The Issue Is Bankruptcy

LaRouche Webcast Transcript: January 22, 2009
The Issue Is Bankruptcy.

Lyndon LaRouche gave a webcast address to an audience in Washington, D.C., and internationally, over the Internet, on Jan. 22, just two days after the inauguration of President Barack Obama. The following is the opening section of LaRouche's presentation, followed by the answer to the last question of the afternoon, which came from someone within the new Administration, asking LaRouche what he had to say to President Obama at this point.. The entire webcast can be found at : http://www.larouchepac.com/node/12385/print Mike Billington
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Lyndon LaRouche: I shall devote the presentation preceding the question-and-answer discussion period, to the most crucial issue facing the United States government now, and the world as a whole. And the issue is: bankruptcy. The fact of the matter is, that the United States is bankrupt. The U.S. system is bankrupt. The U.S. government is bankrupt. And every part of the world is also bankrupt.
Not only does this state of bankruptcy exist, but the moment at which the decisions have to be made to bring this problem under control is now. That's why the priority.
The other aspect of this thing, is that very few people, including the present administration of the United States, the current President's administration, know how to deal with this problem. And therefore, that's the hole that has to be filled, immediately. And therefore, I shall indicate some of the essential ground rules under which the emergency policy of the United States must be crafted to assure the success of the Obama Administration, and in the process, to ensure, that nations such as China, Russia, and others around the world, do not tumble into a collapse in the meantime.
Before a Dark Age Closes In...
We are on the verge, not of a simple bankruptcy, but of a general chain-reaction collapse, globally, comparable in form to the breakdown crisis in the middle of the 14th Century, the so-called New Dark Age. Only this time, the threatened dark age, while immediate, is not merely in Europe: It is worldwide. There is no part of the world which could escape a dark age, unless, the United States itself, the United States government, takes the actions now, under the leadership of its President, which put the world through bankruptcy organization before a dark age closes in.
China is ready for chaos. India is somewhat behind that, in time schedule. But a general collapse of the planet will hit India, too. Russia is on the verge of general bankruptcy. Every part of Europe, including the British Empire—thank God—is on the verge of bankruptcy. And the time has come, therefore, to understand what to do.
Most of the proposals which I hear from around the U.S. government itself, that is, from influential circles around government, as well as those who are coming into government, is that they really don't understand the problem. They understand many aspects of the problem, but they don't understand the problem, and therefore, their tendency would be to make a mistake.
Now one of the big mistakes is this: We have a President, who's just been elected and installed, inaugurated. He must act, now, because he's at the high point of his ability to act. If he postpones these questions, or tries to approach them gradually, certain evil things can take over, and remove from his hands the ability to take the kind of action which he might be able to pull off now. If he's not able to pull it off, if he doesn't get the support to pull it off, then we're all in trouble, and the world as a whole is in trouble. But if he takes the right action, takes it promptly, and proceeds with resolution, as I think he would, then we can make it, as a planet. And what the United States does in that direction, is crucial and will be decisive.
First of all, the policy has to be, to put the United States system into bankruptcy reorganization. Don't fool around with this reform, that reform, this adjustment, that adjustment—forget it! Put it through bankruptcy reorganization now! That means, put the Federal Reserve System into bankruptcy reorganization: That's one of the first necessary steps. Put the Federal Reserve System into bankruptcy reorganization. And it deserves that, after what it did under Alan Greenspan, and what this poor schnook, who now is in his place, is doing or not doing. The system is bankrupt.
What has happened recently, under the Bush Administration—and under the Congress! Remember, the leadership of the Congress is the place that made this a real chaos: Back on July 25th of 2007, when I forecast a general collapse of the system, as coming on immediately, we still had room to get out of this mess, without too much drastic action. That is now no longer possible. Due to what happened in the Congress, including when poor Barney Frank, who is the scapegoat of the century—I think he wanted some success, and he's made it, as "Scapegoat of the Century." Everything that was done in terms of dealing with this crisis, was wrong. What was bad was made worse. We bankrupted ourselves with this bailout policy. The bailout policy was, in my view, unconstitutional and illegal, and warrants impeachment actions against those who are responsible for initiating it, and misleading and panicking the population into getting their representatives to vote for it. This was a crime against humanity. There should have been no bailout.
What's the alternative? The banks are bankrupt! Financial houses are bankrupt—so what? If you engage in gambling and you incur a gambling loss, you're supposed to eat it! You don't get to go to the government to get a bailout. You don't get a second life. Where else—? I mean, a guy says, "I got good news for you, Mother—I'm bankrupt." "Why's that good news?" she says. "Because the government's going to bail me out." What kind of law is that? It's going to take away the pensions of our widows and orphans and so forth, and that's going to bail us out. No!
That's immoral, it's unconstitutional, it's insane.
No Bailout!
So therefore, what we have to do, is immediately, put the entire system through bankruptcy reorganization. The best way to do it, is to act on the Federal Reserve System, because we created the Federal Reserve System, and we want to keep a separation, as Hamilton laid it out, between the functions of the Treasury Department and those of banking. Our affection is devoted to state and local chartered banks, under bank rules which we had with Glass-Steagall. That's the way it should be.
Now, what's happened is, in this corrupt mess, which the Congress has created—remember, the majority of the Congress is responsible for this! They did it! So don't say, the Congress says, "Mr. President, you trust us"! The President can not trust the Congress, after what they did. They voted for this swindle! You're going to trust them? It's immoral! They voted for it!
No, the President has to take the leadership, as the Chief Executive and leader of the nation, in the action, from the Presidency, which must demand support from the Congress, with the support of the people, and ram through an immediate reform: a reform of the U.S. Federal Reserve System, among other things.
What we have to do, is, we have to protect legitimate claims in the banking system, the legitimate functions of the banking system, and forget the illegitimate functions. Cast them aside: Cancel all bailouts! Cancel! No bailout! The only thing you do, is you put the Federal Reserve System through bankruptcy, and by putting it through bankruptcy, you put it under bankruptcy protection—not bailout, bankruptcy protection.
Then: You conduct an assessment of the situation of the bank, like a bank holiday procedure. Those elements which correspond to legitimate functions of chartered banking, will be protected. Those functions which are, because of the repeal of Glass-Steagall, included in this, will be cancelled. They will be simply put into a freeze, through assessment. Because we must save the chartered banking system, which is, in a sense, with its history, a constitutional feature of our system. National chartered banks and state chartered banks of the type which take deposits, and make reasonable, secure investments on behalf of those deposits, which are entrusted with money passed through the Federal government, through the creation of a currency, under the authorization of Congress, will go through that.
We have to, then, rebuild the U.S. economy.... [for the full transcript, see
http://www.larouchepac.com/node/12385/print
The final question: And then the final question comes from one of the people who is coordinating the transition. And he says: "Mr. LaRouche, over these last months, you've been extremely generous in providing not only the context in which this new Administration must consider its policy, but you've shared detailed analysis and specific policy initiatives. Your input has been invaluable, and we'd like you to know that it has been greatly appreciated. If, this very afternoon, you had a few moments to give advice directly to the President, what would you say to him?"
LaRouche: Well, I would say the things I've said today, above all. This is a time—I know the feeling of this kind of situation. I understand the situation he's in, probably in some ways, better than he does, being older and having lived through this world longer, and probably having more influence on me, from various parts of the world, that I can feel strongly the effect in various parts of the world of what the world has been subjected to, under the U.S. toleration of the British Empire. And that's the best way to put it.
That the President has been given, as I believe others would assure him, he has been given a moment as President, where his popularity is at the very height, probably the highest it will ever be, because there are frictional things in being President which tend to tear down some of your popularity around the edges, on one grievance or another, or one issue or another. And this is the time to make a couple of decisions which are crucial, and I think they have to be made up front.
First, we have to deal ruthlessly and decisively with this world monetary-financial economic crisis. We have to establish, again, the position of the United States in the specific tradition of President Franklin Roosevelt, to act as Roosevelt would have done, had he lived beyond the time of his death into the conclusion of the war which he led in winning.
And I think, at this point, President Obama has inherited that legacy from the deceased Franklin Roosevelt, to pick up the world from a period of decline and despair, by taking a decisive action, which, above all other things, establishes the United States in the opinion of leaders of the world, as being the leader of nations out of the darkness through which we have lived in recent times up to this point.
I think that the general economic reform, including that of cooperation extended toward Russia, China, and India, is crucial. But to make that work, we must first make a sweeping reform in the U.S. credit system. We must establish, as Roosevelt intended, a fixed-exchange-rate system of credit, not a monetary system, but a credit system, among a number of leading nations of the world, including our own United States, Russia, China, and India. And around this group of leading nations, to lead the world into a general economic reform, with the kind of objectives which I've referred to today. We have to take mankind out of this abyss, this abyss which we've been sliding into more and more and more, since Franklin Roosevelt died, and especially since 1967-1968.
We've got to get back, and we've got to recognize also in our actions, that the United States, whether some people like to hear it or not, the United States is the greatest nation which has ever existed. Not because of something magical about it, but because we are the representatives of what we call the melting pot nation, of the hopes of the people of the world. We were what they hoped would become their destiny. That what we would achieve would become available to them, for their benefit. And the President of the United States, I think, must express that in practical ways, as well as in voice, to the world as a whole. He must be again seen, as we saw President Franklin Roosevelt during World War II, as a man who took a leading position in a leading nation in saving the world from Hell. And certainly President Obama is faced with a challenge of approximately that magnitude, and I think he needs all the support he can get on that account.