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Crisis Countdown: Nazi Economics and the Bail-In/Bail-Out Plan
October 23, 2013 • 9:46AM

In his weekly discussion with the LaRouche PAC Policy Committee on Monday, Lyndon LaRouche emphasized that we are in a "crisis countdown" period, where the removal of President Obama from office and the implementation of Glass-Steagall are immediately urgent requirements.

The next 6-8 weeks correspond to that countdown period, now that the German elections are over and the orchestrated U.S. shutdown and debt ceiling crisis has entered a new stage. The global financial time-bomb is now ticking and is ready to blow at any time, and the scramble is on.

Although the British Empire's policy is for a "hard landing" of the international financial system, using Nazi austerity and bank "bail-in" policies to selectively salvage those few chunks of the system that will survive intact, some in financial policy-making circles are panicked that the whole thing will go up in smoke if they rely solely on stealing from bank depositors and the population's income level. They would prefer to grease the skids to "bail-in" (aka "bank resolutions") with continued quantitative easing and other forms of bank "bail-outs." Thus, NY Federal Reserve head William Dudley delivered a speech on Oct. 18 in which he assured all major financial players that the "FDIC will have a sufficient credit line from the Treasury to ensure a smooth resolution."

European Central Bank Mario Draghi made a similar argument in a July 30 letter to European Commission head for Competition Joaquin Almunia, a copy of which was obtained by Bloomberg, in which Draghi demanded that the EU's new rules for bank bail-ins be complemented with public capital (i.e., bail-outs); otherwise, an uncontrollable bank run and panic could be unleashed.

Lyndon LaRouche commented today that Draghi et al. have a big problem. If the Eurasian giants China, India, and Russia continue working together building an alternative to the British Empire's policies of economic looting and warfare, this will create a very difficult problem for those pushing bail-in/bail-out. You cannot simply wipe out 6/7 of the world's population without a kickback, LaRouche stated.

While the nervous debate rages, there has been a resurgence across Europe of so-called hybrid bonds, which are bonds that automatically convert into stocks in the issuing company or bank, when the bank's capitalization level drops. In other words, they are like the infamous Spanish "preferentes," which are instruments that do on a small scale what the bail-in "resolution authority" intends to do on a grand scale. The Financial Times reported on Sept. 12 that this asset class, "which almost disappeared four years ago," is having a huge comeback, with $40 billion in sales expected this year. "Some call them 'sudden death bonds;' others talk about 'wipeout' bonds," the Financial Times admitted.

Just call them "phoney bonds," LaRouche suggested, and you'll be on the mark.

"Dr. Doom" says QE could go to Trillions

Additionally, Marc Faber, the Swiss investor and Market analyst known as "Dr. Doom," told CNBC on Monday that the Fed's Quantitative Easing (QE) could increase to $1 trillion {per month}. "The question is not tapering. The question is at what point will they increase the asset purchases to say $150 (billion), $200 (billion), a trillion dollars month... The Fed has boxed itself into a position where there is no exit strategy."


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