As the U.S. banking system goes into meltdown (confirming Lyndon LaRouche’s prediction of a July blow-out), it is essential the Australian Government moves to protect Australians through a reorganisation of our equally-sick banking system.

The collapse of America’s IndyMac Bank, and the subsequent “run” on the bank by panicked depositors, against the assurances of the U.S. Government, shows the taxpayer bailout approach to the year-old banking crisis has failed. The trillions of dollars poured into the U.S. banks by the Federal Reserve and the U.S. Government have only fueled the hyperinflationary blow-out of the broader economy.

And it can’t last: Bear Stearns, IndyMac, Fannie Mae and Freddie Mac (which guarantee around 40% of the total value of U.S. home loans) are just the beginning—Wachovia, Lehman Brothers, and even JP Morgan, and many others, are in deep financial strife.

What Australian depositors deserve to know, is that contrary to the wishful thinking of financial commentators, Australia’s banks are in similar strife.

ABN Amro economists Kieran Davies and Felicity Emmett have revealed to The Age (14/7/908) that the scale of direct taxpayer bailout of Australia’s banks, via the Future Fund, is much greater than the $2 billion previously disclosed.

An incredible $35 billion of the Future Fund’s total pool of $62 billion was parked in Australia’s banks as deposits in April, which accounts for a total of one-third of all the growth in deposits in banks in the past year.

The banks have been able to lend against these deposits, in the hope that continued financing of property investments will avert a collapse of the property bubble, which like in America, would take Australia’s banking system with it.

In other words, taxpayers are being gouged by the GST on rising prices of food and fuel, huge amounts of which tax-take the government isn’t spending on hospitals and schools, but hoarding as “surpluses”, which it gives to the banker-run Future Fund to be funneled into Australia’s collapsing banks, to lend out to keep the property bubble inflated.

This is not working: for the first time since immediately prior to the Great Depression, Australia has experienced a fall in property values across all states, and all of the banks have been forced to raise interest rates independently of the Reserve Bank.

The only solution, is Lyndon LaRouche’s Homeowners and Bank Protection legislation: immediately place all banks under federal protection, to avert bank closures and protect depositors funds; declare a moratorium on foreclosures for homeowners, farmers and tenants; and reorganise the entire banking system through a comprehensive write-down of all the unpayable debt.

This is the essential first step to a reregulation of the economy, which wipes out financial speculation and prioritises investment for domestic industry and infrastructure, for the common good.

Join the CEC’s fight for the Homeowners and Bank Protection Bill to rescue the economy.

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