Lyndon LaRouche Webcast - October 4th 2013

Lyndon LaRouche's October 4th 2013 Webcast
Real Panic Coming from the Top of the Oligarchy

The trans-Atlantic financial oligarchy is in a state of panic, and it is not because of the U.S. government shutdown or even the prospect of a U.S. default if the Congress fails to raise the debt ceiling by Oct. 17. The panic is due to the fact that the whole system is coming down at breath-taking speed and there is nothing they can do about it within the confines of the current system. Christine Lagarde gave an interview to the Financial Times on the eve of the annual Fall meeting of the IMF/World Bank, in which she made clear that the situation is one of earth-shattering change and immense fragility. She warned that any further talk about "tapering" the quantitative easing by the Fed would be enough to set off a panic-crash of developing sector markets, and she warned that a failure to extend the debt ceiling would be catastrophic.

Lagarde's hysterics were matched by Jack Lew, the U.S. Treasury Secretary, who issued a dire warning on the Department's website, declaring that any default would trigger a crisis far worse than the Great Recession of 2008. Lew spent Thursday roaming the halls of Congress to personally deliver his ultimatum. Speaker of the House John Boehner pulled together a meeting of the House Republican Caucus on Thursday to announce to all that there would not be a default. He reported, according to the Washington Post, that he would be drafting a bill to extend the debt ceiling that would aim to draw bipartisan support, even if it triggered a revolt by Tea Party and other conservative Republicans.

One senior Japanese financial official warned that a major European financial crisis will begin immediately after Merkel completes her coalition talks in Germany to form a new government.

The same message of not-so-quiet desperation was delivered directly to President Obama by the Wall Street delegation that invaded the White House on Wednesday. According to a source close to the National Security Council, Obama was told in no uncertain terms that the quantitative easing had to continue indefinitely at the $85 billion-a-month level, with no talk about reductions. They also demanded that the White House ensure that there be no regulatory bite to Dodd-Frank and, above all else, that there be no Glass-Steagall. Even though both Summers and Geithner have run away from taking the job of Fed chairman, the Wall Street desperados demanded that the President choose a replacement for Bernanke who is reliably in their pocket and won't make any waves.

This week, the eleven largest U.S. banks submitted their "living wills" to the Fed and FDIC. In each case, the big banks swore that they were bailout-proof under the worst of financial crises, due to vast reserves of cash and easily liquidated securities they are sitting on. Clearly, Jack Lew and the Treasury Department are not so sanguine. The Treasury alert about the consequences of a Federal government default warned that even a brief default would cause a freeze of credit markets, a collapse of the dollar, and a spike in interest rates — all the ingredients of a systemic breakdown far worse than 2008.