Today's hike in official interest rates will force thousands more Australian households into mortgage default, but will not fix the hyperinflationary crisis that is melting down the global financial system.

The entire world is in the final phase of the financial meltdown forecast by the American physical economist Lyndon LaRouche:

• During September and October, the largest U.S. banks recorded $35 billion in third-quarter write-downs and lost nearly a quarter trillion in market capitalisation, on the back of the wave of sub-prime mortgage defaults in the July-September quarter. However, the losses were only a fraction of the actual losses that the banks carry on their books.
• During the last week of October, and first week of November, the crisis entered a new phase. With the more than $1.5 trillion SIV, conduit, and CDO markets frozen, Merrill Lynch announced an $8.4 billion third quarter write-down, and Citigroup a $6.5 billion write-down. Stanley O'Neal, and Charles Prince III were forced out as CEOs of Merrill Lynch and Citigroup, respectively.
• Citigroup is America's largest bank, and thus at the heart of the world's dollar-based system. Major ruptures at Citigroup could detonate its derivatives holdings of $34.9 trillion in notional value, which would bring down the world's $700 trillion-plus derivatives market, and the entire world monetary system. Merrill Lynch is being investigated for selling an unnamed hedge fund $1 billion in commercial paper, in order to make its losses appear lower. And another massive liquidity injection of US$41 billion on Nov. 1^st, by the U.S. Federal Reserve, failed to have any real effect.

If Governments continue to leave this crisis for central banks to manage, the world will plunge into a depression worse than the 1930s. The only solution is for Governments to act on Lyndon LaRouche's Homeowners and Bank Protection Act, to freeze the debts to keep people in their homes and provide government protection for the banks so they stay open and continue to provide services, while the financial system is put through a form of bankruptcy reorganisation, and the unpayable $700 trillion debt is written off. The CEC has tailored LaRouche's bill for Australian conditions, to include a debt moratorium for Australian family farms.

Furthermore, this crisis confirms that it is time that power over the financial system and interest rates is taken away from the private bankers, and put back into the hands of Government, the only agency of the people, through a new national bank like the original Commonwealth Bank. At the Labor Party's federal campaign launch on Sep. 20, 1937, then Opposition Leader John Curtin called for the Commonwealth Bank to be put back under Government control with the power to set interest rates, declaring that "If the Government of the Commonwealth deliberately excluded itself from all participation in the making or changing of monetary policy it cannot govern except in a secondary degree."

Thus, in supporting "the independence of the Reserve Bank", both Rudd and Howard are really saying that they don't intend to govern this nation and they'll willingly be puppets of the Big Business executives on the RBA Board. Only the CEC will deliver on the promise to keep interest rates low, because only the CEC stands for John Curtin's principle of Government control of interest rates, through a national bank.

For more information on the Homeowners and Bank Protection Act, click here.
To have a copy of LaRouche's latest webcast on DVD
and our latest New Citizen posted to you, which includes our
exposé of the Northern Territory land-scam, click here.

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