaRouche, who announced back in July that the monetary-financial system had collapsed, responded today to the one-half trillion dollar dumping of helicopter money into the world banking system by the European Central Bank, that this was a "sign of the times - pure madness. The institutions are bankrupt, holding worthless junk, and they are pumping more worthless junk into the system. They can't win - only we can win, by cleaning out the junk, with my proposals. We may go down with them, if they sink the human race, but they can't win. We must ask people - are you crazy enough to go along with this crap?"

LaRouche said that you hear people babbling about whether the financial system will "recover," when in fact it exploded in July, and what we are seeing now is just the repercussions of that explosion, with an accelerating rate of crumbling of the economic system, dragged down by the collapse of the monetary-financial system. They may pass these plans, but the crap will still be inside, they can't get rid of it.


Multiple sources have told Lyndon LaRouche and LPAC that the collapse of the monetary-financial system will enter a new, massive stage after January 3. The New York Times financial columnist Floyd Norris weighs in on the issue today, noting that the corporate bond market was as insane as the subprime binge over the past several years, but far larger. Now that the bond insurance industry is collapsing, according to Ted Seides of Protege Partners: "The severity of the subprime debacle may be only a prologue to the main act, a tragedy on the grand stage in the corporate credit markets." Seides calls the credit default swap (CDS) market an "insurance market with no reserves," and puts the total in CDS's at $45 trillion (!), noting that this is almost five times the U.S. national debt.


Increase  DecreaseDecember 28, 2007 (LPAC)--The impact of the global financial crash on the American economy, its remaining physical production, is becoming more and more severe because of the lack of any Congressional acknowledgment of that crash, or action to create "firewalls" to protect the real economy from it.

At least 16 U.S. states have suddenly found themselves in budget crises due to drops in tax revenues, and in two of them, California and Kentucky, the governors have announced they will call "fiscal emergencies." The reasons are spiking unemployment, Medicaid costs, as well as the rapid vaporization of housing-related taxes and fees due to the mortgage meltdown.

As 2007 ended Ford and Chrysler had placed 26,000 production employees on "temporary layoffs" in December, set to last at least through January, and potentially to become permanent. General Motors, which in 2007 "bought out" 46,000 GM and Delphi workers from the industry, announced it's getting rid of 5,000 more by the buyout route. All three automakers have cut their production for the first quarter of 2008 by another 10% or so as sales fall. Employment in the auto industry fell by 75,000 during 2007. New unemployment claims have been running at 345,000 per week in December, 15% higher than earlier in 2007.

Today's announcement of November new home sales by the Census Bureau was disastrous; sales fell to a 647,000 annual rate, when only on September 18, the Homebuilders Association warned gloomily that they might fall to 800,000 by the end of the year! So many "pending sales" have been falling through, that previous months' figures have been revised down, to where the sales were already well below the 800,000 rate even in September, when the Homebuilders were making their "forecast." The November sales figure is the lowest for any month in 12 years.

And durable goods orders for the U.S. economy, also announced today by the Commerce Department, are at $207 billion for November, a full 10% lower than November 2006. This drop is not adjusted for inflation, or for the falling dollar. It's purely and simply the falling economy. The only way to rebuild it, is blocking the crash with the Homeowners and Bank Protection Act and nation-to-nation New Bretton Woods agreements, building new infrastructure as per LaRouche's Economic Recovery Act.


The miserable state of the British economy should alert any sane person that it is time to break from the Anglo-Dutch financier system--it is finished. The British financial press only lets out the dirty secret one drop at a time--revealing today that London commercial real estate is the about to collapse, and declaring that the "sub-prime is a red herring," according to commercial property agent DTZ, quoted in the Torygraph.

"Sub-prime is a red herring. It was simply the most stretched segment of an over-stretched debt market. As such, it has to be seen as a catalyst rather than the cause of the recent turmoil," a DTZ spokesman said. The volume of UK commercial transactions fell by 25% in 2007 to 48 billion pounds, and since the summer, prices in certain sectors of the market have fallen by 26%.

The bankrupt banks are pulling out of commercial property fast. The estate agent Savills reported that 8 of the 97 lenders in the United Kingdom are already out of the real estate sector; another 11 more are "reluctant" to lend and almost 30 will only lend on a "qualified" basis for commercial property deals. Who are these banks that have slammed the door? Savills wouldn't say, but the Torygraph says "they are believed to include Credit Suisse, Lehman Brothers, Bear Stearns, Deutsche Bank and Barclays Capital..." which have all, themselves, been dipping into emergency "helicopter money" to survive.


American statesman Lyndon LaRouche said today that Alan "Bubbles" Greenspan's dire New Year's Eve warning that "something unexpected" will happen soon, which will "knock us all down," provides the true setting for the unleashing of chaos by a faction of the Anglo-Dutch financial oligarchy, which is now occurring around the world. LaRouche pointed to Pakistan, Southwest Asia, Kenya, South Africa, Yemen, and the FARC/Chavez moves in Ibero-American as in-progress chaos operations run by the Anglo-Dutch financier crowd. Greenspan's NPR interview, reported in today, quoted him, "What I have to forecast is that something will happen which is unexpected, which will knock us down ...The odds of that happening, I think, are rising, because we are getting in vulnerable areas."

Greenspan added, "What I point out is that we're in a turning phase, and that the extraordinary improvements that have occurred in the world economy in the last 15 years are transitory, and they're about to change ... So, I think this whole process will begin to reverse." Interest rates, Greenspan said "now are set by the supply of investment money worldwide; a force much larger than the concerted efforts of central banks, including the Fed ... We and all other central banks lost control of the forces directing higher prices in homes."

Greenspan admitted his miserable record at forecasting, despite sitting at the helm of the Fed for nearly two decades: "The record of forecasting not only of myself and of companies I have developed, but of the profession as a whole, is not particularly spectacular," Greenspan said. "Ive been forecasting since the early 1950s. I was as bad then as I am now." Apparently, a belated confession of an economic shitman.

RE: LaRouche - Admin - 12-31-2007


Within hours of the Dec. 27 assassination of former Pakistani Prime Minister Benazir Bhutto, Lyndon LaRouche offered the following blunt assessment.

LaRouche characterized the assassination as a "chaos operation," and emphasized that he sees the British intelligence hand all over it, citing, for example, recent revelations of MI6 operators negotiating with Taliban leaders in Afghanistan, behind the backs of the U.S. and the Karzai government. The British, LaRouche elaborated, are operating within many groups—in all factions, on all sides of the conflict. They work towards both parallel and contradictory objectives, to maintain maximum leverage.

LaRouche emphasized that the motives behind the Bhutto assassination are global, not regional. There are factions of the British oligarchy who are out to make the entire global situation into an unwholesome mess. This has more to do with the global financial crash than anything internal to the politics of Southwest or South Asia. There are factions in the City of London and allied financial oligarchy, who understand that the present financial system is doomed—is already collapsing at an accelerating rate. They see this as endgame, and are committed to determining who survives, and who goes down. They are using terrorism as a weapon of chaos, to secure their survival through the collapse, and to pave the way for dictatorship in many regions.

LaRouche explained that he is not referring to the House of Windsor. The issue is the London-centered Anglo-Dutch financial oligarchy, which is out to consolidate its imperial control over the world, under conditions of a total breakdown crisis. The issue is: Who will come out of the crash intact?

To unearth the specific British assets behind the Bhutto assassination, the appropriate question is: Which British assets in the South Asia region hate the prospect of any rational outcome to the situation? That is the starting point. As early evidence indicates, the Bhutto assassination was an "inside job," run through British and allied operatives within the inner circle of Mrs. Bhutto, including within her security entourage.


What LaRouche said yesterday, stands up. None of the other speaking voices have any idea what the Hell's going on. The fact that they're saying something, means it's wrong.

"Look," he emphasized today, "the issue here, is not candidates, it's not issues, it's not personalities in Pakistan or associated with Pakistan. That has nothing to do with the situation. Those are only the frictional aspects of it.

"The point is," he continued, "this whole operation is keyed to the fact of January 3rd. This pertains to the financial crisis, period. Don't try to interpret this by deduction. Avoid any deductive thing. This involves personalities?-- it has nothing to do with personalities! It's a threat to certain things,-- but what? It's a threat of destabilization of the world system. Response to the fact that the financial system, after the third of January, is going to disintegrate. That's what this is about!

"We should not get into any interpretation of this stuff in terms of personalities, or gossip, or so forth," LaRouche warned. "This has to do with the financial crisis. It's going into the next phase. And what this does, it creates a situation of potential chaos, which is responsive to a financial crisis. This is the detonator for the charge, which is the financial crisis. This is someone, as we said yesterday, in the British system, who is playing against the rest of the system. So, don't go by anything which would seem a normal interpretation. Just scrap it! If it sounds like it's a normal interpretation, scrap it! This is a totally abnormal situation, and there's only an abnormal explanation. And the point is, this is the financial crisis. It's the global financial crisis, and it's nothing else. Who is going to survive the breakdown of the system? That's what the issue is. It is global; it is not southwest Asia.

"The essential thing," he stressed, "is, the decision has been made: the system is coming down! The system is going to disintegrate. The global international financial system is going to disintegrate. It's going to disintegrate very soon,-- and somebody is planning to be the top dog! This is end-game! This is not rivalry; this is not competition. This is end-game! And someone is orchestrating the end-game! The British, the British at the top level at least, do not play this on 'sides.' They play for the game-master, not the contestant. They're playing for the game-master, trying to survive. But the game-master has designated himself to be the game-master. And it can only be somebody inside the British and related system, that's pulling this off.

"You've got to go with those kinds of considerations, and forget all the so-called evidence," he insisted, "because the evidence is worthless under these conditions, that is, the evidence which points in one direction or the other,-- forget it! Scrap it!

"Don't try to interpret it." LaRouche admonished. "Don't try to be credible. Because, if most people would believe it, it's not true! If most people would feel it was plausible, it's not true. The nature of the game is that.

"You see, this thing has a chaos factor in it. And you have to say,-- Wait a minute! You don't know who's doing it, because you have so many competing people. Each is doing something different. Therefore, which of them is doing it? NONE of them! The person who's orchestrating the chaos, is doing it.

"How do you screw up the world?", he asked. "Look, we've seen this before. You have, for example, the assassination of Kennedy. You get the war in Indo-China, which was impossible at that point, if Kennedy had not been shot. So that's the kind of thing. You're going to get one after the other! It's going to saturate the system with one blow after the other! People will come up with an interpretation,-- it's wrong! They'll find out it's the wrong interpretation, because the next one will be different. Then they've come up with two things; they'll try to explain it, then the third one happens,-- they'll be wrong! So, we should not, in any sense, try to make a deductive conclusion, from evidence. Because we don't have the evidence. The evidence is the full game, with all the parts,-- and you don't have them yet! So, therefore, you have to say, `What is the full-game characteristic of this period of history?' That tells you what it is. That's what I'm talking about. Everybody else is wrong on this kind of thing; this is my baby!

"No deductive conclusions! Pakistan is not the only place that will be broken up; the whole damn world will be broken up. That's the game!"

"People are being idiots," he said, "because they say, well, `You can't say that! Let's concentrate on the facts. Let's concentrate on the facts,' is what they'll say. Now here you have, the fact is, we're in the point of a total breakdown of the international financial and monetary system. This is not a collapse; this is not a depression. It's a disintegration of the very integument upon which the whole civilization has now come to depend. That's the game. And, any developments which don't fit the game, don't explain this kind of thing. It's one thing after the other; it's a chaos operation. The tendency is to create chaos; it's a chaos operation. So, therefore, in a chaos operation,-- don't try to attribute chaos, to some individual who's not chaos.

"We don't know who the culprit is; we don't know which faction, who is the faction," LaRouche concluded. "We can identify the faction by the nature of the faction. But the identity of the faction, we don't have. The guy who's doing this, is doing something. We know what they're doing; we know what the effect is they're playing for. That's clear. WHO that someone is, we don't have."

The Coming Eurasian World
Lyndon H. LaRouche, Jr

On the subject of the Dec. 27 assassination of former Pakistani Prime Minister Benazir Bhutto: The least that the victim of a murder deserves, is that the name of the murderer be truly spoken. That my associates and I have termed Friedrich Schiller's "Ibykus Principle."

During past times, I had been concerned directly, and in a relatively significant way, with justice for four of the members of Benazir Bhutto's family: her father, her mother, and her two brothers. Now, all five of them are gone, as if the attempt had been made to wipe their existence from the memories of the surface of our planet.

That Bhutto family is among the heritages which was thus bestowed upon me in the aftermath of the 1976 Non- Aligned Nations conference held in Colombo, Sri Lanka, a cause with which I continue to be associated from the time of the preparations for that conference until the present moment. Prime Minister Indira Gandhi became a person to whose cause I was most closely attached on this same account, as was my late friend and collaborator Foreign Minister Fred Wills who was the sole official voice to speak on behalf of the resolution which had been adopted by the Colombo conference.

Although I was not close to Minister Benazir Bhutto herself personally, or politically, a cry for justice binds together all who have been, or will become victims in the passions of a common cause, especially an historic cause. I am specially concerned, for the sake of all of us, that the evil-doer not triumph through the foolishness of those foolish, perennial blame-fixers who search for a scape- goat.

As ancient Homer's Iliad and Odyssey were understood by sane and intelligent representatives of ancient Greece, the principle of evil, otherwise identified in real life as typified by the Delphic cult of Apollo- Dionysos, is represented in the personified forms of Zeus's Olympus of Aeschylus' Prometheus Bound. A seemingly invisible hand, beyond the reach of mortal men and women, appears to be a mysterious force compelling those mortals, such as many among our own U.S. citizens, to torment and even destroy themselves, and even destroy their society, by actions which are contrary to all sane judgment of thoughtful, mortal human beings. Read the Iliad; it is all there! Or, read the fables of Harry Potter; the same evil is also reigning there.

So, a mystical hand, like the hand of Zeus's own party among the Olympian gods of the Iliad, seems to grip the prevailing will of reigning popular opinion in the U.S.A., in western and central Europe, and other places, today. The spread of economic ruin by currently reigning popular opinion in those places, has impelled the reigning popular opinion of these past decades to destroy the civilization on which the very existence of those nations depends.

In short, the common names for Satan in Greek include, chiefly, Zeus, Apollo, and Dionysus.

All that drama which is validly termed Classical tragedy on the stage, as by Aeschylus, Shakespeare, and Schiller, reflects recognition of this same principle.

What I have just summarized in this way, is, unfortunately, rarely understood by even most influential and highly educated people today. I say, "rarely"! There are those, some good, some very bad, who will, more or less readily, understand and agree with the point I have just introduced in these preceding paragraphs. Those who understand that point, and only persons such as that, persons who are the very rare cases of individuals who are exceptionally well-informed in the principles of goodness, or, a relatively more numerous type, but who are essentially evil, will be met as presently capable of understanding the nature of the international agency, the body of the "geopolitical playwrights," centered in London, which is responsible for the pre-calculated and arranged murder of former Prime Minister Benazir Bhutto.

With that said, I explain the points to be considered.

The Good Prometheus

The essential distinction of the human individual from the beasts, is that the human mind has a defining quality which does not exist as known among any species of beast. In the practice of physical science, this is the quality which distinguishes the Noosphere (mankind) from the Biosphere (lower forms of life). This quality is expressed typically by the centrally underlying principle of physical scientific knowledge, a principle defined for modern science by Nicholas of Cusa's recognition of that scientifically fatal error of Archimedes' mistaken argument in proposing that the principle of the circle could be located in the method of Euclidean quadrature. It was from that point of reference, by Cusa, that followers of Cusa such as Leonardo da Vinci, Johannes Kepler, Fermat, Gottfried Leibniz, and Bernhard Riemann identified the underlying principle of all competent notions of physical science.

The same human faculty is expressed in a developed form only in those methods of Classical poetry, music, and drama which modern European culture associates with the work of such as Shakespeare, Bach, Schiller, Mozart, Beethoven, Keats, and Shelley. I have identified and explained these crucial elements of civilized human behavior in sundry published locations.

It is sufficient, in this location, to point an accusing forefinger at the evil of the character of the Olympian Zeus from Aeschylus' Prometheus Bound. The same principle of evil was represented by the modern Malthusians, and the dupes and other followers of the viciously perverted, lying former Vice-President Al Gore today.

This elementary distinction of man from both beasts and bestialized people, is the key to understanding the root of the difference between good and evil. For example, the love for human beings, which Cardinal Mazarin summoned on behalf of the great principle of the 1648 Peace of Westphalia, is rooted in the passion appropriately evoked from recognizing that the person living next door contains that "spark" of humanity which is uniquely specific to the appropriate fostering of the development of the human individual, a potential lacking in the beasts. This is the "spark" which is recognized as the expression of that human soul which distinguishes man from beast; it is the "spark" which generates progress in physical science as physical economy, and produces what is to be recognized as beauty in Classical forms of artistic expression.

It is this quality which distinguishes decent people from such degenerates as Malthusians and the current dupes of former U.S. Vice-President Al Gore. It is the suppression of what we should recognize as both scientific and technological progress in physical economy, and beauty in Classical modalities for art, which is the expression of evil.

In the known aspects of the history and pre-history of societies, forms of evil comparable to the dogma of the Olympian Zeus of Aeschylus, and to the Apollo-Dionysus modalities of Nietzscheans and other existentialists (such as Brecht, Theodor Adorno, Hannah Arendt, et al.), are expressed chiefly as the degradation of large portions of a society's population as virtually the "human cattle" to which the Olympian Zeus assigns people, as do the Malthusians and followers of Al Gore today.

It is this view of society, which is often referenced in history as "the oligarchical model" of "master versus slave," or the like, which is the common social expression of the principle of evil in practice.

"When Adam delved, and Eve span, who, then, was nobleman?"

If you submit to the doctrines of Malthus, or the Prince of Wales' crony Al Gore, you are either a slave-master, or a slave.

The Force of Tragedy

The conflict between good and evil, which I have just illustrated summarily, is the basis for recognizing the principle of tragedy.

Human nature requires a form of society in which the fostering of the specifically human quality of the individual is the constitutional motive of that society. This is, for example, Gottfried Leibniz's use of the term "the pursuit of happiness" as that denunciation of the essential inhumanity of John Locke's English philosophical Liberalism which Benjamin Franklin et al. supplied as the central principle of natural law in the U.S. Declaration of Independence, the same principle expressed by the fundamental principle of constitutional law of the U.S. Federal Constitution, as the Preamble of that Constitution.

The difficulty is that society as far back as we know it, was dominated by the same oligarchical principle as the ancient Asian empires and their European expression, as typified by the Roman, Byzantine, medieval Venetian- Norman, and modern Anglo-Dutch Liberal system and that Liberal (e.g. Lockean) system's use of a system of chattel slavery, or earlier European serfdom.

President Franklin Roosevelt's intention to shut down the British empire's system once Hitler were gone, as compared to President Harry Truman's support for Britain on this issue, typifies the principle of tragedy.

Had Roosevelt lived out his fourth term, that change would have occurred. So, according to my friend's eyewitness account, as OSS head General William Donovan left the office of the visibly dying President Franklin Roosevelt, he exclaimed to my friend: "It's over!" Without President Franklin Roosevelt, there was no one capable of filling his Presidential shoes, even among the President's loyal associates.

Since that moment, even some months earlier, once the Normandy breakthrough had occurred, the same British and other circles which had originally put both Mussolini and Hitler into power, and had backed off only because of U.S. pressure by Franklin Roosevelt, were determined, as frankly fascist Felix Rohatyn has expressed this view, that another FDR shall not exist! Already, as Churchill's hack, Field Marshall Montgomery, wasted the Allied First Army in a venture of incompetence beyond belief, Churchill & company were determined that "Hitler should not be defeated too soon." From the Summer and Autumn of 1944 onwards, the relevant elements of the British empire and its U.S. accomplices have been dedicated to eradicating the sovereign nation-state institution, that for motives coinciding to all practical ends, with the doctrine of the Olympian Zeus.

It is the crafting, under the direction of Anglo-Dutch Liberal financier forces, that the trends in the molding of international culture shall be toward a destruction of science-driven economic progress, and an accompanying, radically-neo-malthusian, Al Gore-like reduction of the world's population shall occur, through induced famines and disease of the type Gore is fostering. The aim is world population-levels reduced from over six billions persons, to less than one, as quickly as manageable.

This is the force of tragedy, a form worse than Hitler's, and globally.

You see it in the instances of the poor fools who are shameless, or simply stupid enough to avow themselves co-thinkers of the genocidal policies of Al Gore et al.

The War Risk

Nonetheless, the victory of such fellow-travelers of Al Gore's policies as Felix Rohatyn is not assured. The cultural impetus for a desired economic recovery through technological progress is strong in the world's population. The enemies of mankind must therefore fear that a reaction like that which President Franklin Roosevelt's election produced would spoil the Anglo-Dutch Liberal fanatics' plans today as during the middle to late 1930s.

At this moment, and as early as sometime after January 3, 2008, the fact of the presently ongoing world monetary-financial breakdown crisis, that the present Anglo-Dutch Liberal policies are insane, will sweep through the world's population.

The plan for a London-steered, Dick Cheney bombing of Iran is in trouble. A certain part of the Liberal financial-political elite is desperate. What has just occurred during recent weeks, in Pakistan and nearby, reflects the actions of a faction within the Anglo-Dutch Liberal apparatus which is now lurching into forms of desperate action not seen up to the present time.

The obvious character of this desperate action is an impulsion to shatter existing nation-state institutions throughout crucial areas of the world at large. The most recent actions against Pakistan, actions obviously run by some distinct factional element within the Anglo-Dutch Liberal establishment is the only circumstance under which what happened to Benazir Bhutto would have been risked in the specific location (Rawalpindi) where that operation occurred. The only relevant capability for that is British assets deployed throughout the Southwest Asia/South Asia theaters of operations.

Ramtanu Maitra

The gruesome killing of Benazir Bhutto in the evening hours of Dec. 27 in Pakistan's garrison town of Rawalpindi is yet another step in the process of weakening, and eventual break-up, of Pakistan.

Despite the crocodile tears shed in Washington and London over Bhutto's assassination, it was a disaster waiting to happen and therefore, was altogether expected. Those who believed, naively, that Bhutto's mission was to reinstate democracy in Pakistan and put its usurpers, the Pakistani military, in the background, do not realize why she was inserted into the scene, which was already rife with violence. The truth is that the British imperial circles, with their stooges in Washington, set up Bhutto's execution, to advance their scheme to break up Pakistan, and create chaos throughout this strategic region.
Bhutto, no doubt, was a mass-based political leader, but she was a woman (an excuse used by the puppet Islamic jihadists to commit violence against a person), and she was goaded into the scene by the United States—perhaps now the most hated nation among Muslims in general—to serve Washington's purpose, which was to put the Pakistani military on the defensive and force it to share power with a democratic politician. According to the master strategists in Washington, that is the best of both worlds—the Pakistani military stays friendly, while the United States shakes off its guilt of backing a military dictator.

It is not known what transpired in the telephone call between U.S. Secretary of State Condoleezza Rice and Benazir Bhutto that led to Bhutto's decision to return. What promises were made will not be known unless Rice can shake off the national security garb and tell the truth. The one who knew, and could tell others, is gone.

The 9/11 event had enticed a weak-in-the-head Bush Administration to embark on a journey, the path of which was paved by the British colonialists. The vestiges of British colonial aspirations exist not only at Buckingham Palace, but even more so in the power of the intrigue and secrecy-ridden City of London.

Britain and the Muslims
The partition of India, and the formation of Pakistan, a Muslim nation, by the British Raj, was not done because the British liked Muslims. They had slaughtered them by the thousands in 1856, when the Hindus and Muslims joined hands under the last Mughal emperor, Bahadur Shah Zafar, to drive out the firenghee (white-skinned foreigners). Those who remember that untold part of the history of the Indian independence movement, talk of the piles of bodies lying in the streets of Delhi slaughtered by British soldiers. Most of them, like Benazir Bhutto and her colleagues who died on Dec. 27, were Muslims. The Muslims were "traitors" aspiring to reinstate the "despicable" and "corrupt" Mughal dynasty, London screamed.

The key to the British Empire's financial success was its ability to manipulate Islam. The British Empire-builders eliminated the Islamic Caliphate, created nations out of deserts, eliminated some nations, and partitioned others to create Islamic nations. Britain was aware that the oil fields of Arabia would be a source of great power in the post-World War II decades. The western part of British India bordered Muslim Central Asia, another major source of oil and gas, bordering Russia and Muslim Afghanistan. British India also bordered Islamic Iran and the Persian Gulf—the doorway to the oil fields of Arabia. In order to keep its future options open, Balochistan, bordering northeastern Iran, and the tribal Pushtun-dominated areas bordering Afghanistan, remained as British protectorates.

So, when the break-up of British India was planned by Churchill and others, Balochistan was not a problem. The problem was the Pushtun-dominated North West Frontier Province (NWFP), which was led by a pro-Congress Party leadership, and had voted in the last referendum before partition, to join Hindu-majority India.

What London wanted was that the large Hindu-dominated India must not have common borders with Russia, or Central Asia. That could make it too powerful and, worst of all, energy independent. Pakistan was created by the gamesmen in London because they wanted a weak Muslim state that would depend heavily on the mighty British military. The Cold War period held this arrangement in place, to the satisfaction of the British. The Kashmir dispute, triggered from London to cut off Indian access to Afghanistan, served the British policy-makers well.

But the post-Cold War days are different. China is rising in the north and seeking entry into the Persian Gulf and Central Asia through the western part of Pakistan bordering Afghanistan. China has a long-term plan to build, and build, and build, infrastructure in this area, to bring resources into its vast but thinly populated western sector that extends from bordering areas of Kazakstan under the shadows of the Tien Shan mountains in the West, to the Shaanxi province deep inside China.

What is the connection of this history to the gruesome incident that happened in the darkening shadows of Liaquat Ali Bagh in Rawalpindi? It is important for the Pakistanis, as well for the other citizens of the Indian subcontinent, to know and assimilate.

Britain wants another partition of Pakistan. Whether Washington wants it, or not, it is playing second fiddle to this absurd policy. This time, a new nation is supposed to emerge—a weak and disoriented nation, born out of violence, just like the partition of British India. This nation will consist of Pushtun-dominated North West Frontier Province (NWFP), Federally Administered Tribal Areas (FATA), and Balochistan—all situated west of the Indus River and bordering he British-drawn disputed Durand Line that allegedly separates Afghanistan from Pakistan.

Why Bhutto?
The purpose of inserting Benazir Bhutto into the scene, after eight years of self-imposed exile, at a time when law and order had completely broken down, and even the Pakistani military was coming under serious attacks from the Islamic militants, was two-fold. The first objective, which Bhutto achieved in no time, was to put the Pakistani military on the defensive and generate demands in the street for the military to get back to barracks.

It is understood by the majority of Pakistanis, that despite the corruption that envelops the military, it is the only force in the nation that could, in the short term, maintain law and order, and fight the secessionists.

Once she put the Pakistani military on the defensive, Benazir did not become irrelevant. She became the designated qurbani (sacrifice). The killing of Benazir Bhutto has already unleashed domestic violence. In the midst of grieving Pakistan Peoples Party (PPP) activists and workers, who feel betrayed and orphaned, will be the killers whose objective is to challenge the military and postpone the Jan. 8 elections. They would provoke the military to shoot at the people.

It is to be noted that the international Islamic radicals, who dip heavily into the British and other foreign intelligence sources, have infiltrated over the years into the Pakistani Inter-Services Intelligence (ISI) and the lower echelons of Pakistan's military. That makes the task of keeping Pakistan together even more challenging.

The death of Bhutto was a step to breaking up Pakistan. She, however, wanted to unify the country. The Pakistani people must see to it that her death was not in vain.