19 Nov.—Next to no one forecast
the global financial crisis
(GFC) of 2008, except for American
physical economist Lyndon
H. LaRouche, Jr. He was likewise
unique among prominent
individuals and institutions, in
that he proposed a solution to the
impending crisis.
Today, warnings of a new, far
more severe GFC are appearing
daily from such institutions
and persons as the International
Monetary Fund, the Bank for
International Settlements, the
U.S. Federal Reserve, and even
former Bank of England Governor
Mervyn King. What's more,
repudiation of the system of war
and usury that has dominated the
transatlantic region, a rejection
already seen in the BRICS (Brazil,
Russia, India, China, South
Africa) group's initiatives for a
new, just economic order, has
now spread to the UK and the
United States: it was expressed
in the June Brexit referendum,
when British voters rejected the
European Union, and in the 8
November election of Donald
Trump as President of the USA,
defeating Establishment candidate
Hillary Clinton. The large
"minor party" vote in this year's
Australian elections is part of the
same picture.
The continuing self-destruction
of the globalised financial
system, combined with the
worldwide pattern of rebellion
against it, puts the world at a
dangerous, but also very promising,
point.
Derivatives: "Nuclear
Bombs"
If the financial contracts called
derivatives are "unexploded nuclear
bombs nestling deep in the
financial system", as Business Insider
put it recently, many economists
believe that ground zero is
most likely to be Deutsche Bank,
the former giant of German industrial
banking. In the 1990s,
Deutsche Bank adopted the Anglo-
American investment banking
model, moved many operations
to London, and eventually
brought in such City of London
figures as John Cryan (of S.G.
Warburg) and Richard Meddings
(Standard Chartered) to executive
and supervisory positions.
Deutsche Bank holds one of the
world's largest hoards of utterly
worthless derivatives, a mass
of speculative contracts that interlock
through counterparty relationships
with virtually every
other major bank in the world.
Italian and French banks are
in no better shape, while seven
of the eight biggest Wall Street
banks have failed recent "stress
tests". Australia's "Big Four"
are world leaders in derivatives
operations, in which Britain's
"Big Six" banks are likewise up
to their eyeballs (Figs 1 and 2).
As competent analysts acknowledge,
it was the explosive growth
in derivatives speculation over
the previous decade, that caused
the 2008 crash—even though derivatives
speculation had likewise
provoked the near-meltdown of
the global system in August-September
1998.
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