The U.S. dollar and financial system has already exploded. There should be no talk about how the crisis of system is “coming”—it’s already here. The crash of the dollar system will cause an explosion of the entire international financial system. Already, pieces of the exploded planet are flying around like asteroids—but only a fool would say that the asteroids are “going to cause” the explosion! The planet has exploded! Only a fool or a liar would say anything to the effect of “a trend toward a coming crisis.” The catastrophe is now.
The following news slug is one of those pieces:
November 20, 2007 (LPAC)--With the last days' announcements of big bank losses in the financial crisis, the vast, estimated $5-700 trillion bubble of financial derivatives contracts held by the banks, along with "leveraged losses" on credit assets, are the new locus of the losses--as LPAC and EIR have warned, and thus, a multi-trillion dollar crash is here.
In the most notable case, the giant reinsurance company Swiss Re acknowledged that it had sustained a $1 billion loss, coming from just two derivatives contracts known as "credit swaps." Swiss Re refused to name the counterparty, undoubtedly another bank, for whom these two derivatives contracts were written, though Goldman Sachs is suspected.
On November 16, Goldman Sachs chief U.S. economist Jan Hatzius had issued a chilling estimate of the fall in the banking system. He forecast that direct U.S. bank losses in the next year or so would be $400 billion (a very similar estimate had just been made by Deutschebank's chief economist). Just assuming that half of these losses are in highly leveraged assets (where there was a 10:1 ratio of borrowed dollars in the money used to buy the assets), Hatzius forecast that the total drop in the ability of the banks to lend, will be $2 trillion. For comparison, in 2006, the total lending of U.S. banks to households and non-financial corporations was $3.24 trillion, according to the Federal Reserve.
In dramatic understatement, Hatzius called the result “a substantial recession.”
The reader is reminded not to be fooled by the mass insanity of the financiers, and to take what LaRouche has proposed as the alternative of the already collapsed financial system.
