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Citizens Electoral Council of Australia

Media Release  15th of October 2009

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 03 9354 0544 Fax: 03 9354 0166
Email: cec@cecaust.com.au
Website: http://cec.cecaust.com.au
 

LaRouche was right! Fuse lit for economic explosion

Away from the “Belshazzar’s Feast” carnival atmosphere of Wall Street and the City of London gorging on profits from two years of taxpayer-funded bailouts, the month of October has seen a dramatic deterioration in the broader U.S. economy, and the finances of the three tiers of American governments—as Lyndon LaRouche forecast in July. The collapse of America’s public finances is the fuse for a global economic explosion: it places the U.S. at risk of sovereign default on its debts, which will collapse the already-plunging U.S. dollar—the world reserve currency—and trigger a global chain-reaction. In the U.S. as of mid-October:

* The banks
So far this year, 98 U.S. banks have failed and are now closed. Many more banks are burdened with commercial real estate loans and hundreds more will sink as the commercial real estate market implodes. Estimates indicate that as many as 1,000 more banks could collapse over the next few years. There were 25 bank failures in 2008 and just 10 in the five previous years.

* State budgets
Many states whose fiscal year began 1st July, are facing bankruptcy after just the first quarter of their budgets. Job losses and collapsing tax revenues are hitting hard. The California budget is already in the red within 10 weeks of passage. The state of Illinois has $3 billion of unpaid bills. Service agencies which rely on government funding, such as Meals on Wheels, an at-home care provider, and a disability program, are on the verge of shutdown or eviction.

* Federal debt
The U.S. federal budget deficit was about $1.4 trillion in fiscal year 2009. That is about three times the deficit in fiscal year 2008. Almost half of the spending increase resulted from outlays from the Troubled Asset Relief Program (TARP) and net payments to Fannie Mae and Freddie Mac. Spending increases and revenue reductions stemming from Obama’s so-called stimulus program, the American Recovery and Reinvestment Act of 2009 totalled almost $200 billion this year. (Not to mention the $23 trillion or so created out of thin air to bail out the banks over the last two years.)

* Commercial real estate
This bubble has been pricked. Commercial vacancies (from hotels to offices to shopping centres) across various states are at record highs, increased by up to 10% over the last year. As many as one in five U.S. hotel loans may default through 2010. (Meanwhile the residential housing crisis continues, with tent cities ever-growing.)

* Monetary aggregates
The U.S. is in a new credit crunch, with banks cutting lending despite trillions in government bailouts. Credit to the manufacturing sector, in particular, is drying up. Monetary aggregate created by the Fed, however, continues to increase at a rapid rate. The U.S. monetary base has doubled in one year since last October, from just over $1 trillion to over $2.1 trillion.

* Hyperinflation
Hyperinflation is breaking into a new phase, with commodities from sugar to tin soaring. A single investor, thought to be a hedge fund, cornered the tin market last week, contributing to a 40 per cent increase in prices. Uncharacteristically, the speculator has taken physical possession of the metal, stockpiling it in warehouses around London.

* Physical breakdown
Almost 5 million jobs have been lost since Obama came into office. 400,000 Americans lost their unemployment benefits during the month of September, even despite the extension of benefits in 27 states. Pension funds are evaporating. The current annual report for the Ohio teachers pension fund estimated it would take until “Infinity” to meet its obligations to retirees (their previous estimate was 41 years). Last week for two days, Cobo Hall in downtown Detroit was a scene from the descent into the New Dark Age. The city had announced the distribution of a limited number of applications for a limited amount of federally funded assistance to help around 3,500 needy families pay mortgage, rent, utility bills, or just buy food. Some 60,000 people showed up over the two days, creating a mob scene, with a number of people nearly trampled and others collapsing under the pressure. Police had to be called in to manage the crowds, and medics were called in to treat the wounded.

Citizens Electoral Council leader Craig Isherwood contrasted this economic reality with the hysterical crowing by the Australian news media that the crisis is over, and the markets are booming:

“The corporate media is setting up the Australian people for a fall—again,” he said. “They urged the mums and dads and retirees to plough their hard-earned money into the markets before the onset of the global collapse in 2007, and refused to publicise the CEC’s warnings that it would all crash, and now they are doing it all over again. However, if the people fall for it again, they are the fools.”

Mr Isherwood announced, “The only hope for the U.S., Australia, and the world economy, is the LaRouche Plan:

  1. Cancel the immoral debt, and implement Glass-Steagall regulations;
  2. establish a credit system to replace the world monetary imperium, including by establishing agreements between Russia, China, India, and the U.S. for a new fixed exchange rate system;
  3. begin an economic recovery by investing in blue-collar, capital-intensive jobs rebuilding infrastructure and agriculture.”

For a rundown of how we got into this economic breakdown crisis, and details of how to get out of it, click here for a free copy of the feature DVD, the Homeowners & Bank Protection Bill—The Only Solution.

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