July 21 2008 (LPAC)--The British banking system is in a full-scale meltdown, and the City of London is still managing to get everybody else to bail them out--including the U.S. Federal Reserve. None of this would be happening if the Fed had followed Lyndon LaRouche's directive to raise U.S. interest rates to 4%, as an urgent stop-gap measure.

The latest pickpocketing operation involves the #1 British mortgage lender, the insolvent HBOS, which today failed miserably to sell about $8 billion in additional stock to its existing shareholders--known as a "cash call." Only 8.3% of the total was placed, leaving the underwriting banks, Germany's Dresder Kleinwort and the U.S.'s Morgan Stanely, to find other suckers to buy the financial garbage, or swallow it themselves. But Dresdner and Morgan Stanley are being backstopped, in turn, by the ECB and the Fed. So guess who's going to pick up the tab?

The British ran a similar operation on July 11 through Spain's Banco Santander, in order to buy out London's failing Alliance & Leicester bank. Santander itself has kept its nose above the water-line only by swapping its toxic mortgage and other debt with the ECB, and receiving cash in exchange. Last week, a bankrupt Barclays Bank could only place 19% of a cash call it urgently needed, and therefore had to turn instead to the Qatari sovereign wealth fund QIA to bail them out.

And there is no end in sight, because the entire British banking system is crumbling. The Sunday Times of London admitted as much in a July 20 article entitled "Investors flee as confidence in banks crumbles," whose first sentence contains the familiar Big Lie: "Nobody predicted the scale of the collapse." At this point, the Times reports, "Confidence in banks has evaporated... The banks' credibility is bust."