If, as seems increasingly likely, the doomed Euro system crumbles to dust this very weekend, then Britain, with a four-day bank holiday through Tuesday, will get a few extra hours to try to put through their worst-case disaster scenarios. Those scenarios can’t work for very long, though, if at all — that collapse will drown Europe in a hyperinflationary flood tide like Germany’s in the fall into winter of 1923. All Europe west of Belarus will only be the first domino to fall — the US and the Americas will follow virtually immediately.
Gold jumped $50 in price Friday morning — shades of Weimar! Interest rates on German bonds had gone negative, and U.S. Treasuries were heading there. Subscribers to Bloomberg’s forex quotation service were surprised to see quotations for the Greek drachma on their screens — subsequently explained as a software test.
Mad Wall St. mouthpiece Jim Cramer of CNBC ranted on Friday that “we need help.” Obama and Bernanke must have a conference call with European leaders on Sunday, and tell them to get their act together. Bernanke must announce that the Fed is opening: 1) a credit line for a Europe-wide bank-bailout fund; 2) a credit line to the ECB to bail out all of Europe’s sovereign debt; and 3) a third credit line for “a new Marshall Plan for growth!”
By Friday, the yawning gulf of the bankruptcy of the Spanish banking system had decisively overshadowed even the Greek catastrophe. The EU and ECB were demanding that Spain must finally come clean on the real dimensions of that bankruptcy, saying that the Spanish government’s successively ever-larger estimates had destroyed its credibility. One rough estimate on Friday, of what is known of Spain’s debts which must be covered in the immediate period ahead makes the point. The total is in the ballpark of one trillion euros, give or take: 600-700 billion for the private banks (300 billion is now being admittedly publicly); about 50 billion for the country’s regions (Autonomous Communities), and some 200-250 billion for the national government. In other words, about a quarter of Spain’s estimated total public and private debt of four trillion euros, 170% of GDP, as of the end of 2011. And, mind you, none of this takes into account the uncharted amounts of derivatives that are piled on top of each of these categories.
Spearheading massive capital flight from the whole euro area, capital flight from Spain has been 97 billion euros in the first quarter; 80% of it pulled out by the international and so-called “Spanish” banks themselves.
In a struggle waged on the brink of the abyss, London and London’s cutouts Tim Geithner and IMF Managing Director Christine Lagarde have set up the Spanish to demand, with their support, an international bailout directly to the banks, which would not go through the Spanish government — despite the fact that this violates all the rules of the EU. Rajoy’s Spanish government has bought into it because they know that if their government as such is “bailed out,” it will be put into receivership like Greece, under commissars from the “Troika” (EU, ECB, and IMF). Besides the fact that it violates the EU treaties, the obstacle to such a direct bank bailout is Germany, which would be left holding the can. And at just this juncture, the big German newspaper Die Welt runs a feature, “Germany’s Leaving the Eurozone is Not Unthinkable,” illustrated with the 100 Deutschmark note bearing the portrait of the divine Klara Schumann — the same one which has been featured on dozens of leaflets of Helga Zepp-LaRouche’s Bueso party, distributed in cumulatively millions of copies in Germany over recent years.
Only immediate implementation of the Glass-Steagall principle can stem the hemorrhage, freeze the system, halt the collapse, and allow time for other necessary steps.
At just this moment, the British empire is howling with unparalleled ferocity for unleashing invasion and fullscale war against Syria, which Lyndon LaRouche insists would be thermonuclear World War III. On Thursday, the British attack-dog, Obama’s UN Ambassador Susan Rice, vowed that the U.S. would attack Syria itself if Russia and China continue to prevent the UN Security Council from doing so. But the U.S. Joint Chiefs of Staff heard her, and called in Obama’s Defense Secretary Panetta to order him, “No, we’re not! No way in Hell!” Panetta carried out his orders by telling a press conference in his airplane, “No, I cannot envision” that we would go to war without the UN. As Defense Secretary, he cannot send US troops to war without the necessary support — in this case, UN support.
And the allies of Joint Chiefs Chairman Gen. Martin Dempsey and Lyndon LaRouche in Israel, the Israeli “old boys” who are the traditional leadership of that country, are loudly sounding off not only against war with Iran, but also against Obama’s other project of war with Syria.
In this moment of heightened crisis, even some U.S. Congressmen have begun to wake up from their slumber to conspire appropriately with LaRouchePAC representatives for Glass-Steagall, for NAWAPA XXI, and against Obama’s London-directed plans for World War III. In our mobilization efforts, the independent and community bankers are proving to be passionate allies for Glass-Steagall. Not one of them knew there was a Glass-Steagall bill in Congress, Marcy Kaptur’s HR 1489, but on learning it they mobilized themselves to fight for it.
Will there be the right leadership at the right time to push these things through and remove Obama? It would require nothing short of a miracle to turn this around at this late date. We must provide that miracle.