The prospects for fixing
the global financial crisis
improved markedly on January
20, with Barack Obama’s
inauguration as 44th President
of the United States.
Obama’s swearing-in closed
the door on the eight disastrous
years of the Bush-Cheney
régime, which not only left the
world in strategic and political
chaos, but in an economic breakdown
crisis which threatens the
existence of the majority of
people on the planet.
But the key to whether
Obama will succeed, is the
extent to which his Presidency
adopts the urgent policy
prescriptions put forward
by the American statesman
and economist Lyndon H.
LaRouche, Jr. The likelihood
of that happening took an
important step forward in the
course of LaRouche’s two most
recent international webcasts,
on January 16, just before
the January 20 inauguration
of President Obama, and on
January 22 (see p. 3), just after.
Both featured extensive back-and-forth
between LaRouche
and members of the new
administration, including a
public acknowledgement by
senior members of the U.S.
Presidency of LaRouche’s
invaluable input.
LaRouche is the world’s
leading economist, as manifest
in his unparalleled record in
both economic forecasting
over the last four decades, and
in his proposals to solve the
present, long-ripening crisis.
Typifying that record, he had
announced in a July 25, 2007
webcast—three days before the
“sub-prime crisis” exploded
—that “The world monetary
financial system is actually
now currently in the process
of disintegrating.... There is no
possibility of a non-collapse of
the present financial system—
none! It’s finished, now!”
The ensuing 18 months have
only proved him right, despite
episodic braying by media
pundits and other hysterics that
“the worst is over.”
Derivatives Cancer
LaRouche has repeatedly
emphasised, as he did again
especially on January 16, that
he had warned on July 25,
2007 not of a mere “sub-prime
crisis”, but of “a breakdown
of the international financial
derivatives bubble,” a bubble
which is now “on the order
of magnitude, equivalent
to, nominally, about $1.4
quadrillion dollars.”
Even as the system collapses,
that bubble has continued to
grow, abetted by the $8 trillion
or so which the U.S. Federal
Reserve and Treasury have
pumped into the “bail-out”.
And the process is the same
here in Australia, where the
off-balance-sheet derivatives
exposure of Australia’s banks
expanded by $420 billion in
just three months, from $13.8
trillion in June 2008 to $14.2
trillion by September.
Meanwhile, the physical economic
“host” of the derivatives
cancer is fast disappearing.
The world’s leading economies
have all suffered sharp drops in
national income and staggering
job losses, while world trade
has ground to a virtual halt
on the back of the collapse in
Chinese manufacturing and a
three per cent drop in Chinese
exports in December.
For Australia, this has
precipitated falls of 20 per cent
or more in resource exports to
China, a sharp increase in job
losses in the “boom” sectors of
the economy like mining and
banking, and a stark warning
from mainstream economics
bureau Access Economics
that 2009 will see the sharpest
contraction in the Australian
economy in history.
LaRouche’s Prescription
In both his webcasts, but with
particular starkness on January
22, LaRouche hammered home
what the new president must
do, if the world is to survive:
Establish a national bank on the
model of that founded by the
first U.S. Treasury Secretary,
Alexander Hamilton, and use
that bank to put the U.S. banking
system and Federal Reserve
into bankruptcy reorganisation.
Banking functions dealing
with the real economy will be
protected, while the unpayable
derivatives and other speculative
paper will be set aside, either
written off or frozen for later
disposition. Simultaneously,
the U.S. must engage the
major powers of China, Russia
and India to create a new
international monetary system
based on physical production
and national sovereignty, to
replace the present, London
and Wall St.-centred “globalist”
system of speculation. It’s either
this, or the world plunges into
a chain-reaction breakdown
not seen since the 14th Century
Dark Age.
LaRouche’s prescription
for Obama on banking
reorganisation, is precisely
what Australia must do to avert
our own national catastrophe.
Urgent Measures for Australia
With $14.2 trillion in derivatives
exposure, Australia’s
banking system must immediately
be put into bankruptcy
reorganisation, beginning with
the privately-controlled central
bank, the Reserve Bank.
A national bank must
be established to finance a
national economic recovery
program, centred on great new
water, power and transport
infrastructure projects.
Australia has the good
fortune, thanks to the old Labor
Party, that many of the urgent
economic recovery measures
prescribed by LaRouche have
an historical precedent.
The Commonwealth Bank,
for instance, was founded
in 1911 as a true national
bank by the great expatriate
American and Labor MHR
King O’Malley, who declared
of himself, “I am the Alexander
Hamilton of Australia.”
Then, in the do-or-die
conditions of World War II,
the great “old Labor” leaders,
John Curtin and Ben Chifley,
used the Commonwealth
Bank to harness the credit
for Australia’s extraordinary
wartime economic mobilisation,
which increased the nation’s
productivity exponentially,
and established world-class
manufacturing, munitions and
machine tool industries.