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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."



RE: LaRouche - Admin - 12-08-2007


With no less than the humility with which the author presents this report to the deserving, intended next President of our United States,
I present him, or her the following.

Since approximately July 25th of this year, the world as a whole has been gripped by what survivors of this present calamity would probably remember, as what was in the process of becoming the greatest, global, financial, chain-reaction collapse in modern history. We could escape the worst of those effects, even now, if we were prepared to end the Babel of the presently bankrupt, globalized monetary-financial system, and to adopt, immediately, an appropriate form of a new world system composed of, respectively, perfectly sovereign nation-states. The measures needed to rescue society from the presently ongoing general collapse, are knowable; the question is: "Will society have both the knowledge and the will needed to make the change: a change from the policies of what has become, up to this point, more than three, disastrous recent decades of terribly wrong decisions contrary to the original intention of the Bretton Woods system?"

So far, none—I repeat: none!—among the visible pre-candidacies for the U.S. Presidency, has shown even a meager sign of commitment to competent policies for leading this republic out of, and away from the continuing causes for the presently onrushing breakdown-crisis of the planet. That lack of the competent policies which should have been adopted by those candidates, is a key contributing element in the planet's presently accelerating plunge toward a "new dark age." To restate that crucial fact, our proper task now, is to prevent a dark age' which would be of several future generations' duration in its immediate effects, were it permitted to continue its present course.

To begin to understand our republic's present predicament, we should recognize that we are, thus, now, gripped, globally, by a crisis which has no comparable precedent in modern European history, not since the infamous, medieval, 14th-Century "New Dark Age."

We in the U.S.A. could still, and must now, act immediately to arrest the present, mid-stream onrush of that oncoming catastrophe. Admittedly, for this purpose, we do have one or two capable personalities from among the current roster of candidates; but—alas!—none of them have presently qualified themselves for this extraordinary mission, unless he, or she were to change his, or her present candidacy in ways which could be supplied only as beneficial guidance from some relevant intervention, as it were delivered from above.

We must not blame all of those candidates too much for their shortcoming on this account; but we must, nonetheless, blame them vigorously. The relevant fact is that they represent, largely, a generation born, usually, between 1945 and 1958, to become part of a specifically "white collar" tradition, the "68er" tradition of the children of the 1950s "white collar" and "organization man" generation, in most of Europe as in the U.S.A. It is a generation of "68ers" which has been educated in hostility to any competent view of the social elements of economic processes; worse, if they have any comprehension of economics at all, it has been indoctrination from a press and academia as ignorant, or even more ignorant than they are. All, candidates, academia, and press alike, are currently expressing the kinds of absurd, but widespread beliefs which are largely responsible for the mess in which the virtually doomed present civilization finds itself today.

My mission here, is, hopefully, to enable at least one such prospective Presidential candidate, but hopefully more, to become capable not only of understanding this challenge, but capable of taking up the unprecedented, specific kind of job of leadership which needs to be provided immediately, now.

Consider all of the candidates who are either in the race now, or the "third man," "independent" candidacy, of New York Mayor Bloomberg, who is apparently waiting for a timely moment to launch an intended threat to Senator Hillary Clinton's presently probable candidacy, as Ross Perot did against George H.W. Bush, in 1992. The job to be done must be by a candidate who would be electable, and would consent to be guided into becoming a competent and decent choice for the future of our nation and the world.

Both our republic, and the world as a whole, are in the present grip of a Classically, globally tragic situation. But for my age, I would be the only possible candidate who could actually be presently considered intellectually competent for the role which the next U.S. President must perform under these present, historically extraordinary conditions. So far, none of the present candidates has shown any grasp of the crucial, specific strategic quality of tasks of leadership, on which not only our republic, but on which civilization as a whole would depend, if the world as a whole were not already fated to be plunged, very, very soon, into a deep, and prolonged new dark age.

Therefore, apart from the fact that the mass-media orchestrated campaign debates have been given more of the character of childish spats, than serious attention to the actual business at hand, the choice of potentially credible prospective candidates is limited to less than a handful who are intellectually and emotionally capable of changing their present habits, by absorbing the guidance in economic expertise and related matters which they presently lack, but which I would give freely to each, or all of them, as I do here.

Specifically, most of the campaigning by the candidates so far, has either expressed simple ignorance of the actual policies on which our republic's survival urgently depends, or, the candidate is a victim of his, or her disqualifying habit, of avoiding those issues which "the big campaign financiers," who seem to own most of the candidates, might consider unpleasant. A candidate who fails to change what has been heretofore that prevalent failure shared among all visible leading candidates, would be remembered chiefly for his, or her part in bringing on that monstrous both national, and global tragedy for which our people would suffer for generations to come.

So, the time has passed for society's continuing to tolerate recent decades' customary games of populist Sophistry. The world can no longer tolerate those petty, schoolyard-like games of childishly competitive political sports, into which our republic's principal pre-candidates have been lured in this campaign thus far.

What We Must Demand
For scientifically grounded reasons which will be provided within this report, we must reject any candidate who fails to rely upon reawakening the seemingly already lost, but unique, historical advantage which we still have as a nation. We must reject summarily any candidate who does not rely, without swerving into other ways, on that specific intention of our Federal Constitution which provides the uniquely appropriate premise for crafting a remedy for the present, terrible economic threat to our world as a whole. The essence of that needed option, for which the original founding of our republic's history provides us guidance, lies principally in a recognition of three, historically defined, crucial points of principle, as follows:

1. That, in all truly successful forms of nation-state government since the 1648 Peace of Westphalia, the morally acceptable design for the modern, sovereign form of nation-republic, has been defined by the principle of agape, as that named principle is traced to such ancient precedents as Plato and the Christian apostles John and Paul. This is the same notion as expressed by Gottfried Leibniz's denunciation of John Locke, as Leibniz affirmed the notion of the principled right of people to "the pursuit of happiness." That treatment of the concept of agape, by Leibniz, was not only central to our 1776 Declaration of Independence; it was elaborated as the functional, ruling principle of our constitutional law, as the Preamble of our Federal Constitution.

This already abused, indispensable principle of U.S. constitutional law adopted from Leibniz, has been virtually obliterated from national practice under the horribly tragic Administration of President George W. Bush, Jr. and his accomplices. It has also been the trend of tragic behavior, by the complicit majority on each side of the aisle, in much of the attempted law-making during the terms of the 2001-2007 Bush Administration, and also, usually, the Congress itself, especially so since February 2006. (As for the effect of the incumbency of the current President and his Vice-President, that can be fairly described as comparable to a situation in which science-fiction's "Pod People" had taken power.)

2. That, in all successful forms of nation-state governments during the interval since the 1648 Peace of Westphalia, agape has been expressed in international affairs as the obligation of each society to be governed by the principle of each being bound by the obligation of affording "the advantage of the other." By that standard, much of our so-called political class's putative leadership is presently behaving as a pack of self-doomed barbarians.

3. That, the mode of government must now become, again, our electorate's adherence to the fact that the superiority of the design of the U.S. republic as an economy, is lodged in the Constitutional preference for a credit system, in opposition to that implicitly imperialist character which is intrinsic in the practice of usury under an Anglo-Dutch Liberal monetary system. We must rid ourselves of the most reckless, the most evil, the most destructive, most usurious, present form of a monetarist system: a so-called "free trade" system.

There are, in turn, three—again "three"—leading moral and other crucial, historical advantages subsumed by the foregoing, threefold constitutional characteristic of the U.S. system, moral and intellectual advantages over, for example, the current, morally wretched, Fabian system of government of Great Britain. These advantages include:

a.) That "protectionist" feature of the settlement of what became the U.S. Federal Constitution, the feature which, chiefly, has made our republic so vastly, morally and otherwise superior to the Sophist's system of the United Kingdom. This advantage was then, and remains the influence of those settlers who shaped our immigrant patriots' character, those settlers who emigrated from Europe with the intention to bring the best of the Classical culture of Europe to a North America which had been located then at a relatively advantageous distance from the reach of the European legacy of usury and aristocracy.[1]

b.) The significance of the establishment of the United Kingdom under King George I, as successor to England's Queen Anne, was that his accession embodied the defeat of the cause of the patriotic party in England, a party which had leaned toward the option of choosing Leibniz's assistance, a party whose defeat had worked in favor of that pro-imperialist Anglo-Dutch Liberalism whose power was consolidated under William of Orange's Hannoverian protégé, King George I.[2] When Britain reached out, with the 1763 Peace of Paris, to take away our liberties, our patriots revolted, in defense of a civilized form of life.

Under the leadership of President Franklin Roosevelt, our republic had returned, one more time, to the impulse of our dedication to those principles. The work done then, in that direction, was not completed; but, it was under way. With President Franklin Roosevelt's untimely death, the process of progress was aborted under his immediate successor. The same betrayal of principle was carried out, to a worse degree, with the Sophistry of the "1968ers" in both Europe and the Americas.

So, with the assassination of President John F. Kennedy, what had been the partly shackled devils of our destruction were abruptly unleashed; we were stricken by the prolonged virtual imitation of each of a long series of wars like the Peloponnesian War of a self-doomed ancient Greece. These have been wars launched during the interval 1964-2007 to date, by repeated consent of the majorities of the U.S. Congress, and, most emphatically, by outright, implicitly treasonous fraud of forces controlling the administration of the presently incumbent President. Those foolish wars have been an emblematic feature of a series of global developments which have brought both our own ruined republic, and the world at large, into the onset of what will soon become, unless stopped, a global, new dark age roughly comparable to that of Europe's 14th Century. The worst of these wars have been those promoted under what President Dwight Eisenhower denounced as "a military-industrial complex," or the same complex named by others a "revolution in military affairs," as this was associated with Samuel P. Huntington's The Soldier and the State, or under London's Fabian-sponsored, brutish U.S. Vice-President Cheney, and Cheney's London-linked U.S. protectors George Shultz and Middlebury, Vermont's wretched Felix Rohatyn.

c.) The original economic policy which had made the U.S.'s constitutionally defined economic policy morally and otherwise superior to that of the United Kingdom, is expressed as our patriots' constitutional abhorrence of a "free trade" system. The Anglo-Dutch Liberal model, called "monetarism" today, is axiomatically a financial-oligarchical, and, inherently imperialist system of government.[3] Our patriots' system, under which the power to create and regulate currency, is under the control and direction of the institutions of our Federal government, was established, thus, as a credit system, as distinct from, and opposed to the implicitly imperialist form of economic tyranny known as a "monetary system."[4]

To be able, now, to meet the specific challenges thus posed to humanity as a whole, we must commit ourselves, according to these specific principles, to act in concert with certain other leading nations, to bring the world as a whole, not to paradise, but to a durable condition of safety and prosperity. To accomplish that, our government, with our support, must revive the set of crucial principles, cited here above, upon which our remarkable occasions of past greatness were formerly premised, as under Abraham Lincoln and Franklin Roosevelt.

To that end, a special approach must be taken to escape from the grave hazard expressed by the lack of certain crucial qualities in the visible pre-candidacies.


For the Record
For obvious reasons, much of what I present, within the subsequent, main body of this report, on matters of scientific principle, must be prefaced here, by pointing to the experience of my repeatedly proven, virtually unique advantage of authority in long-term economic forecasting.

For example, it would be reasonable for a reader to ask: "Just how good is LaRouche's forecasting?" Or, "What is the record of LaRouche's performance?" Therefore, I introduce the body of this report with a review of relevant highlights of that record: I identify the most essential of the scientific premises on which my notable special skills, discoveries of principles, and other relevant accomplishments have depended over the interval 1956 to the present day.

This introduction is also supplied here as indispensable for understanding the root-causes of the tragic, systemic incompetence shown, thus far, in matters of economics and grand strategy generally, among all presently leading official pre-candidates for the 2008 Presidential campaigns and general election. Without taking this matter of forecasting into account, there could be no competent insight into the matter of curing the relative demerits which the notable candidacies have, in fact, exhibited, so generously, thus far.

Therefore, look back to 1956. My first forecast for the U.S. national economy, was a short-term affair, made then, modestly, as part of my specific executive function at that time, a function bearing on supplying needed measures of quality control over that firm's consulting practice. The subject of that report, was my forecast of a crucial change in what I reported as then already in progress, a qualitative change in the marketing conditions in which competent management consulting firms must begin to operate during the immediate years from 1957 onward.

That forecast, which was presented at the beginning of the last quarter of 1956, emphasized the fact of an oncoming, deep recession then in progress, a threat which I had warned would cycle to the surface about February-March 1957. My forecast was focussed, chiefly, on the radiated effects of increasingly reckless major corporate and related speculation, that under the system then associated with Arthur Burns et al. These sources of failure in U.S. economic performance were, most notably, the effects expressed in the operations of firms in the fields of automotive and other hard-goods categories of consumer "capital goods."

The collapse foreseen in that relatively short-term forecast of mine, not only arrived on my estimated time-table; closer examination of the effects of a deepening recession throughout 1957-58, prompted my first, subsequent attempt at a long-range forecast. That longer-range forecast was begun, with successful results, during middle through late 1958, an effort which was continued, as my private endeavor, with significant refinements, into a rounded development of the theses I adopted, and publicized more widely, during 1960.[5]

My long-range forecasting had some, initially limited public circulation through a time from 1961 until the middle of that decade. The circulation of that forecast was accelerated during the latter half of the 1960s, and into the 1970s. The leading among the presently more relevant features of that report were the following.

I had forecast that if the continuing trend in executed U.S. national economic policy of practice which had been expressed, under specialist Arthur Burns, in the aftermath of the U.S. Korean War, were to be continued, into the medium and long term, through the middle of the 1960s, a menacing trend in developments must be expected to emerge during the second half of the 1960s, leading toward a threatened breakdown of the Bretton Woods fixed-exchange-rate monetary system. In none of these publicized reports was I ever mistaken. The collapse of August 1971, and the ensuing, celebrated Queens College debate between me and Professor Abba Lerner, mark the forecast result.[6]

The Science of 'If': Dynamics
By the time President Dwight Eisenhower completed his terms in office, and despite the attempted reforms by President John F. Kennedy, the most widely taught and practiced modern academic and business-practice traditions in the customary university teaching, and practice of forecasting of developments in economy, had become thoroughly, intrinsically incompetent. In my adult lifetime, all but a diminishing few of my possible intellectual rivals among the leading, and younger academic, business, and related long-range forecasters, in the Americas, or in western and central Europe, have always been wrong, and that more or less disastrously, in their outlook on the subject of so-called "business cycles."

This incompetence has principally three leading aspects.

Firstly, generally, in the U.S.A. and western and central Europe prior to and since 1971-72, the tendency which has been carried, more and more, to lunatic extremes, has been to rely upon more radically monetarist assumptions, assumptions which assume that all success depends upon making the "financial community" happy over the span of the relatively short to medium term. The assumption is, that the secret of economics is to make "the suckers," such as typical Wall Street investors, happy. The critics of that sort of nonsense have become a rapidly diminishing few.

Contrary to prevalent delusions in circles of governments and academia, it is not the financial market, but the physical economy which is real: it is the rate of increase of the physical standard of living, per capita and per square kilometer, which determines the actual health, and stability of the economy over the medium to long term: as in the U.S.A. presently, contrary to the foolish President George W. Bush, Jr.: "How good is your pension, and your cost of actually available and good health-care, when the time comes to retire?" The proper question is: What is the rate of increase (or decrease) of the potential relative population-density, per capita, and per square kilometer, of each and all regions of the nation, over the course of a generation or more? On this account, the U.S. economy has been experiencing a physical net decline in output, per capita and per square kilometer, over the course of (approximately) 1968-2007 to date, especially since the awful bungle of the 2000, Gore-Lieberman Democrats' Presidential campaign.

The second principal consideration, is the difference between the methods for forecasting weather and forecasting human behavior.

If we put the role of human behavior to one side, forecasting physical trends in the planet, and our Solar System, can produce useful results, but not mechanically predetermined results. Forecasting can be made successful, to the degree our science has been successfully developed for that purpose. In attempting to forecast human mass behavior, we are confronted with an additional, completely different challenge. For forecasting developments within social processes as such, we must emphasize attention to a voluntary capability unique to the human individual, a factor which does not exist in either inanimate processes, or living processes other than mankind.

This distinction of human, from plant and animal behavior, has two aspects, one ordinary, the other critical. There is the factor of somewhat animal-like, ordinary choice; but, there is also the crucial factor, which does not exist among lower forms of life, the power to change our societies' characteristic powers as a species, through the individual, original human thinker's discovery, or re-discovery of universal physical principles, as principles are typified for modern science by Johannes Kepler's uniquely original discovery of universal gravitation.[7] These discoveries of principle have an effect comparable to what might be considered as akin, in effect, to mankind's virtually willful evolution into a higher species, through fundamental and related scientific progress of the type which was forbidden by both the Olympian Zeus of Aeschylus' Prometheus Bound, and the present-day, neo-Malthusian dupes of London's "68er" and swindler Al Gore.

Thirdly, what I am stressing here, is the following point. To achieve a competent form of insight into these two factors which I have just listed, we must take a third qualitative consideration into account. No actual form of physical, or mental process can be competently represented by the kinds of Euclidean, Cartesian, or neo-Cartesian methods of the mechanistic-statistical forecasting used by the more typical modern economists. Real economic processes are not mechanistic-statistical, not empiricist processes, but are dynamic. Unfortunately, in the Americas or Europe today, virtually no leading politician, and very few among those trained in the subject of economics, have any competent conception of what the term "dynamic" means for the qualified scientist.

This use of the term dynamic is to be traced by any competent economist, or physical scientist otherwise, from the remarkable quadrivium of the Pythagorean science of Sphaerics, from which all a priori presumptions, such as the later Sophistry of Euclid, were banned; the relevant original term for the method of valid science, was dynamis.

The most famous example of the relevant application of Sphaerics was the proof of the construction of the doubling of a cube by the friend and collaborator of Plato, the Pythagorean Archytas of Tarentum. The revival of the use of the concept of dynamis, under the name of dynamics, was introduced, by name, to modern science by Gottfried Leibniz, in Leibniz's 1692-95 exposure of the fraudulent, mechanistic-statistical character of the same method of Descartes from which the degenerated practice of quacks such as John von Neumann,[8] and forecasters such as LTCM's Myron Scholes was derived.

However, the modern revival of the Platonic form of Sphaerics was actually begun, first, prior to Leibniz's work, by Cardinal Nicholas of Cusa's De Docta Ignorantia; but it was Leibniz who made the crucial connection to the concept of dynamis. Cusa's method was that, combined with Cusa's follower Leonardo da Vinci, from which we have proximate origins of the entirety of the work of Johannes Kepler, the first fully competent modern mathematical physicist after Leonardo da Vinci, and, as Albert Einstein has emphasized, the principal figure on which all competent science since, has depended.[9]

Therefore, all competent practice of economics today, depends upon a Riemannian insight into the principles of physical economy, as opposed to intrinsically usurious, monetarist schemes. This notion of physical economy includes a recognition of the inherently fraudulent and immoral character of the form of practice of usury known as monetarism, and demands an absolute contempt for Cartesian, or neo-Cartesian, statistical modes of so-called "economic forecasting."

Since President John F. Kennedy
Bear the implications of this, just said, in mind, as we proceed. At this point in this report, for the moment, it is sufficient, to take into account the worthwhile approximations of good economic science encountered in the work of Presidents Franklin Roosevelt and the John F. Kennedy whose assassination cleared the way for the steps leading up to the wrecking of the foundations of what had been the successful U.S. economy. This change, after Kennedy's death, led to the policies of continued wrecking to become intrenched under the later, successive stages of wrecking actions under Presidents Nixon, Ford, and Carter.

The administration of President Kennedy had attempted serious, and extremely beneficial changes in U.S. economic policies; but, that excellent effort implicitly ended with his assassination in November 1963. His had been a worthwhile legacy which was soon suffocated by a lie, a lie like that of Prime Minister Tony Blair and his accomplice Dick Cheney later, a lie used to push the fear-stricken, corrupted U.S. Congress of 1964 into launching the folly of a U.S. long, wasting war in Indo-China.

Thus, the assassination of President Kennedy cleared the way for what has proven, since, to have been the kind of effect which I had projected as probable for the second half of the 1960s. This effect came fully to the surface during 1967-68, first expressed as the collapse of the United Kingdom's economy under the wrecking conducted by the first Harold Wilson government, in late 1967, and the consequent, first U.S. steps, during February-March 1968, toward disintegration of the Bretton Woods monetary system.

So, I repeated my earlier warnings of my long-range forecast more forcefully, and more widely during the late 1960s, and into 1971. On August 15-16, 1971, U.S. President Nixon, acting under influences including that of George Shultz, "floated" the U.S. dollar, a measure Nixon had taken under the pretext of his publicly avowed devotion to the traditional enemy of U.S. independence, Lord Shelburne's lackey Adam Smith. At the beginning of 1972, George Shultz was entrusted with the task of formally destroying the remains of the Bretton Woods system.

During that time, I was the only notable, published economist who had forecast that looming outcome of the 1960s. The crucial feature of my forecast, was not that I had forecast merely the threatened breakdown of the Bretton Woods system; but, I had warned that such a breakdown would lead quickly toward a shift into approximations of a new fascist system of the type which we are now experiencing in a rather matured form under the model which the Bush-Cheney Administration has copied from the German author of Adolf Hitler's dictatorship, Carl Schmitt. That is the Schmitt who was also the inspiration for the current U.S. Federalist Society, and was the original sponsor of the man who became the model for Chicago University's Professor Leo Strauss.[10]

However, Shultz's role during 1971-72 was not simply an arbitrary decision by Nixon, made under the influence of Shultz et al. It was the culmination of a process of attempted wrecking of the Bretton Woods system, an attempt which had been launched already under President Harry S Truman, which has been always steered, as under Truman, by President Franklin Roosevelt's enemies in official London, and promoted by those who took greater control over the U.S.A. under the conditions of widespread terror engendered by the assassination of President John F. Kennedy. Without that manifold process of intended wrecking, over the 1945-71 interval, President Nixon's unconstitutional sabotage would not have become possible.

Now, as the 1997-98 case of toleration for the unfortunate Myron Scholes, only illustrates today's prevalent delusions, the usual leading economists of today's age of Alan Greenspan have become vastly less competent than even the usual cases from the late 1960s and into the early 1970s age of Paul Volcker. This has been a leading factor in shaping the characteristic incompetence on nearly all crucial issues of economic policy, until now, of all presently leading pre-candidates for the Presidential nominations of the two parties (and also, that of, apparently, Mayor Bloomberg).

Since those events, to the present date, the world as a whole has been constantly on an economic march toward monetary, and financial, globalized, fascist "Hell." This has been a course of development which had now pushed the entire world to the wobbly brink of a total, global collapse into a presently threatened "new dark age."

When every forecast which I have publicized, from the late 1950s, to the present, is considered in exactly those terms I have specified for my own forecasting (as distinct from malicious, or simply foolish misrepresentations of my forecasts by some others), the evidence today is, that I have never been mistaken, where, in each instance, my putative rivals, and also merely captious critics, have been consistently wrong, as during the period of service of Presidents George H.W. Bush, Bill Clinton, and George Shultz's and Dick Cheney's patsy, George W. Bush, Jr.[11]

The Subject of Dynamics
That difference in respect to competence, is essentially a matter of two things. First, as I have already emphasized, earlier in this introduction, the difference is a matter of method: my method is, essentially, a matter of dynamics in the sense given by Gottfried Leibniz and Bernhard Riemann, as opposed to the silly, mechanistic, neo-Cartesian forecasting methods which are customary among today's usual economists and political leaders, as by university professors of, and graduates in economics generally.

The intrinsically incompetent method of today's usual economist, or relevant university figures generally, on the subject, is a reliance upon the intrinsically incompetent, mechanistic-statistical method of "statistical projections" and emphasis on "exact numbers" methods and practices derived from the model of the bungler René Descartes and his cultish devotees. The example of the work of Myron Scholes, as in the matter of the 1998 crash of LTCM, is to be blamed, essentially, on the foolishness of those who trusted the work of Scholes and his like, in driving the hereditary irrelevance of the mechanistic-statistical methods of Descartes to a positivist's wild-eyed extreme.[12]

Now, review the concept underlying my forecasting of developments since 1972. Consider the summary comparison of change of ratios of monetary, financial, and net physical output over the course of the 1972-2007 interval, especially the "post-Soviet" interval 1992-2007 (Figure 1).

That forecast has shown exactly the pathway of choices which relevant events have followed, since 1996 to the present time.

The point to be made in these prefatory remarks, is not simply that I have been right in these matters, where presumed rival authorities, and sundry commentators have been persistently wrong. The crucial point to be considered, is the fact that my work has been premised on a correct principle of science, where my putative rivals have relied upon scientifically incompetent premises. The issue thus posed, is that of dynamics, as opposed to the incompetence of the systems of mechanistic-statistical extrapolations on which the empiricist and positivist number-mechanics rely.

I explain this matter of principle to which I have pointed above, as follows.

The Modern Historical Background
Put aside the cases of opinions expressed by wishful dreamers, self-anointed, but illiterate know-it-alls, and many other people who are simply ignorant of competent professional considerations in the matter of the history of modern economy. By modern economy, I mean the period of globally extended European statecraft launched by the A.D. 1439 great ecumenical Council of Florence. Competent historians and economists will contrast modern European civilization, from approximately A.D. 1439 onward, to that earlier form of European society which was collapsed into a prolonged, medieval "New Dark Age" of civilization, an over-ripe collapse triggered by the epoch-making, calamitous, famous Fourteenth-Century bankruptcy of the Lombard banking house of Bardi.

Excepting the types of reforms associated with models of reference provided by such as Solon of Athens and Charlemagne, in all known ancient and medieval European and near-Eastern societies, the organization of society was modelled on the prescription which Aeschylus' Prometheus Bound associates with the Delphic cult's model for Lycurgus' Sparta, the latter a model in which the great mass of the population was bestialized under a system of virtual slavery such as serfdom.

The essential distinction to be emphasized here, is that modern European civilization, as the definition was introduced earlier by the work of Dante Alighieri, was later defined systematically by the combination of a crucial set of two pioneering works of Cardinal Nicholas of Cusa: his Concordancia Catholica, defining the principle of the modern European sovereign nation-state republic from which our own U.S. republic was derived, and his De Docta Ignorantia, which laid down the foundations for all competent expressions of modern European physical and related science. When we apply the essential principle of physical science from De Docta Ignorantia to the domain of Classical artistic composition, we have touched, in the outcome of the work of Cusa, that crucial aspect of modern European civilization which separates the foundations of our U.S. constitutional republic from all known ancient and medieval cultures. That is the principle which is otherwise expressed as the only unique distinction of man from beasts.[13] For the purposes of the modern statesman and economist, the crucial developments which separated the new form of society launched by that Florence Council, from what might have been considered a mere revival of something like an earlier (e.g., "feudal") form of European society, were expressed in those two contributions by the man known to history as Cardinal Nicholas of Cusa, the founder of both the principle of the modern sovereign nation-state[14] and of modern physical science.[15]

In respect to the history of the quality of European civilization, the poet, dramatist, and historian Friedrich Schiller, defined the issue of that civilization as exemplified by the conflict between the evil legacy of Lycurgus of Sparta, and the benefit typified by the work of Solon of Athens. As a matter of fact, the great English Classical poet Percy Shelley paralleled historian Schiller's thesis, by, for example, contrasting the mission of the fabled Prometheus with the evil of the Delphic Olympian Zeus and (implicitly) Delphi's Apollo-Dionysus cult. Heinrich Heine located decadence in the emergence of the Nineteenth-Century cult of Kantian and related expressions of Romanticism. I agree with the views of the matter by Schiller, Shelley, and Heine, as far as each goes; my work in the science of physical economy has depended upon my going deeper into the matter than these have done, as I do here, in the remainder of this prefatory section of my report. I begin with a crucial, specific discovery by Cusa.

Science & Statecraft
In a brief review: Cusa's broader significance for modern physical science and economy, is his central role in reviving the largely lost knowledge of competent science, a discovery which he made in the course of his attention to the Classical Greek archives of Byzantium. What proved to have been his most crucial practical contribution to the founding of modern science, was his emphasis on correcting a systemic error in the work of Archimedes, Archimedes' mistaken claim to have solved the problem of defining the generation of the circle and parabola from the standpoint of a notion of quadrature. All of the distinct accomplishments in scientific method by modern physical science, from that time, to the present day, including economy, have depended for their earned authority upon the realization of the implications of Cusa's insight into that error by Archimedes.

This specific contribution by Cusa provided the basis for those discoveries by Johannes Kepler on which, as Albert Einstein emphasized, all competent practice of modern physical science depends. Kepler himself defined the principle of these discoveries in two, interdependent contributions which we have come to enjoy from Kepler's discovery of universal gravitation: as what was to become Gottfried Leibniz's uniquely original discovery of the elementary principle of the calculus (the essentially transcendental infinitesimal),[16] and as the development of the concept of physical-elliptical, and higher order transcendental functions by Carl F. Gauss, Bernhard Riemann, and others. These same discoveries are crucially indispensable for the competent understanding and practice of modern political economy.

To grasp the importance of these conceptions from dynamics for a science of physical economy, it is essential to recognize that a competent modern practice of economy as a science, depends absolutely on modern European science's foundations in the work of such outstanding followers of Cusa as Leonardo da Vinci and Kepler, and such outstanding followers of these modern geniuses as Fermat, Leibniz, Jean Bernouilli, Abraham Kästner, Gauss, Abel, Dirichlet, and Riemann. Without a grasp of these matters, no competent working grasp of the principles of modern economy, such as our own constitutional form, were possible. The concept of the infinitesimal, as Leibniz derived that from the work of Kepler, provides the crucial relevant connections.

The concept of the physical infinitesimal, as Cusa exposed the indicated error of Archimedes, is what contrasts the uniquely original discoveries by Kepler to the honest failures of Copernicus and Brahe. Kepler recognized Cusa's principled argument against Archimedes in two successive, qualitative phases of Kepler's own absolutely original discoveries in astronomy.

1. Kepler's strenuously rigorous proof of the falseness of assuming the function of an equant in the Earth's and Mars' Solar orbit, led Kepler to the concept of "equal areas, equal times" of an elliptical Solar orbit. This discovery defined the efficient existence of the true physical infinitesimal (a physical transcendental) as an expression of a universal physical principle of gravitation.

2. Kepler's discovery of a mathematical-physical function for gravitation, which depended upon combining the ironical co-function of two senses, vision and hearing, provided the foundation for all competent approaches to the notion of universals in modern physical science, including a science of physical economy. It defines the efficient form of physical meaning of the term "infinitesimal" for all physical science, and, also, all that which defines the difference of the potential creative powers of the mind of the human individual, from the nature of the beast.

It is those creative powers, so defined, which define any competent attribution of meaning to the notion of those social functions of economy which are of crucial importance for the reshaping of the policy-making of the U.S.A. now.

As Academician V.I. Vernadsky and Albert Einstein have defined this matter, so, in the case of Kepler's discovery of the universal physical principle of gravitation, all valid discoveries of any universal physical principle, are expressed in the form of a unique, transcendental quality of experimental proof of the existence of a universally efficient physical principle.[17] This argument is, of course, contrary to the academic classroom and other dogmas of ancient and modern Sophists, such as the empiricists and positivists, but so what? All competent use of the term "universal physical principle" has precisely the required meaning I have just stated here.

Finite Physical Space-Time
Since the ancient Sophist Euclid, drooling and other credulous students of secondary and higher indoctrination, have been brainwashed into assuming such fairy tales as the notion that scientific thinking requires us to believe that competent mathematical thinking means accepting the Sophist's voodoo of Euclidean or kindred sorts of "self-evident" definitions, axioms, and postulates. The most radical, and most vicious expression of this sort of practice of academic witchcraft, is met today among the dupes of such miserable creatures as the pro-Satanic Bertrand Russell, as in Russell's Principia Mathematica, or the wickedly demented products of such Russell devotees as the late Professor Norbert Wiener (i.e., "information theory") and the Theory of Games of John von Neumann, or of the infernal wickedness of Russell's avowedly fascist accomplice H.G. Wells.[18]

All competent instruction of the young in the foundations of scientific thinking, requires the exclusion of the Sophist dogma of a priori set of definitions, axioms, and postulates. In other words, only a physical geometry such as that of the Pythagoreans and Plato, or modern Riemannian physical geometry, can be justified for the crafting of the scientific potential of the young mind.

The most significant root of the human errors about scientific knowledge, is the presumption which is central to the inherent, systemic fallacies of notions of sense-certainty associated with a literal reading of the apparent evidence of our senses. The correct view of this matter, is the recognition of the fact that what we think we see, literally, or hear literally, is not the merely apparent, not the actual form of that whose existence our sense-organs report to our brains. Thus, ignorant popular opinion imagines, wrongly, as the teaching of Euclidean or Cartesian geometry insists, that space is simply extended infinitely: the real universe is very large, yes; but, infinitely extended, never.

The truth about sense-certainty is presented to us in the clearest, and relatively simplest way, by Johannes Kepler's uniquely original discoveries of the universal principle of gravitation. In the first instance, Kepler proves the existence of gravitation in terms of an elliptical function; in the second instance, he defines the measure of gravitation within the Solar System as a functional expression of the principle of organization, gravitation, of the Solar planetary system. As Albert Einstein was to emphasize, the fact that the universe is organized according to the principle of gravitation, illustrates the demonstration that the universe, while very large, is, nonetheless finite, because it is enveloped ontologically, bounded, by a universal principle of gravitation, and, in other expressions of the universe's existence as a unified physical field.[19]

The same kind of general conclusion was reached, in a refined way, for chemistry, by Academician V.I. Vernadsky's proofs of the partition of the universe into three physical-chemically distinct phase-spaces, including the Biosphere and Noösphere.

So, experimental physical science demonstrates that our universe is bounded, as finite, by what unique methods of experiment identify as an efficiently functioning universe of physical principles. This does not imply that the universe is of a fixed size, but, is, rather, developing and expanding relatively, but, nonetheless, remains finite, and is anti-entropic, rather than what is falsely presumed, by ignorant believers, to be entropic.

The corollary of these considerations, is that we must never esteem our sense-perceptual processes as "self-evidently true." Rather, we must regard our senses as we regard any other scientific instruments, biological, or man-made, and, as limited in the authority of their findings in the same way as any instrument we create to complement those sense-perceptual powers which are delivered, so to speak, with the baby.

The latter conclusion was delivered to modern science through Johannes Kepler's discovery of the quantification of a universal physical principle of gravitation from study of the organization of a cluster of the planets of the Solar System. This same principle was clarified for the asteroid orbits by Carl F. Gauss. It was not sufficient to rely upon spatial evidence in the form of vision; without including the harmonics of what we associate with the sense of hearing, the measurable, "wavicle" quantum principle of gravitation could not have been discovered.

So, we must think about the proper, practical meaning of terms such as science and education, if we are to recover our seemingly lost penchant for national progress.

How Our Nation Was Ruined
The crucial difference with which civilization as a whole is confronted in our selection of a new President, is that civilization has reached a great breaking-point in the history of our planet considered as a whole. For what we face now, there is no precedent in the actual experience of any person presently living on this planet. The planet as a whole is now gripped by a general physical-economic crisis which has no precedent since times when new dark ages were heralded by the disintegration of earlier, past forms of once great empires.

Therefore: "Who is the devil which has taken over the minds of the leading typical representatives of our own, as many other nations?" The most crucial of all of the top-down problems of our society today, is that our once-great republic, like the people of the nations of the Ancient Greek, Shakespeare, and Schiller tragedies, has been taken over by the type of reigning mental disease which gripped the generation of Rome's Caesars, Norman England, and the great religious warfare during most of the 1492-1648 interval in Europe.

In particular, since the death of President Franklin Roosevelt, the planet as a whole has been gripped by a long wave of degeneration in the essential features of the morality and culture of the planet considered as a functionally unified whole process.

What I have just summarized in that way, presents a terrible problem to the believer in what is called empiricism. Empiricism, otherwise known as Liberalism, was introduced to modern society by the Venetian Paolo Sarpi and Sarpi's personal lackey Galileo Galilei. Empiricism, or Liberalism, was cooked up by Sarpi as a trick for solving a Sixteenth-Century political problem identified in the writings on modern strategy by Niccolò Machiavelli. The problem, as Sarpi defined it, was to permit some of the kinds of innovation in technology which made Cardinal Nicholas of Cusa's definition of the sovereign nation-state's science, strategically superior to Venice's efforts to turn back the clock to the feudal system of imperial world-rule by usury. Sarpi's point was to allow some technological and other innovation, where the older faction of Venice wished to stop progress altogether. So, Sarpi intended to create a new form of financier imperialism, called Anglo-Dutch Liberalism today, which would permit some innovations, but would, nonetheless, deny the existence of universal physical principles to be known to typical members of society. In principle, Sarpi took the same position on the "discovery of fire" as the Delphic Olympian Zeus. To copy a new technique (in some cases) was permitted; but, it was not permitted to allow knowledge of the universal principle on which that technique's use had depended.

Thus, Sarpi rejected the strict "zero growth" ideology of the Sophists Aristotle and Euclid, but adopted the utter irrationality of the medieval madman William of Ockham. Sarpi's outlawing of the acknowledgment of the existence of discoverable universal physical principles, is what is to be known as philosophical Liberalism— Anglo-Dutch Liberalism—in matters of both science and morality.

That denial of actually knowable truth of universal principle in science, is known, as I have just said, as Liberalism, or, in its more radical expressions, as positivism, or existentialism. The variant of that doctrine, to the same effect, is typified by the fraudulent positivist dogma of the fanatical Ernst Mach, by the Principia Mathematica of Bertrand Russell, and by such depraved cult-followers of Russell as Norbert Wiener ("information theory") and John von Neumann ("artificial intelligence").

Therefore Sarpi and his followers, who are chiefly known, variously, as empiricists, positivists, or Liberals, do not accept the actual existence of universal physical principles, except as mere "footprints," such as mathematical formulas used to describe an effect. The method of René Descartes is a typical product of the methods of Sarpi and Galileo, as also of modern empiricists and positivists generally. All Anglo-Dutch "economic" doctrine, such as that of Bernard Mandeville, François Quesnay, and that plagiarist (of Quesnay and Turgot) Adam Smith, and their ideological followers, is premised on the same Liberals' hoax by modern European forms of Sophistry.

Modern philosophical Liberalism, is, therefore, a modern extension of the ancient Sophistry (and related superstitions) familiar to scholars from that decadence of ancient Classical Greece leading into the hoax associated with the name of Euclid. The decline of the U.S.A., from its recovery under the leadership of President Franklin Roosevelt, and the U.S.'s decline, since the death of President John F. Kennedy, into the pile of the neo-Malthusian, post-industrial rubbish which it, like western and central Europe, has become today, is an echo of the same principle of moral degeneracy, known as Sophistry, which destroyed ancient Classical Athens. The typical moral and intellectual disorientation which usually characterizes the "white collar Baby Boomer" today, is, clinically, a modern echo of the same moral disorder which led ancient Athens to its self-destruction through its adoption of the same form of corruption, then known as Sophistry, and now as Paolo Sarpi's and Galileo's Liberalism.

The leading source of dysfunction among the white-collar middle-class stratum in the age-interval 50-65 today (the so-called "68ers"), which has been the principal, leading source of self-inflicted incompetence of our nation and western and central Europe, its decadence, today, is just that. It is exactly that ideological corruption which has led our republic down the same pathway of ruinous long wars, under the "68er" influence, as ancient Athens' self-destruction through the Peloponnesian War then, today.

It has been the substitution of Liberalism, and its popularized, degenerated forms of culture and recreation, for the efforts to maintain a Classical culture in education, science, art, and physical economy, which is responsible for all of the degeneracy in which our own economy and that of western and central Europe have been plunged during the recent forty-odd years. The hatred of science associated with grossly perverse figures such as former Vice-President Al Gore, is typical of the moral and intellectual decadence, and outright fraud, which is carrying our republic, and the world generally, toward absolute ruin today.

What has ruined us so severely, and increasingly, since the murder of President John F. Kennedy, and what had already weakened us morally since the death of President Franklin Roosevelt, is the decadence which the leading white-collar edge of the generation of returning World War II veterans permitted to be done to our culture with the accession of Winston Churchill's admirer, Harry S Truman. It was the orchestrated conflicts, between Classical and Popular, and between "Blue Collar" and "White Collar," which have divided and now almost destroyed us since my generation's White Collar children were victimized by a new Liberalism, children then, who grew up to become the leading edge of the "anti-Blue Collar" Liberals of the 68er generation.

Without the "White Collar" generation born between 1945 and 1958, we would not have had the "68ers" in the Americas and Europe, and we would not have had that cult of "post-industrial" utopias which has brought the world at large to the verge of the deepest, longest, and worst dark age in the history of known European civilization.

I. The World's Presently Onrushing Breakdown-Crisis
The one-page "Leaders" editorial for the November 17-23, 2007 edition of Britain's Economist,[20] gloated over the current folly of our United States of America, in the following terms:

"In 1929, days after the stock-market crash, the Harvard Economic Society reassured its subscribers: 'A severe depression is outside the range of probability.' In a survey in March 2001, 95% of American economists said there would not be a recession, even though one had already started. Today, most economists do not forecast a recession in America, but the profession's pitiful forecasting record offers little comfort."

That far, that Economist editorial statement was nearly right, at least formally accurate in its choice of language. However, the same paragraph concludes:

"Our latest assessment [see page 80] suggests that the United States may well be heading for recession."

Suddenly, with that sentence added, the Economist was wrong. In fact, it is the United Kingdom in its present form, which is now, apparently foredoomed to a dirtier and quicker disaster than that which now, admittedly, threatens the U.S.A. Northern Rock, for example, is no Gibraltar. Those in London, and London's dupes elsewhere, who dream of a triumphant London-ruled western and central Europe, risen Phoenix-like from the ashes of a doomed U.S.A., should be classed in the legacy of fools whose chosen destiny is akin to that of the backward-looking, Biblical "Lot's Wife." "More salt, Mrs. Lot?"

Actually, the U.S. economy had been in a long wave of physical-economic recession in net physical capital formation, in basic economic infrastructure and related, net physical capital-goods, and monetary accounts, since as early as the rather brutal cuts during the term of U.S. Federal fiscal year 1967-68, a U.S. recession which had been triggered, in 1967, by the essentially incredible first Harold Wilson U.K. government's collapse of Sterling. The effect of these 1967-68 developments was later echoed, and accelerated by the inauguration of U.S. President Richard Nixon, especially Nixon's August 15-16, 1971, virtually treasonous actions in bringing down the Bretton Woods monetary agreements.

Since that time, through the January 1981 inauguration of President Ronald Reagan, the U.S. economy underwent two successive phases of steep downturn, and, despite much, soaring, monetary-financial inflation, has never actually enjoyed a net physical recovery since then, up to the approximately July 25, 2007 outbreak of what is now threatened to be the steepest, global, and most deadly physical-economic and monetary depression in the nation's history. However, taking the fact of accelerated, already wild-eyed monetary inflation into account, contrary to the Economist editorial of November 17th, the imperial economy of the U.K. at home is already plunging, into an even steeper depression than the U.S., and is bringing most of Euro-dominated Europe down with it. Like the poor old prostitute she really is at heart, the City of London is running out of her aging financial tricks.

A proper understanding of these developments requires some remarks on the nature of the collapsing Anglo-Dutch Liberal world system's role and character as the planet's still leading position as a failed, global imperial power.

That Brutish Empire!
The most misleading feature of the book which Lord Shelburne's lackey Gibbon presented to him as The Decline and Fall of the Roman Empire, is the suggestion that the British Empire which had been virtually established by the 1763 Peace of Paris, was to become a copy of the empire of the Roman Caesars, or, as Gibbon recommended to Shelburne, the adopted model of the Byzantine reform of the Roman Empire by Julian the Apostate. By and large, that recommendation of the model of Julian the Apostate has been carried forward in actual practice. Nonetheless, the suggestion that Queen Elizabeth II reigns in the manner of Augustus, Tiberius, or Nero would be gravely misleading.

With certain adjustments taken into account, the Anglo-Dutch Liberals' empire, which was established according to the intention of Venetian Party reformer Paolo Sarpi, is essentially, still today, that medieval Venetian empire, usually mislabeled as the system of the Norman crusaders. It was Venice's financier oligarchy which actually ruled the crusading imperial domain of that time, managing, while looting the same empire itself, through exhausting the Norman chivalry either with what were euphemistically termed "crusades," as through tiresome, ultimately fruitless expeditions into nearby Asia, or Byzantium, or simply preoccupying the armored Norman beasts with the pleasures of making wars upon one another, always financed by loans at usurious Venetian or Lombard rates.

What became known as the British empire-in-fact, since the February 1763 Peace of Paris, has actually been the empire dominated by an Anglo-Dutch Liberal financier class, one created by the strategically motivated migration of financier and kindred elements of the New Venetian party of Paolo Sarpi, into the maritime districts of the northern seacoasts of Europe, chiefly today's Netherlands and the United Kingdom. There is really very little difference in their deplorable essential character, still today, between the actually reigning Anglo-Dutch Liberal financier class and its present North American financier offshoots, on the one side of the relevant history, and, on the other, the notorious pirates who Liberally infested the Caribbean of Cayman Islands notoriety during the course of the Sixteenth, Seventeenth, and Eighteenth Centuries.

It is to be recalled, that that British empire-in-fact established in February 1763, under the already rising leadership of Lord Shelburne, conducted the early phases of its attempted global rule largely through the private armies and maritime forces of, principally, the British East India Company. For much of its earlier history, the reigning monarch of the United Kingdom was essentially a public convenience of the Company, with much of the actual power passed down from chief thug Shelburne, to his Foreign Office creature Jeremy Bentham, and, in turn, to Bentham's trained successor Lord Palmerston. It was when a U.S.A. led by President Abraham Lincoln defeated both Palmerston's own treasonous American Confederacy, and launched the defeat of the combined forces rallied against President Benito Juárez's Mexico, by London, Napoleon III's France, the Habsburg monarchy, and London's wholly owned Spanish slave-traffickers in Mexico, that London recognized the U.S.A. of Lincoln's heritage as being the ponderable force which must be subverted and destroyed for the advantage of Britain. London made arrangements, such as two Twentieth-Century "world wars," in the effort to eradicate the once-growing American influence on the continent of Europe, and in Asia, once and for all.

Some, admittedly very silly Americans have exhibited their own lack of intelligence by considering that British empire our oldest and dearest ally. [22] The views expressed somewhat gently in the cited Economist's editorial, are neither recent nor accidental. After all, it was the Old Lady of Threadneedle Street which created and installed Germany's dictator Adolf Hitler, with help from the Basel of the Hjalmar Schacht who was, on London's behalf, the virtual sponsor of Adolf Hitler's rise to power. This was, at a relevant time, the same Schacht who had been the protégé of the Bank for International Settlements, and a protégé of the one-time head of the Bank of England, the Montagu Norman associated with New York City's Brown Brothers, Harriman. These were the British circles of Winston Churchill, which, like the awful, and thoroughly anti-African racist Field Marshal Montgomery of El Alamein, never really forgave President Franklin Roosevelt for causing Adolf Hitler to be defeated "prematurely."

After all, there is nothing really inconsistent in Fabian London's promotion of the careers of its agents Mr. and Mrs. Lynne Cheney, this done against the most vital interests of our U.S.A. Puppet Dick Cheney's role in the British-designed scheme for a "revolution in military affairs," and the antics and profits of BAE to which he has been linked politically, have successfully destroyed the power and reputation of the U.S.A. more extensively and profoundly than any outside power could have done without the Cheneys' assistance. Those who defend Cheney's incumbency still today, may be properly considered in that light.

The British Empire is, essentially, a joint-stock company representing financier partners, and also predatory rivals, of many ancestries and political vintages. Betwixt and between the pleasures of cutting one another's throats for profit, the joint-stock company of that emotionally childishly brutish, infernal financial rabble, requires a certain kind of "nanny," a political instrument of government, an instrument lodged chiefly in the monarchy and parliaments of the Anglo-Dutch Liberal system, to regulate its predatory affairs.

The British monarch is no emperor, but a sort of corporate functionary, whose role is required to keep some semblance of order among a thieving, murdering, predatory financier-oligarchical rabble, the latter a special kind of financial slime-mold, which appears to please itself to spell night-hood with a prefixed "k."

Why Be So Very Brutish?
In the meantime, the only relatively healthy economies still to be found in the world at large, are, for the moment, in the East Asian bloc of China, Japan, and Korea, with Britain's enemy Russia still too dependent on fuel exports to be more than a very interesting runner-up, and India's hopeful nuclear-power prospects notable. However, even in those locations, the rate of current collapse in the new world depression now hitting the Americas and western and central Europe, is a clear, increasingly infectious menace to the well-being of even the relatively healthier East Asia industrializing bloc. If the U.S.A. continues to go down, as it has been doing since about this recent July 25th, it will take down the economy of the entire planet with it.

For example: Throughout the trans-Atlantic community in general, the presently onrushing, deep, world...

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.

LaRouche - Admin - 01-04-2008


Paul Krugman

On Wednesday, the U.S. Federal Reserve announced plans to lend $40 billion to banks. By my count, it's the fourth high-profile attempt to rescue the financial system since things started falling apart about five months ago. Maybe this one will do the trick, but I wouldn't count on it

In past financial crises - the stock market crash of 1987, the aftermath of Russia's default in 1998 - the Fed has been able to wave its magic wand and make market turmoil disappear. But this time the magic isn't working.

Why not? Because the problem with the markets isn't just a lack of liquidity - there's also a fundamental problem of solvency.

Let me explain the difference with a hypothetical example.

Suppose that there's a nasty rumor about the First Bank of Pottersville: People say that the bank made a huge loan to the president's brother-in-law, who squandered the money on a failed business venture.

Even if the rumor is false, it can break the bank. If everyone, believing that the bank is about to go bust, demands their money out at the same time, the bank would have to raise cash by selling off assets at fire-sale prices - and it may indeed go bust even though it didn't really make that bum loan.

And because loss of confidence can be a self-fulfilling prophecy, even depositors who don't believe the rumor would join in the bank run, trying to get their money out while they can.

But the Fed can come to the rescue. If the rumor is false, the bank has enough assets to cover its debts; all it lacks is liquidity - the ability to raise cash on short notice. And the Fed can solve that problem by giving the bank a temporary loan, tiding it over until things calm down.

Matters are very different, however, if the rumor is true: The bank really did make a big bad loan. Then the problem isn't how to restore confidence; it's how to deal with the fact that the bank is really, truly insolvent, that is, busted.

My story about a basically sound bank beset by a crisis of confidence, which can be rescued with a temporary loan from the Fed, is more or less what happened to the financial system as a whole in 1998. Russia's default led to the collapse of the giant hedge fund Long Term Capital Management, and for a few weeks there was panic in the markets.

But when all was said and done, not that much money had been lost; a temporary expansion of credit by the Fed gave everyone time to regain their nerve, and the crisis soon passed.

In August, the Fed tried again to do what it did in 1998, and at first it seemed to work. But then the crisis of confidence came back, worse than ever. And the reason is that this time the financial system - both banks and, probably even more important, nonbank financial institutions - made a lot of loans that are likely to go very, very bad.

It's easy to get lost in the details of subprime mortgages, resets, collateralized debt obligations, and so on. But there are two important facts that may give you a sense of just how big the problem is.

First, the United States had an enormous housing bubble in the middle of this decade. To restore a historically normal ratio of housing prices to rents or incomes, average home prices would have to fall about 30 percent from their current levels.

Second, there was a tremendous amount of borrowing into the bubble, as new home buyers purchased houses with little or no money down, and as people who already owned houses refinanced their mortgages as a way of converting rising home prices into cash.

As home prices come back down to earth, many of these borrowers will find themselves with negative equity - owing more than their houses are worth. Negative equity, in turn, often leads to foreclosures and big losses for lenders.

And the numbers are huge. The financial blog Calculated Risk, using data from First American CoreLogic, estimates that if home prices fall 20 percent there will be 13.7 million homeowners with negative equity.

If prices fall 30 percent, that number would rise to more than 20 million.

That translates into a lot of losses, and explains why liquidity has dried up. What's going on in the markets isn't an irrational panic. It's a wholly rational panic, because there's a lot of bad debt out there, and you don't know how much of that bad debt is held by the guy who wants to borrow your money.

How will it all end? Markets won't start functioning normally until investors are reasonably sure that they know where the bodies - I mean, the bad debts - are buried. And that probably won't happen until house prices have finished falling and financial institutions have come clean about all their losses. All of this will probably take years.

Meanwhile, anyone who expects the Fed or anyone else to come up with a plan that makes this financial crisis just go away will be sorely disappointed.

LaRouche - Admin - 01-04-2008


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 which is now occurring around the world. LaRouche pointed to Pakistan, Southwest Asia, Kenya, South Africa, Yemen, and the FARC/Chavez moves in Ibero-America as in-progress chaos operations run by the Anglo-Dutch financier crowd.

Ayn Rand devotee and 20-year Fed Chairman Greenspan said in his National Public Radio (NPR) interview, reported in today, "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 ____ (rhymes with hitman).

In the most dire words, French commentator Jacques Attali, a longtime lackey for the financial oligarchy, and former adviser to French President Francois Mitterand, calls the world financial system, bankrupt. Writing in his column in the weekly l'Express today, he says, "It is the whole world which seems to be going over the precipice. As if a collision of trains going at full speed was being prepared. As if, in a vortex emptying the bottom of a bathtub...." there is no stability in sight for the global economy.

"That the murder of an opposition leader of a country of the South would so gravely shake the Asian financial markets, and with them those of the entire world, reveals the extreme fragility of the planet," writes Jacques Attali, referring to the murder of former Pakistani Prime Minister Benazir Bhutto. Attali says that "Beyond the sub-primes, many other debts are circulating and no one knows how the banks will be able to honor them: those of hedge funds, of monoline insurers, of LBO funds, and of holders of credit cards, which form a pyramid amounting much more than the bank's own funds, which would have been closed a long time ago, had the central banks not agreed to refinance them all without restraint."

The European Union is in such bad straits, "with an Italy going financially adrift, to such an extent that the very existence of the euro could be put into question by speculators attacking the Rome Treasury."

He even adds to this already poisonous mix, the crises of the Middle East, and the growth of world poverty. But, like other appendages of the Anglo-Dutch oligarchical system, Attali will not admit that it is gone forever, and must be replaced with the kind of financial reorganization represented by Lyndon LaRouche's New Bretton Woods monetary system, and emergency action in the United States embodied in the Homeowners and Bank Protection Act. Instead he only lists the symptoms, as if he were examining a live patient, not a corpse.


In a schizophrenic drive to save the financial system, the European Central Bank yesterday again "mopped up" some of the hundreds of billions of dollars in liquidity that it had pumped into the collapsing interbank market over the past few weeks -- while then adding today, about another $200 billion in new liquidity to the system.

The ECB drained about $300 billion out of the system, in the last few days, re-absorbing part of the flood of liquidity that it had poured out as part of an unprecedented coordinated action by central banks starting in mid-December. Last week, the ECB had drained out another $150 billion, and more is expected to be mopped up on Friday, Jan. 4, even after pumping new liquidity in on Thursday.

Reportedly, the ECB has vast difficulty in creating "equilibrium conditions" on the markets, because banks "remain unwilling to lend among one another," since they are unable to measure the exact degree of exposure to the damage caused by the subprime blow-out.

Leading economist Lyndon LaRouche said that the ECB draining the liquidity from the banks was one of examples of financial turbulence that he expected would hit on January 3. The point is, there is no monetarist solution, he said, even though the financiers keep looking for one. The only way to understand the crisis now faced is from the global standpoint, LaRouche reiterated.


Lyndon LaRouche called for a world color mapping of the severity of national dissolution and potential genocide crises, for both the Feature coverage of EIR Number 2 and the LPAC website, in order "to make clear that you have a global financial breakdown and a single, global British chaos strategy, not 'hotspots.' If you think of this and try to describe each threatened national dissolution--Kenya, Pakistan, Lebanon, Bolivia, Thailand--as a 'hotspot' first, you have it wrong," LaRouche said. Chaos and ungovernability are the British Empire's strategy of "governing" through a financial breakdown collapse--coming out on top in the endgame, by destroying all the other players, and blocking all national debate and action on the solution.

"This is what they're doing worldwide, LaRouche said. It's one chaos policy. And those writers and 'experts' who are talking about 'Anglo-American' destabilizations--they should cut it out; whose agent is Dick Cheney, anyway? Who does George Shultz work with, who selected Cheney?

This is the British Empire. It is the London Economist, the leading mouthpiece of London's financial empire, which has just warned Thai leader Thaksin that "he is the Benazir Bhutto of Thailand." It is British MPs who have been found to be funding Baluchi fundamentalist separatists in Pakistan; British MI-6 agents just expelled from Afghanistan for guiding and funding the Taliban; British Iraq policy which set up the invasion and then the conditions for the breakup of Iraq between southern, central, and Kurdish regions. Now, in a serious blunder, Pakistani President Musharraf has been induced to announce in a national address, that he is calling in Scotland Yard teams to investigate Benazir Bhutto's murder. It is a British Liberal Democrat in the House of Lords who is the "gamemaster" (see report below) of the outbreak of riots in Kenya, now leading rapidly to ethnic cleansing and threatening genocide. It was Britain's ambassador, confronting the U.S. ambassador on CNN today, demanding that the Kenya election be scrapped and started over amidst rioting and hundreds already dead.

The reason? The City of London knows--and even half-acknowledges, in its financial press and statements of the Bank of England--that the global monetary system is blown out, and a final disintegration of banking systems is under way. The year of hyperinflation, 2008, began today in spectacular fashion: Gold reached an all-time record of $860, rising 3% on the first business day of the year; oil passed $100 a barrel, rising 2% for the day; wheat and other agricultural commodities rose 2-3% in wholesale price today; stock markets fell and the leading indicator of industrial production in the United States, the ISM index, showed a "totally unexpected" 4% drop in one month! And today, the "Basel II" changes in bank-capital deregulation went into effect, backfiring with exactly the opposite impact on banks than intended when they were designed--because the banking system is in the middle of a crash. "Big banks will shrink, and small and middle-sized banks will disappear," was the way financial insiders in New York and Europe characterized the situation.

The only sane answer to such a complete financial disintegration underway, threatening dark age conditions, is for nations to rapidly place "firewalls" of national protection around chartered banks, industry, and households to protect them from the crash; and for a group of major nations to establish a new monetary system, a New Bretton Woods, to replace the collapsed IMF system. This is LaRouche's policy, the Homeowners and Bank Protection Act (HBPA), Economic Recovery Act, and the "four-power" approach to a New Bretton Woods by cooperation of the United States, Russia, China, and India with other nations.

The insane policy of the Anglo-Dutch financial oligarchy to prevent such national moves--or even serious debate and discussion of them--is chaos, destruction of national sovereignty, breakup of nations, even ethnic genocide.

Thus we see, and have to map out, not "crisis hotspots" with their own local scenarios, but a single global policy of chaos, assassinations, existential national crises, like that which leads to world war. And we have to expose it, and defeat it with national mobilizations modelled on the HBPA.


There will for sure be a lot of financial pain, soon, wrote Daily Telegraph financial columnist Ambrose Evans-Pritchard today. For most of the past year, Evans-Pritchard has been echoing the forecasts by Lyndon LaRouche, that the current financial system has gone down.

Real estate bubbles will burst all over Europe, Evans-Pritchard wrote, a "version of the East Asia 1998 crisis [will hit] half the ex-Communist bloc"; Japan will crash due to an 18% rise of the yen against the dollar; but China will not be able to step into world lending, especially to emerging markets, because of "credit tightening and yuan appreciation" by Beijing.

Overall there will be massive rate cuts by the central banks, with inflation to follow. In the "Anglo-Saxon" sector of the world, the populations' personal losses will "mount to $1 trillion, entailing a $4 trillion contraction in lending." Everywhere else in Europe, the high euro will kill every economy outside Germany, and the euro accord will crack. French president Nicolas Sarkozy will react and increase his war against the European Central Bank, and the restrictions imposed by the Maastricht treaty, Evans-Pritchard wrote. Finally, Hillary Clinton will take the White House, with Democrats in control of both Houses.

Telegraph Business desk chief Damian Reece warned that Chancellor of the Exchequer Alastair Darling is not long for political office, after Northern Rock is nationalised. "Having succeeded the UK's longest continuously-serving Chancellor, Darling is likely to become one of the UK's shortest-serving Chancellors. He has to be favourite among the Cabinet to be moved on come a spring reshuffle."


The big banks will shrink, and the smaller banks just disappear in the coming financial meltdown, French hedge fund big name Arpad Busson told The Times of London in an interview Dec. 31. Busson is known for warning in 1987 that the financial system was on the way to meltdown, in the crisis forecast by Lyndon LaRouche earlier that year.

Busson told The Times three days ago: "This is the first time in my 21 years in the business that I've seen systemic risk. I think we are now one-third of the way through the banking problem.... The big banks can battle against these massive write downs. They can shrink," he said. "What I'm concerned about is the medium-sized and small banks. This is going to create another round of consolidation among banks, which is a pity if you end up with ten banks that control the world."


With ripples from the financial crash already hitting the real U.S. economy and companies, it will only take a rise in corporate debt defaults to 5% from the current 1.4%, to blow up a derivatives market far larger than anything that has crashed so far. This is the $45-50 trillion mass of financial derivatives called credit default swaps (CDS), which have ballooned tenfold in three years, and are called "the next domino" in the crash for early 2008 by one New York financial manager, who says it will be "far more severe" than anything that has happened so far in the mortgage meltdown and otherwise.

Again, banks are in the greatest danger of going under in this potential $45-50 trillion blowup; it is banks--not the "monoline" bond insurance companies already reported in big trouble--which have issued 44% of all CDS, and hedge funds another 22%. Fitch Ratings Agency is already projecting a corporate bond and loan default rate of 4-5% in the first half of 2008--particularly by home builders and commercial real estate companies in the United States and Europe--enough to collapse a large chunk of the CDS bubble.

The financial manager compared the CDS bubble to a huge, brand-new insurance industry whose providers reserve nothing for future losses. "Imagine what will happen if $45 trillion ... experiences an actuarial average of 5% losses, and no one [in the banks] has $2.25 trillion sitting around to foot the bill!"