This week’s Bank of International Settlements report which warned that the global financial system “might be at some kind of tipping point” was a de facto admission that major banks and institutional investors are about to go under, and that any attempts to forestall such collapses with “palliatives will only make things worse in the end.”

Written by departing chief economist, Bill White, the BIS’s 78^th Annual Report issued on June 30^th, indicates that central banks have reached the end of their capacity to continue to bailout failing banks and hedge funds, saying that “‘socialised risks’ should be taken on by political systems, and not dumped on the books of central banks.”

The report is a belated echo of comments made by American economist Lyndon LaRouche, in regard to ongoing troubles at Lehman Brothers, that the next major bank to go down would not get an elaborate funeral like that given to Bear Stearns, but would just be buried in the dead of night.

The report concludes: “Should governments feel it necessary to take direct actions to alleviate debt burdens, it is crucial that they understand one thing beforehand. If asset prices are unrealistically high, they must fall. If savings rates are unrealistically low, they must rise. If debts cannot be serviced, they must be written off. To deny this through the use of gimmicks and palliatives will only make things worse in the end.”

This week LaRouche called on the U.S. Federal Reserve to make it clear that whenever any commercial banks face insolvency, they will be put through bankruptcy reorganisation under Fed protection. Such protection, which is part of LaRouche’s Homeowners and Bank Protection Bill “firewall” is the only real way governments can intervene to save the banks, and the people’s savings.

As we approach the anniversary of Lyndon LaRouche’s historic July 25^th, 2007 webcast (in which he stated that the financial system had already crashed and that we would now see it unravel) the global financial system is entering a new accelerated phase of meltdown.

LaRouche will hold another international webcast on July 23^rd to lay out the solutions to the crisis, centred in his “Four Power” proposal to bring Russia, China and India together with the USA, to create the framework for a new international financial architecture.

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