November 4, 2007 (LPAC)-- During the past week, as Wall Street shook from the twin firings of the CEO of the largest commercial bank in the world--Citigroup, and the CEO of one of the three largest investment banks in the world--Merrill Lynch, physical economist Lyndon LaRouche's repeated and uniquely correct warnings that the entire world financial and monetary system is irreversibly finished, were definitively confirmed. This is not the crisis of a week, but of the past 40 years, which has been gathering force during the past two years. The timeline below details some inflection points this process, which is being acknowledged, increasingly, by competent financial insiders, but still denied by leading Democrats and Republicans. Were they to acknowledge this, they would have to muster the courage to urgently implement LaRouche's proposal to put the world financial system through bankruptcy reorganization.

• During May and June of 2005, the Standard & Poor's rating agency downgraded General Motors and Ford's credit rating, on the more than $450 billion of the two companies' debt, to junk-bond status. This set off an implosion of Collateralized Debt Obligations (CDOs)--a form of highly speculative instrument--which caused hedge funds to lose hundreds of billions of dollars, nearly triggering the melt-down of the world financial system.
• In September 2006, the Greenwich, Connecticut-based Amaranth Advisers hedge fund, which had $9 billion under management, went bust, the largest hedge fund failure in history. This caused strong reverberations in the natural gas market--where Amaranth speculated--and among other hedge funds, which scrambled for liquidity, although the deniers of reality shouted that "the event wasn't as big as LTCM"
• During January and February 2007 the sub-prime mortgage crisis, which had been festering since the last half of 2006, erupted full force, as banks began to acknowledge sizeable sub-prime defaults. The foundations of the $20 trillion U.S. housing bubble began to shake. On March 13, New Century, the second largest sub-prime lender (after Countrywide), once a hot property, was delisted by the New York Stock Exchange, and effectively ceased to exist. New Century's market capitalization had evaporated from $1.75 billion to a mere $55 million at the point it was put out of its misery.

  During the period between mid-Summer 2006 and November 1, 2007, 178 U.S. mortgage-related lending companies went out of existence. According to projections based on data provided by Foreclosures.com, during 2007, U.S. home foreclosures will reach 2.02 million, 52% greater than during 2006

• During July 2007 in the United States, banks rang up spectacular losses in asset-backed securities, particularly Mortgage-Backed Securities (MBS). Then on August 9, France's BNP Parbias, one of the world's largest banks, announced that it was suspending all transactions in three of its "dynamic investment funds," which all held mortgage-backed securities. German banks announced five similar funds were being shut down. The crisis had now hit Europe, and expanded globally, causing markets to freeze up--ranging from junk bonds to commercial paper, far beyond the sub-prime mortgages and MBS. Between late July and the end of the October, the Bank of England, the U.S. Federal Reserve, and the European Central Bank, franticly pumped in more than three-quarters of a trillion dollars in short-term and medium-term funds, to prevent markets from melting down, and banks from folding. This set the ground for a Weimar-style hyperinflation.
• During September and October, the U.S. banks recorded $35 billion in third-quarter write-downs and loan loss provisions, capped by these banks losing nearly a quarter trillion in market capitalization. But the losses were only a fraction of the actual losses that the banks carry on their books. During the last week of October, and first week of November, the crisis entered a new phase. With the more than $1.5 trillion SIV, conduit, and CDO markets frozen, Merrill Lynch announced an $8.4 billion third quarter write-down, and Citigroup a $6.5 billion write-down. But there were much worse financial convulsions going on inside these two companies, behind the scenes. Stanley O'Neal, and Charles Prince III were forced out as CEOs of Merill Lynch and Citigroup, respectively.