Only Glass-Steagall reform can rescue world economy

The Greek collapse is not a local, self-induced financial crisis, but the next domino in the global economic breakdown crisis, which threatens to implode the entire euro system, and then the rest of the world—including Australia.

American physical economist Lyndon LaRouche will speak on “The Greatest Crisis in Modern History” in his upcoming 9th May webcast, and explain how only a Glass-Steagall standard reform of the world financial system can possibly rescue the world economy.

Readers of this news service have been on an emotional roller-coaster vis-à-vis the economy for the past 18 months, since the collapse of Lehman Brothers, but it is time to stop wanting to be lied to.

There has been absolutely no recovery—local or global—from the financial crisis that Lyndon LaRouche was forecasting for 15 years, which began in July 2007.

Instead, enormous sums of debt were created to prop up the system, the burden borne by governments.

As of October 2009, as LaRouche said would happen, those governments began to collapse under that debt burden, beginning with Dubai, now Greece, and lined up behind are Portugal, Ireland, Italy, Spain, Britain, and the big one, the United States.

The hot-spot for generating the new debt has been the Brazil carry trade, followed by the Australian carry trade, whereby low-interest central bank credit is borrowed by banks at 0-1 per cent, and on-lent into higher-interest economies such as Brazil and Australia.

Consequently, Brazil and Australia have similar economic patterns: Brazilian credit grew 47 per cent last year, which has fed a massive rise in property prices, as seen in Australia—Rio de Janeiro property prices have jumped 50 per cent in 12 months; Brazilian interest rates are on a steep upward trajectory—last week a 0.75 per cent rise, next time expected to be 1 per cent—because it is the only way to keep attracting the new carry trade investment to keep rolling over the older, unpayable debts—exactly like Australia, whose banks have $440 billion in 90-day foreign debt that can only be rolled over if rising interest rates keep attracting carry trade investment.

The availability of credit and rising house prices are interpreted as “economic recovery”, when they are simply features of the global debt-creation mechanism which has massively expanded the global burden of unpayable debt, that has now claimed Greece and threatens everybody else.

The truth is, there is only one possible way to create a real recovery, which is through Lyndon LaRouche’s call for a total bankruptcy reorganisation of the world financial system, in which all financial assets are valued against the clear standard of Franklin D. Roosevelt’s Glass-Steagall Act, so that worthless/toxic assets are cancelled, and real assets are protected and used to issue the national credit to generate a recovery through infrastructure development and primary and secondary industry expansion.

If you are finally ready to stop kidding yourself about the mirage recovery, and want to see a real solution, tune in to LaRouche’s webcast this Sunday at www.larouchepac.com live at 3am Sunday 9^th May, archived shortly thereafter.