Interview with former Japanese IMF Managing Director Daisuke Kotegawa. Mr. Kotegawa personally dealt with the 1997 Asia Crisis on behalf of the Japanese Finance Ministry. He was interviewed by Michael Billington of Executive Intelligence Review on October 7, 2016.

MICHAEL BILLINGTON: Let me first ask you to give your overview of the current crisis, eight years after the Lehman shock, and why you think we did not restore a sane banking system after that shock, and why we’re now facing the crisis that we’re in.

DAISUKE KOTEGAWA: Well, basically, the people in charge in 2008 in the case of the Lehman shock were successful in stopping this crisis from becoming something like the Great Depression in 1929. But they made some substantial mistakes which we didn’t do back in Japan in the late 1990s. The most important thing is that the authorities didn’t arrest anybody among the bankers who were responsible for this big problem. From our experience in Japan, we know that bankers will just repeat wrongdoing again and again, which would give them big profits. So, the only way we can stop them, is to get rid of those people.

BILLINGTON: Which has not happened at all in the United States. Many people were arrested in Japan, and none here. Do you want to say something about the failure to restore Glass-Steagall and the failure of the Dodd-Frank bill to deal with this problem?

KOTEGAWA: Yes, the largest problem we have now is due to the abolishment of Glass-Steagall. Now investment bankers can get involved in a huge amount of a kind of gambling, using ordinary people’s money and deposits. These deposits are very, very important for the ordinary people; so the government cannot disdain these ordinary people’s deposits. That’s why the government has to maintain this kind of thing, a basic financial system. So, there’s no other option for those governments but to bail those banks out in order to maintain ordinary people’s deposits. Basically what happened in the past is, investment bankers actually privatized their own profits, while they nationalized the losses, and socialized their risk.

BILLINGTON: The center of the current threat of an explosion is the crisis of Deutsche Bank, although many other banks are in similar if not quite as severe a situation. You have recently put forward a four-point proposal for what must be done if we are to prevent the Deutsche Bank uncontrolled collapse from causing contagion throughout the entire Western banking system, perhaps even in this month of October, I believe you said. Do you want to discuss that proposal?

KOTEGAWA: Yes, we have a way out; but before doing that, we need I think, two other conditions. Number one is the reintroduction of Glass-Steagall, so that these kinds of mistakes will not be repeated; that’s number one. Number two is the people who are responsible for these kinds of crises should be punished. Those are the conditions. We have to control this kind of bigger crisis; and this would require a very extensive cooperation of banking supervisory authorities of all countries where the counterparties of Deutsche Bank are headquartered. The first thing this group will have to do is to set, secretly, the specific day; where they are to settle all of these derivatives. Then, that would come down to the specific amount for each bank to get a bail-out. So, all governments have to be ready to supply the required amount of money to bail out those banks.

BILLINGTON: On the condition that they implement the preconditions you mentioned; the Glass-Steagall and the arrest of the criminals responsible.

KOTEGAWA: Yes.

BILLINGTON: You have indicated that there’s no solution to Deutsche Bank outside of those conditions, but that it has to be nationalized, that the German government has to give confidence back to the bank by putting the state behind it. How would that function? And do you think it will happen?

KOTEGAWA: Well, the banking sector is different from the manufacturing sector. In the manufacturing sector, it takes time for any manufacturing company to become insolvent; it takes 5-10 years. But the banking sector is basically a virtual world where the confidence in the system and also in a specific bank is very important. It is very important to make an announcement by the German government that the German government will be standing right behind this bank. The best way would be for the government of Germany to announce that they will partially nationalize Deutsche Bank, and insure that this bank will not collapse.

BILLINGTON: Do you have any expectation that the German government is going to do that?

KOTEGAWA: This would be a big critical issue, which I don’t know whether they are prepared to do, because this big problem was created by the London branch of Deutsche Bank, where most of the employees are either British or American. The Germans are not involved, so when I visited Germany last June, I found there was so much disinterest in rescuing Deutsche Bank; rather, one of the people said, “Let that bank collapse.”

BILLINGTON: The impact of that, however, on the German economy would be devastating.

KOTEGAWA: No, the German economy is very healthy compared to other countries in Europe; but if Deutsche Bank would collapse without any control, that would have, I think, a tremendous contagion effect on other major banks in Europe. I just will refrain from specifying the names of those banks, but I should say that about 10-15 major banks in Europe would become insolvent and disappear.

BILLINGTON: Mr. LaRouche’s proposal, which is very similar to yours, uses as a reference the former CEO of Deutsche Bank, Mr. Herrhausen. How do you see the difference between Deutsche Bank as it functioned under the Herrhausen administration and previous to that, compared to how it has functioned since that time?

KOTEGAWA: Well, if I just put it in a very simple way, that’s the difference between a commercial bank and an investment bank. The investment bank does not create anything for the ordinary consumers, while commercial banks do not create huge amounts of profits for their banks. But they play a very important role to enhance the industries in certain countries. So, in a sense, I think commercial banks are very important for national economies and for their depositors.

BILLINGTON: You’ve made a very strong point of the necessity of arresting the bankers responsible for having destroyed these banks. You indicated to me at one point, that in Japan the arrest of the bankers had an impact in lessening the banking community’s impact upon the Diet, upon the parliament. How do you see the power of the Wall Street and London banks over the governments of Europe and the United States today, where of course, nobody has been arrested since the 2008 crisis?

KOTEGAWA: In 1997, the big crisis started in Japan, starting with the degradation of the seventh largest investment bank in Japan—named Sanyo. Then, just three weeks later, the fourth largest investment bank of Japan, named Yamaichi, was also degraded; and I was in charge of dealing with the crisis. The next year, two big major banks—one named Long Term Credit Bank, the other named Nippon Credit Bank—both of them were partially nationalized. Then all of the board members of those four institutions were later arrested and put in jail. That did not stop there, and supervisors like the people who worked in the central bank of Japan, the Bank of Japan, and also my clique in the Ministry of Finance; some of them were arrested just because they had too many occasions to have dinner with those bankers, or those securities houses. They were put in jail. Some of my friends committed suicide and died; but in those days I thought those things were very cruel actions over those people. But after I observed here in the States what happened after the Lehman shock, I came to the personal conviction that arrest of those bankers was necessary to get rid of their big power over our Parliament.

BILLINGTON: There has been not a single person arrested from the banking crisis of 2007–2008 in the United States; and in fact, the Department of Justice has explicitly stated that they had made the decision not to arrest any bankers, that it made it better for them to collaborate with the banks, rather than to arrest them. The result, I think, is now upon us. What is your concern about whether we can make it through this often fragile month of October, not only in the United States, but in the entire Western banking system? Or, do you think that this has reached a point that it cannot go on any further without either a collapse or a Glass-Steagall solution?

KOTEGAWA: Well, I was in charge of the investigation of those failed financial institutions back in Japan; and I found that those people who worked in banks didn’t have any loyalty to their own banks, nor did they have any loyalty to their nation. Their interest was just for their own personal interests. Unlike some people’s imaginations, they are not smart people. Once they have a very good opportunity to have made fortunes in investment banking, then they really would like to repeat it. So, unless our authorities stopped them, it is highly likely that they would just repeat it. The government has to bail them out again and again, as long as commercial banking is linked with investment banking. I am not a U.S. citizen, but I had a chance to watch a very famous movie about Bonnie and Clyde; and they robbed a certain amount of money by attacking banks, but the money lost from this big crisis cannot compare with the scale of the money which Bonnie and Clyde robbed. They were shot dead, while people who are responsible for this crisis are not even put in jail.

BILLINGTON: Let me ask last, I know that you have, over your years of experience here at the IMF and otherwise, established very close friends around the world: across Europe, the United States, Brazil, Russia, China. As you know, in a very real sense, the world is divided between two paradigms now. One that you’ve described—the general breakdown crisis, unrestrained speculation; and on the other hand, among the BRICS nations and the New Silk Road process in China, the emergence of a paradigm based on development, based on building infrastructure: railroads, water projects, nuclear power. And you have had some contact with some of the people involved in that paradigm as well. What is your advice to America and to Europe in terms of our relationship with this Russia-China-India nexus of nations and this New Paradigm?

KOTEGAWA: After this kind of financial crisis, the most important thing is to create the real demand all over the world. Not just the money game, which has been enhanced by the so-called “quantitative easing.” Those emerging countries, including the BRICS, have a gap between their current economic living standard and the desire for a living standard. So this is a source of a big potential for economic growth in the future.

BILLINGTON: The United States generally gave up on investing on infrastructure in the rest of the world, or actually even within the United States, the argument being that this is better left to the private sector. The result seems to be that while the BRICS-centered nations, the New Silk Road countries, are investing in huge infrastructure projects across Asia, South America, Africa, the US and European industries are very little involved in that process. How can we get the tremendous opportunity to the Western industries to recognize that this would be to their benefit, as well as to the rest of the world?

KOTEGAWA: To be very frank, I see there is very little space left out for the improvement in infrastructure, both in Japan and also in Europe. But that is not the case here in the United States. I must say that the highway system, the railroad system here in the States is inferior to their counterparties in China. China has much, much better railroads; they have much, much better highways. This kind of infrastructure can contribute a lot to the national economy.

by Lyndon H. LaRouche, Jr.

June 10, 2014

The following statement is for immediate action by all associates in all regions of the National Caucus of Labor Committees and its associated practice. The priority is assigned to all means and measures of public action, nationally and internationally, without reservation. That priority is existential for the policies of our republic, and for the general information of, and by all relevant circles world-wide, beginning this date of June 8, 2014.

1. THE FACT OF THE MATTER

The economy of the United States of America, and also that of the trans-Atlantic political-economic regions of the planet: are, now, under the immediate, mortal danger of a general, physical-economic, chain-reaction breakdown-crisis of that region of this planet as a whole. The name for that direct breakdown-crisis throughout those indicated regions of the planet, is the presently ongoing introduction of a general “Bail-in” action under the several, or more governments of that region: the effect on those regions, will be comparable to the physical-economic collapse of the post-“World War I” general collapse of the economy of the German Weimar Republic: but, this time, hitting, first, the entirety of the nation-state economies of the trans-Atlantic region, rather than some defeated economies within Europe. A chain-reaction collapse, to this effect, is already accelerating with an effect on the money-systems of the nations of that region. The present acceleration of a “Bail-in” policy throughout the trans-Atlantic region, as underway now, means mass-death suddenly hitting the populations of all nations within that trans-Atlantic region: whether directly, or by “overflow.”

The effects of this already prepared action by the monetarist interests of that so-designated region, will, unless stopped virtually now, will produce, in effect, an accelerating rate of genocide throughout that indicated portion of the planet immediately, but, also, with catastrophic “side effects” of comparable significance in the Eurasian regions.

The Available Remedies

The only location for the immediately necessary action which could prevent such an immediate genocide throughout the trans-Atlantic sector of the planet, requires the U.S. Government’s now immediate decision to institute four specific, cardinal measures: measures which must be fully consistent with the specific intent of the original U.S. Federal Constitution, as had been specified by U.S. Treasury Secretary Alexander Hamilton while he remained in office: (1) immediate re-enactment of the Glass-Steagall law instituted by U.S. President Franklin D. Roosevelt, without modification, as to principle of action. (2) A return to a system of top-down, and thoroughly defined as National Banking.

The actually tested, successful model to be authorized is that which had been instituted, under the direction of the policies of national banking which had been actually, successfully installed under President Abraham Lincoln’s superseding authority of a currency created by the Presidency of the United States (e.g. “Greenbacks”), as conducted as a national banking-and-credit-system placed under the supervision of the Office of the Treasury Secretary of the United States.

For the present circumstances, all other banking and currency policies, are to be superseded, or, simply, discontinued: as follows. Banks qualifying for operations under this provision, shall be assessed for their proven competence to operate as under the national authority for creating and composing the elements of this essential practice, which had been assigned, as by tradition, to the original office of Secretary of the U.S. Treasury under Alexander Hamilton. This means that the individual states of the United States are under national standards of practice, and, not any among the separate states of our nation.

(3) The purpose of the use of a Federal Credit-system, is to generate high-productivity trends in improvements of employment, with the accompanying intention, to increase the physical-economic productivity, and the standard of living of the persons and households of the United States. The creation of credit for the now urgently needed increase of the relative quality and quantity of productive employment, must be assured, this time, once more, as was done successfully under President Franklin D. Roosevelt, or by like standards of Federal practice used to create a general economic recovery of the nation, per capita, and for rate of net effects in productivity, and by reliance on the essential human principle, which distinguishes the human personality from the systemic characteristics of the lower forms of life: the net rate of increase of the energy-flux density of effective practice. This means intrinsically, a thoroughly scientific, rather than a merely mathematical one, and by the related increase of the effective energy-flux density per capita, and for the human population when considered as each and all as a whole. The ceaseless increase of the physical-productivity of employment, accompanied by its benefits for the general welfare, are a principle of Federal law which must be a paramount standard of achievement of the nation and the individual.^{1The substitution of “3. Cancel Green Policies …” for the correct, “A Federal Credit-System,” is a travesty against the principles of any actually scientific principle. Only affirmative identifications of “Science,” could ever be allowed. Only, the previous title: “The Use of a Federal Credit System” is permitted. Eliminate all use of reference to “Green Policies:” the very use of that latter reference, is a fraudulent representation.}

(4) “Adopt a Fusion-Driver ‘Crash Program.’” The essential distinction of man from all lower forms of life, hence, in practice, is that it presents the means for the perfection of the specifically affirmative aims and needs of human individual and social life. Therefore: the subject of man in the process of creation, as an affirmative identification of an affirmative statement of an absolute state of nature, is a permitted form of expression. Principles of nature are either only affirmation, or they could not be affirmatively stated among civilized human minds.

Given the circumstances of the United States, in particular, since the assassinations of President John F. Kennedy, and his brother, Robert, the rapid increase required for even any recovery of the U.S. economy, since that time, requires nothing less than measures taken and executed by President Franklin D. Roosevelt during his actual term in office. The victims of the evil brought upon the United States and its population since the strange death of President Harding, under Presidents Calvin Coolidge and Herbert Hoover (like the terrible effects of the Bush-Cheney and Barack Obama administrations, presently) require remedies comparable to those of President Franklin Roosevelt while he were in office.

This means emergency relief measures, including sensible temporary recovery measures, required to stem the tide of death left by the Coolidge-Hoover regimes: measures required to preserve the dignity of what were otherwise the unemployed, while building up the most powerful economic and warfare capabilities assembled under the President Franklin Roosevelt Presidency for as long as he remained alive in office. This meant the mustering of the power of nuclear power, then, and means thermonuclear fusion now. Without that intent and its accomplishment, the population of the United States in particular, faces, now, immediately, the most monstrous disaster in its history to date. In principle, without a Presidency suited to remove and dump the worst effects felt presently, those created presently by the Bush-Cheney and Obama Presidencies, the United States were soon finished, beginning with the mass-death of the U.S. population under the Obama Administration’s recent and now accelerated policies of practice.

There are certain policies which are most notably required, on that account, now, as follows:

Vernadsky on Man & Creation

V.I. Vernadsky’s systemic principle of human nature, is a universal principle, which is uniquely specific to the crucial factor of the existence of the human species. For example: “time” and “space” do not actually exist as a set of metrical principles of the Solar system; their only admissible employment is for purposes of communication is essentially nominal presumption. Since competent science for today can be expressed only in terms of the unique characteristic of the human species’ role within the known aspects of the universe, the human principle is the only true principle known to us for practice: the notions of space and time are merely useful imageries:

Rather:

The essential characteristic of the human species, is its distinction from all other species of living processes: that, as a matter of principle, which is, rooted scientifically, for all competent modern science, on the foundations of the principles set forth by Filippo Brunelleschi (the discoverer of the ontological minimum), Nicholas of Cusa (the discovery of the ontological maximum), and the positive discovery by mankind, by Johannes Kepler, of a principle coincident with the perfected Classical human singing scale adopted by Kepler, and the elementary measure of the Solar System within the still larger universe of the Galaxy, and higher orders in the universe.

Or, similarly, later, the modern physical-scientific standard implicit in the argument of Bernhard Riemann, the actual minimum (echoing the principle of Brunelleschi), of Max Planck, the actual maximum of the present maximum, that of Albert Einstein; and, the relatively latest, consequent implications of the definition of human life by Vladimir Ivanovich Vernadsky. These values are, each relative absolutes of measurement of man’s role within the knowledge of the universe.

This set of facts pertains to the inherent fraud of the merely mathematicians and the modernist “musical performers” since the standard of the relevant paragon for music, Johannes Brahms (prior to the degenerates, such as the merely mathematicians, such as David Hilbert and the true model for every modern Satan, such as Bertrand Russell, or Tony Blair).

The knowable measure, in principle, of the difference between man and all among the lower forms of life, is found in what has been usefully regarded as the naturally upward evolution of the human species, in contrast to all other known categories of living species. The standard of measurement of these compared relationships, is that mankind is enabled to evolve upward, and that categorically, by those voluntarily noëtic powers of the human individual will.

Except when mankind appears in a morally and physically degenerate state of behavior, such as within the cultures of the tyrants Zeus, the Roman Empire, and the British empire, presently: all actually sane cultures of mankind, have appeared, this far, in a certain fact of evolutionary progress from the quality of an inferior, to a superior species. This, when considered in terms of efficient effects, corresponds, within the domain of a living human practice of chemistry, to a form of systemic advances, even now leaps, in the chemical energy-flux density of society’s increase of the effective energy-flux-density of scientific and comparable expressions of leaps in progress of the species itself: in short, a universal physical principle of human progress.

The healthy human culture, such as that of Christianity, if they warrant this affirmation of such a devotion, for example, represents a society which is increasing the powers of its productive abilities for progress, to an ever higher level of per-capita existence. The contrary cases, “the so-called zero-growth” scourges, such as the current British empire are, systemically, a true model consistent with the tyrannies of a Zeus, or, a Roman Empire, or a British (better said) “brutish” empire, such as the types, for us in the United States, of the Bush-Cheney and Obama administrations, whose characteristic has been, concordant with that of such frankly Satanic models as that of Rome and the British empire presently, a shrinking human population of the planet, a population being degraded presently in respect to its intellectual and physical productivity, as under those U.S. Presidencies, most recently.

Chemistry: The Yardstick of History

We call it “chemistry.” Mankind’s progress, as measured rather simply as a species, is expressed typically in the rising power of the principle of human life, over the abilities of animal life generally, and relatively absolute superiority over the powers of non-living processes to achieve within mankind’s willful intervention to that intended effect. Progress exists so only under a continuing, progressive increase of the productive and related powers of the human species. That progress defines the absolute distinction of the human species from all others presently known to us. A government of people based on a policy of “zero-population growth and per capita standard of human life” is a moral, and practical abomination.

Man is mankind’s only true measure of the history of our Solar system, and what reposes within it. That is the same thing, as the most honored meaning and endless achievement of the human species, now within nearby Solar space, heading upward to mastery over the Sun and its Solar system, the one discovered (uniquely, as a matter of fact), by Johannes Kepler.

A Fusion economy, is the presently urgent next step, and standard, for man’s gains of power within the Solar system, and, later, beyond.

By Jeffrey Steinberg and Michael Steger

October 12—President Barack Obama, on behalf of a dying British Monarchy, is engaged in a Nazi-inspired “Big Lie” campaign threatening nuclear war against Russia and China. With the French Hollande government in tow, Obama is now announcing military intervention into Syria, bringing Russia before the International Criminal Court in The Hague for war crimes in Aleppo, and declaring in London’s The Economist that he is personally responsible for the greatest economic recovery of all time, all to which Hitler could have only blushed.

This is merely a British-directed campaign of lies and threats driven by total fear and panic as their empire and Monarchy crumble. They have absolutely no capacity to deliver on their threats or to prove their lies when challenged. The British are literally going mad over the prospect of a total and final loss of power, as their trans-Atlantic financial system blows up and Obama faces possible war crimes tribunals.

Deutsche Bank represents one of many possible triggers for systemic blowout, and is literally twenty times larger than the Lehman whale which hit in 2008. It has now been openly admitted that the European Central Bank covered-up the bankruptcy of Deutsche Bank when it conducted the so-called stress tests late last year. Non-existent assets, derived from sales that never happened, were booked as capital reserves by Deutsche Bank to hide the fact that they are doomed, unless the 46 trillion euros in derivatives on their books are cancelled, and they return to traditional German retail banking. HSBC, the flagship of the City of London’s offshore dope empire, put out an emergency warning on Wednesday of an imminent blowout of the trans-Atlantic stock market bubble. Wells Fargo in the United States is quickly going under—their CEO Stumpf ran into retirement earlier today—as are 10 to 15 of the largest banks in the trans-Atlantic world as this system unravels in the weeks ahead.

Regarding nuclear war bluster, former NATO Secretary General Rasmussen called on European states to begin a massive arms buildup to confront Russian threats, an empty fraud which can only be inspired by in-the-bunker-like madness. The European states are literally bankrupt, are incapable of traditional military buildups, and there is already a growing backlash in Germany and elsewhere over the suggestion of new sanctions against Russia.

In Syria, the U.S., Britain, France and the Gulf States have spent billions of dollars building a hardcore Islamic State and Al Qaeda terrorist apparatus to overthrow the Assad government as a stepping stone to general war throughout Eurasia. Within little less than a year, Vladimir Putin has stepped in and ruined their entire scheme. Now, the Syrian Army, with Russian support, is on the verge of crushing the terrorist networks in Aleppo, while the French, the British and the Obama Administration accuse Putin and Russia of war crimes in Syria, all while engaging in outright genocide against humanity in Yemen.

So, to cover up their own guilt in decades of genocidal depopulation antics, such as forced sterilizations and imposed famines; scientific frauds such the ozone layer, global warming, and human overpopulation; British slave-based economic policies such as “relative technologies”; and IMF criminal debt-slavery and financial control over entire nations, the lackeys of the British Empire are now in a panic and actual terror over the looming crash of their entire system. Thus, the British are carrying out a vicious campaign to frighten and demoralize the American people—the very people who rescued the world from British-sponsored fascism under the leadership of President Franklin Roosevelt—principally by turning the U.S. Presidential elections into a pornographic nightmare via controlled media.

There are real issues, as well, that are causing panic and despair among the American people. First and foremost is the collapse of the physical economy, including the U.S. healthcare system—a collapse anticipated from the outset by Lyndon LaRouche in March of 2009 when he compared Obamacare to the Nazi eugenics program Tiergarten 4. The collapse of jobs, the rise of drug addiction and suicide, combined with the destruction of healthcare services leaves a vast majority of Americans facing an impossible situation of 50 percent boosts in annual healthcare premiums and a dramatic cut in available services, all while standards of living collapse. Even former President Bill Clinton recently told a rally in Michigan that Obamacare is a disaster: “You’ve got this crazy system where all of a sudden 25 million more people have health care, and then the people who are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half and it’s the craziest thing in the world.”

The American people have every right to be angry, but not to be intimidated or bullied by a pack of liars, among whom President Obama reigns. The American people need to hear the truth: that the entire British-Saudi system, which owns President Obama, is finished along with their bankrupt financial empire.

It is now time to escalate the fighting spirit which led to the victory in the JASTA fight against the 9-11 British-Saudi Coup—a fight which delivered a devastating blow to the heart of the Anglo-Saudi Empire of terrorism, drugs, and destruction, and which revived Hamilton’s Spirit within the Halls of Congress. The American people should laugh at this fool called Obama, mock his British-bluster of lies, and end this Nazi-like charade of general warfare. It is time to bring down this fraudulent system, so we can get on with the serious business of building a world of infinite opportunities at the very demise of the British Empire.

And the solutions are readily available, starting with the reinstatement of Glass-Steagall and the immediate launching of a Hamiltonian recovery spelled out in Treasury Secretary Alexander Hamilton’s Reports to the U.S. Congress on manufacturing, credit and the national bank. These principles have been revived in Lyndon LaRouche’s Four Cardinal Laws, and they are ready to be implemented now.

Nations like Russia, China, and India are already moving in this direction. It is now time for the United States to get on with the true future of mankind’s ultimate development.