LaRouche: Wall Street Is Hopelessly Bankrupt, Institute Glass Steagall Worldwide Immediately

August 26, 2015

Lyndon LaRouche today issued an emergency call for the immediate instituting of Glass Steagall full bank separation worldwide—starting in the United States. 

“As of now,” LaRouche declared, “Wall Street is plummeting to a general breakdown crisis.  It is already underway and it is unstoppable.  Wall Street is hopelessly bankrupt.  We must, therefore, mobilize in anticipation to force the United States Federal Government to stop that financial crash from bringing down the real economy and the nation with it.”
LaRouche demanded:  “We must preemptively close down Wall Street and force the issue back to the Presidential system.  That means immediately reconvening the US Congress to act on legislation already presented in both the House and the Senate to reinstate the FDR Glass Steagall bank separation, precisely as President Franklin Delano Roosevelt did it in 1933.
“We have reached the point where the United States can no longer survive if we continue to tolerate the existence of Wall Street. We must end the Wall Street control over the US economy.
“This requires,” LaRouche continued, “a mobilization as was carried out by FDR, to defend the US economy by ending the tyranny of Wall Street.
“Furthermore, this is a global crisis and the Glass Steagall solution must be adopted internationally.  This means global bankruptcy reorganization and the establishment of a credit system to revive capital intensive real production.”
LaRouche concluded:  “I am taking this opportunity to sound the alarm and to call on others to join me in forcing the only viable action, available to the American people and people worldwide:  Shut down Wall Street and reinstate Glass Steagall.  We can sustain the US economy while Wall Street is put through an immediate, orderly bankruptcy proceeding.  We can launch a global recovery, but only under the condition that Wall Street and the other bankrupt centers of financial speculation are shut down for good.”

SEE "Glass Steagall"



Is the Fed Behind Market Jump? Many Voices Say 'Yes'

The Dow Jones “miraculously” soared to a 600-point spike on Wednesday, after losses of nearly 2,000 points over the previous three trading days. This has once again raised the obvious question of whether the Fed intervened to prevent the continuing meltdown. Whether or not the Fed is drifting back towards an under-the-table QE, the reality is that Wall Street and London are finished and such one-day reversals are merely further signs of the absolute instability, derived from the fact that the trans-Atlantic gambling bubble is crashing and nothing can be done to alter that reality—save a full international Glass-Steagall bankruptcy reorganization.

Some leading voices are openly saying that the Fed has pumped liquidity into the gaping hole in the Wall Street dam. Paul Craig Roberts, former Treasury official under President Ronald Reagan and a leading Wall Street adversary, penned a column this week, charging that the Swiss National Bank is one of the concealed conduits for Fed intervention into global markets. Roberts wrote:

“Are we witnessing the corruption of central banks? Are we observing the money-creating powers of central banks being used to drive up prices in the stock market for the benefit of the mega-rich...?

“If central banks cannot properly conduct monetary policy, how can they conduct an equity policy? Some astute observers believe that the Swiss National Bank is acting as an agent for the Federal Reserve and purchases large blocs of US equities at critical times to arrest stock market declines that would puncture the propagandized belief that all is fine here in the US economy.

“We know that the US government has a plunge protection team consisting of the US Treasury and Federal Reserve. The purpose of this team is to prevent unwanted stock market crashes.”

Back in July 2010, then-TARP Inspector General Neil Barofsky testified before the Senate Banking Committee and informed an astonished group of legislators that the size of the bailout was not the $700 billion Congressionally-approved TARP, but was closer to $23.7 trillion. He provided the Senators with a list of all of the Fed and Treasury special discount windows that had been created to feed the bailout monster. Even before Dodd-Frank passage, the Fed had devised mechanisms for pumping money into the market through delegated broker dealers. This would tend to lend credibility to Roberts' charges about the Swiss National Bank.

In the meantime, as Lyndon LaRouche asserted on Aug. 25 in discussions with colleagues, the patently absurd claim that China's falling economy and currency devaluation was the cause of the market fall, has been discredited publicly. On Aug. 26, Nicholas Lardy penned a New York Times op-ed titled “False Alarm on a Crisis in China,” in which he tore apart the propaganda barrage claiming that China—as opposed to the trans-Atlantic region—was in a financial and economic free-fall.

Lardy wrote that “the popular narrative is not well supported by the facts. There is little evidence that China's economy is slowing significantly from the 7-percent pace reported by the government for the first part of the year. Wage growth is running at about 10 percent annually; the pace of creation of nonagricultural jobs is stronger than in any recent year; both real disposable income and consumption expenditures of Chinese households are growing strongly. It is not the picture of an economy heading for a hard landing.” Neither Lardy nor any other sane economist could say the same for the trans-Atlantic region.

Attributing Global Market Problems to China Would Be Wrong, Says India's Reserve Bank Governor Rajan

In an interview for "India Business Report" on BBC World News on Aug. 25, India's Reserve Bank Governor Raghuram Rajan said, "Every adverse development in the global economy works through financial markets first, then trade later.... But you have to be careful about attributing everything to China. There are a number of concerns about when interest rates will normalize around the world, and there are also questions about whether some markets are just too high," he told BBC.

Rajan, who is under pressure from the Modi government to lower interest rates in order to help the Indian economy to develop faster, said, "The real stimulus for economic revival should come from the governments through growth-oriented reform processes, and not through monetary policy stimulus.... I have been a little concerned about the immense burden for action that is falling on Central Banks, and I think it is quite legitimate for Central Banks to say at some point, 'we can't carry the burden ourselves; in fact, we may not have the tools to do everything that is asked of us,'" Rajan said.  "Don't keep asking us [central banks] to do more, because at some point, we get into territory where the consequences may be more bad than good, if we actually act," he added.

"In my country, I'm faced with traditional central bank problems like inflation, so we still have a handle to work with those. But in some other countries, you are faced with problems which are maybe way beyond what the central bank is capable of addressing —  such as demographic change, deep changes in productivity — and those are probably best dealt with other tools," Rajan said.