theDrahos

The Wall Street system of banks is again facing a bankruptcy crisis — this time triggered by collapsing oil and commodity debt and derivatives — and even central bankers know that it will be as bad as a second 2008 crash, or worse.

These banks have been generally bankrupt since the impact of the elimination of Glass-Steagall. Wall Street’s bankruptcy crisis is made worse by the free fall of the euro and the fact that all the biggest European banks, most definitely including the London banks, are loaded to the gills with toxic debt securities of more and more varieties, and have never written any of it off since 2008.

A financial crash worse than 2008 is looming over this whole bankrupt London-Wall Street system of banks. The United States must act immediately generate a buffer against this crash for its economy and citizens.

The Wall Street banks should effectively be shut down, put through a bankruptcy reorganization so that they may continue some limited function as commercial banks. Their ability to manage things in the U.S. economy must be terminated now, or the economy faces a terrible crisis…

In a wide-ranging discussion with colleagues on Tuesday, Jan. 27, Lyndon LaRouche called for immediate action at the level of the U.S. presidency to bankrupt Wall Street and replace it immediately with an interim system of Federal credit to launch urgently needed capital-intensive infrastructure and job creation.  LaRouche emphasized that without such immediate actions, the already ongoing collapse of the Wall Street bubble will be the trigger for thermonuclear war with Russia, which will be a war of extinction for all of mankind.

LaRouche called on his colleagues to take up the actions of all great American presidents, who all launched policies that were never before undertaken.

Wall Street is hopelessly bankrupt and must not be permitted to sink what remains of the U.S. real economy.  The latest statistics on durable goods sales showed that December 2014 was the fourth consecutive month of decline, indicating that the real economy is in a state of collapse, driven by Wall Street’s gambling operations, typified by the too-big-to-fail banks’ massive speculative binge in shale oil and gas, which is now blowing up towards a $20 trillion crash.

LaRouche posed the question to the American people and to those sane elements in the institutions of government: 

LaRouche added that, as recently as the Clinton Administration, the means existed to carry out such a restructuring—minus the Wall Street parasites.

If there is no such immediate action to bankrupt Wall Street by reinstating Glass-Steagall and putting a Federal credit system in place, Wall Street will crash and then demand a bailout. LaRouche emphasized:

LaRouche explained that a temporary Federal credit mechanism must be immediately put in place to provide credit to the real economy, as a more permanent new National Bank and related institutions are established.

LaRouche noted, ironically, that the recent breakthrough with the Greek elections on Sunday, repudiating the Troika’s mass murder, will also accelerate the drive for thermonuclear showdown, because it will serve as one more trigger for London and Wall Street’s desperation that their system is set to blow.

LaRouche concluded:

Standard & Poors cut Russia’s sovereign debt rating to the junk level BB+ on Monday, below investment grade. S&P, acting as if this were a purely business decision rather than part of a coordinated act of financial warfare, said:

“In our view, the Russian Federation’s monetary policy flexibility has weakened, as have its economic growth prospects.”

Russian Finance Minister Anton Siluanov called the downgrade

“unreasonable, as the agency didn’t consider the country’s anti-crisis plan, and the strong economy with its large reserves and extremely low public debt.”

This “anti-crisis plan” was the subject of cabinet meetings chaired by Prime Minister Dmitri Medvedev and President Vladimir Putin over the past ten days. It includes a number of incentives for economic activity, coupled with budget cuts, but also the (healthy) abandonment of some of the extreme “more drastic than Maastricht” budget deficit targets of recent years. The plan does not, however, ameliorate the suffocating effects of the Russian Central Bank’s hiking of the prime interest rate to 17%.

A “Mahathir solution” of capital and exchange controls is being promoted by Putin’s advisor Sergei Glazyev, along with state-guided, effectively Hamiltonian credit policies for physical reconstruction and infrastructure, but it has not been taken up at the government level.

Glazyev’s Dirigist Plan for Sanctions Response

The Russian TV service RT quoted Paul Craig Roberts, former US Assistant Secretary of the Treasury, who identified the fact that

RT noted that even the US has acknowledged the crimes of S&P, imposing a $77 million fine on the rating agency last week for fraud in ratings it issued in 2011, and banning it from assessing a segment of the commercial mortgage-backed securities market (CMBS) for a year.