LaRouche has emphasized that there is no solution, for any bank, to the Wiemar style hyperinflation, without a profound international policy change, conducted by governments, that eliminates the speculative aspects of the global financial system and restores a productive-credit system of banking, like the Bretton Woods system of FDR did. To understand the reason why only governments can create the solution, look at the insanity of the bankers attempting to solve the disaster that has broken out in Saxony.

Late in the night of December 12, a crisis emergency session of top German bankers and banking regulators reached an agreement that allows Sachsen LB, the troubled bank of Germany's State of Saxony, to escape instant default. The agreement foresees an extra state guarantee by the government of Saxony in the range of 2.75 billion euros, plus another 1.5 billion euros provided by the association of German savings banks and by the Bundesbank, the central bank of Germany. The agreement is the precondition for the state bank of Baden-Wuerttemberg, LBBW, to realize its promise of late August, to take over Sachsen LB, which at that time was the second big victim in Germany's banking sector, after Industriebank (IKB), from the acute US sub-prime crisis that broke out in July.

At the end of August, LBBW payed 250 million euros for the Saxon bank which was threatened with default because at least two of its ``conduits'' in Dublin, Ireland, had run foul over leveraged mortgages in the USA, in the range of more than 22 billion euros. Banking insiders already in late August spoke of 35 or even more billion euros of a Sachsen LB mortgage bubble - figures denied by the Saxon bankers then, but corroborated by a survey pointing to uncovered speculative papers of 43 billion euros, which LBBW published, after press leaks, on Dec. 9.

LBBW insisted that the only thing that would prevent it from pulling out from the takeover deal of late August, by the end of December, would be a Saxon state government guarantee to cover at least 10 percent of that bubble, which is 4.3 billion euros. When Saxony protested, pointing out that 4.3 billion euros would be 25 percent of the entire state budget for one fiscal year, charging the Baden-Wuerttembergers with blackmail that could and would not be accepted by the Saxons, a fierce struggle broke out on December 10 which threatened the pullout of LBBW and the prospect of default of Sachsen LB. On December 11, Jochen Sanio, head of the banking regulatory office Bafin, warned both sides to reach an agreement by December 16, or he would shut down Sachsen LB the day after, with all the chain-reaction consequences that would imply. That ultimatum triggered a new round of hectic talks to find a ``solution.''

Whereas the threatened immediate shutdown has been averted, for the time being, with the nighttime deal reached yesterday, the agreement is far from being any solution. Moreover, it burdens the citizens of Saxony with a per-capita debt that is three times that of before, and it forces Saxony to bend its constitution, which has a ceiling of 1.75 billion euros on state banking guarantees. The new agreement adds another billion to that. The Saxon constitution was already suspended for two days in late August, to circumvent an inconvenient parliamentary de bate and instead finalize the aforesaid sale of Sachsen LB to LBBW, with a down payment of 250 million euros.

Furthermore, the question of what to do with 43 billion euros of worthless assets, remains as unresolved as the bigger problem, of what to do with the hyperinflationary monetary increase worldwide. Officially, LBBW has committed itself not to continue the conduit business, which has driven Sachsen LB into the abyss, but to instead return to ``solid'' project financing. However, LBBW itself has suffered admitted losses of 800 million euros in the third quarter of 2007, from engagements on the US leveraged mortgage loan market. The announcement of those losses at the end of November torpedoed a potential merger of LBBW with the state bank of Bavaria, which officials of both banks were discussing.

Whereas the Sachsen LB default may have been averted for the moment, the emergency deals just signed will leave the new owner of the Saxon state bank, LBBW, unprotected against the next wave of heavy market turbulences’ which may come already early next year, or in spring. Who will bail out LBBW, then? And who will bail out the bank that bails out LBBW?

In order to stop the insanity of the bankers, the LaRouche movement in Germany, especially the LYM, has intervened repeatedly in the debate on Saxony, during recent weeks, with a statement by Helga Zepp-LaRouche, the national chairwoman of the BueSo party. The statement, calling for a defense of the Common Good, has been mass-circulated in Germany by way of deployments by the LYM, like occured on December 13, right in the middle of the banking district of Frankfurt; Germany's ``financial capital.” A campaign in defense of the Common Good will be at the center of several weeks of BueSo party organizing in the streets of the State of Hesse, including those of that state's capital, Frankfurt, which will help build the momentum for LaRouche's New Bretton Woods.