The global financial and economic system is ready to blow now, statesman and physical economist Lyndon LaRouche emphasised on September 12th, contrary to those who argue that the crisis is under control.
There are two big bombs ready to explode, LaRouche stressed: the imminent collapse of the yen carry trade, and the popping of the bubble of collateralised assets. Either of them or both of them combined will be the biggest blow-out in most people's lifetime.
In respect to the collateralised assets, LaRouche said this is bigger than anything considered so far. The main driver is the indirect monetisation of collateralised assets, which are worthless. These fictitious assets are then used as assets of some other capital holding.
Australians are heavily exposed to these worthless collateralised assets, through the tens of millions of dollars invested by Australian superannuation funds and local councils in collateralised debt obligations (CDOs), which have already suffered heavy losses.
LaRouche has proposed a Homeowners and Bank Protection Act to protect both the people, and the function of the banks. "We have to create a genuine firewall, an absolute firewall," LaRouche emphasised. "There can be no compromise, otherwise the whole system will go. Don't do anything else. There should be no pricing of mortgages or bank assets. Don't try to negotiate a compromise. Don't encourage anyone else to do so."
"The choice is to save the nation or save the hedge funds, and you can't save the hedge funds. The hedge funds have no destiny except death. Don't bail them out. Put them into receivership."
