The banking elite and the governments of the
trans-Atlantic region are in a state of panic, as their attempt to outright
steal depositors accounts in Cyprus to bailout bankrupt banks has exposed to the
rest of Europe, and to the world, the state of desperation and lawlessness
governing Europe's EU bureaucracy and the IMF, as the western banking
system crumbles. It is now clear that only Glass Steagall can reverse the
descent into Hell. This article
appears in the March
22, 2013 issue of Executive Intelligence
Review.
Mike Billington
As Cyprus Theft Shows, Glass-Steagall, or Chaos!
[PDF version of this article]
March 19—With
the expropriation of the Cypriots to save the banks, the five-year Eurozone bank
collapse, which European officials said had "ended" in late 2012, has exploded
again.
The entire
trans-Atlantic financial system, including the United States, is disintegrating,
exactly as Lyndon LaRouche has warned for years. As even the Quarterly Bulletin
of the Bank of England warned in its latest edition, nothing has been solved
since the 2008 financial blowout, as there are huge amounts of bad loans on the
books of the banks which financed leveraged buyouts at that time, which could
trigger the next crash. In their panic to save the system, the London-centered
banks are now resorting to outright theft from citizens to support the
bankrupt bondholders—and setting the world on a course for chaos.
The LaRouche
Political Action Committee is currently on a full-scale mobilization around the
one solution to stop the chain reaction of bank runs, hyperinflation, and social
chaos now facing the trans-Atlantic region: LaRouche's three-point program:
- Reinstate Franklin Roosevelt's Glass-Steagall Act now;
- Establish a Hamiltonian credit system to finance productive economic activity; and
- Launch great infrastructure projects such as NAWAPA, and re-employ millions of Americans in high-tech, energy-intensive jobs.
Once the U.S.
has moved decisively toward implementing this program, Europe will quickly
follow.
The House bill to reinstate
Glass-Steagall, HR 129, now has 40 co-sponsors, but no companion bill has
yet been introduced into the Senate; and Congress has been tied up in absurd
budget debates which evade the crucial issue: the system is bankrupt and must be
replaced! And the first step is to end the bailouts with Glass-Steagall—or face
chaos and mass death.
Bailout by Theft
European
Union officials agreed on March 16 to a €10 billion bailout of Cyprus—in
reality, the banking sector of that island center for hot money in Europe.
Cyprus thus becomes the fifth European nation to fall under the draconian
bailout conditions, but this time the EU financial officials added a twist: They
demanded that all depositors in Cypriot banks be levied between 6.7% and 9.9% of
their savings, as a "contribution" to the bailout fund.
Thus, for the
first time ever, depositors will be sacrificed in order to save the banks.
Depositors' money will simply be grabbed to bail out the bondholders.
While newly
elected Cyprus President Nicos Anastasiades, under enormous pressure, agreed to
the deal, he has run into a storm of political protest, and has now told EU
officials that the parliament will not ratify the deal. Demonstrations have
broken out across Cyprus, and the banks have been closed, to prevent depositors
from pulling out their deposits, en masse. The parliamentary vote today resulted
in a total rejection of the pact. It remains questionable when the banks will
reopen.
Bank Runs on the Agenda
Bank stocks
fell across Europe March 18, as word spread of the Cyprus deal. Moody's ratings
agency was first to raise the specter of bank credit downgrades throughout the
Eurozone, leading to bank runs or "jogs," as they have been termed. Moody's
warned in a "note" that the Cyprus bailout/deposit seizure is
"credit negative for bank depositors across Europe: ...the decision to impose losses on depositors signals euro area policymakers' willingness to risk triggering wider financial market disruptions in pursuit of other policy goals."
A Bloomberg
News analysis piece warned that bank credit ratings will be downgraded across
much of Europe—the "bank crisis will be restarted." It is only a matter of time
before runs start. In diametrical opposition to deposit insurance, depositors'
money has been subordinated to bank creditors' bailouts and liquidity injections
to insolvent banks; the Cyprus depositors are being treated like "junior
unsecured creditors" of the banks and given derisory "stock" in the bankrupt
banks. The damage is already done, no matter whether the Cyprus confiscation is
"revised" during this week.
The
retriggering of the bank collapse follows months in which European Central Bank
president Mario Draghi's promise of unlimited money-printing was declared to
have "turned the corner" on the Eurozone financial (not the economic!) crisis,
by such authorities as U.S. Fed chairman Ben Bernanke and—just this weekend in
his syndicated column—former Treasury Secretary Lawrence Summers.
Now it is
back to former British Prime Minister Gordon Brown's infamous New York
Times op-ed of May 31, 2011: "All of Europe faces uncontrolled bank runs,"
unless "a drastic solution is adopted"—a multi-trillion, globally organized,
bank bailout.
Financial
pundits were quick to react with alarm. Wolfgang Münchau wrote in today's
Financial Times:
"The long-term political damage of this agreement is going to be huge. In the short term, the danger consists of a generalized bank run, not just in Cyprus but across the continent. It would be rational for depositors in countries with shaky finances, such as Italy, Spain or Portugal, to withdraw their savings because the Cyprus rescue has shown that the creditor nations will insist from now that any bank rescue must be co-funded by depositors."
A headline in
CNN Market Watch March 18 caught the overall mood:
"No bank runs in Spain, so far."
Mass Murder
Chaos in the
bankrupt banking system of Europe comes on top of what has already been a
mass-murderous regime of austerity, combined with hyperinflationary money
printing.
The nation of
Greece is the most dramatic example of the direction and intent of the
financial oligarchy's schemes to try to save their system: a policy of genocidal
depopulation. There the living standard of the population has been slashed by
25% over the last three years to bail out the bankrupt banks. Suicides have
skyrocketed, death rates have increased, and medicine has become increasingly
unavailable. In Spain, unemployment has more than doubled, and is now over 26%,
with youth unemployment at 55-60%, just as in Greece, in order to pay the
bankrupt banks.
In the United
States, Obama is hell-bent on slashing Medicare, Medicaid, Social Security, and
crucial investments such as the NASA budget to maintain the bailouts for the
bankrupt banks. Now, in Cyprus, the financial parasites have turned to stealing
the money directly. And if the people scream, let them die! That is the
intention of the Troika, London, and Wall Street, and it comes directly from the
Queen, and her lackeys Tony Blair and Barack "I am not a dictator"
Obama.
The Russian Angle
Among those
reacting especially angrily to the Cyprus seizure is the Russian government,
which was caught by surprise. Almost half of Cyprus's bank depositors are
believed to be non-resident Russians; and Russian offshore companies and their
employees are bound to take a big hit.
Russian
corporations (including banks) and individuals are estimated to hold about
€20-25 billion in deposits on Cyprus, and they will lose billions directly—in
addition to the loss of investment funds that generally flow into Russia itself.
The Russians have been the only government, so far, to aid the Cypriot
government, and they weren't even consulted. President Putin told a meeting of
officials March 18 that the scheme was "unfair, unprofessional, and
dangerous."
Lying Thieves
Thievery, of
course, is what has characterized the entire trans-Atlantic banking system,
increasingly since the killing of FDR's Glass-Steagall banking separation in
1999. The Obama Administration has absolutely refused to prosecute the
criminals—as a matter of policy, because, as Attorney General Eric Holder has
admitted, prosecutions would threaten the whole rotten system.
Thanks to the
efforts of the Senate Permanent Subcommittee on Investigations, however, some of
that criminality is coming to light. The Committee has produced a 307-page
report on the $6 billion derivatives trade losses of JPMorgan Chase (reported in
2012), and on March 15, held a four-hour hearing that provided a treasure trove
of evidence that JPM lied, violated Federal regulations regarding its
derivatives trade, doctored its internal rules so as to change its balance
sheets, lied to investors, lied to the public, and withheld federally mandated
information from agencies such as the Office of the Comptroller of the
Currency.
Yet, as the
five witnesses from JPM stonewalled the questions from the only three Senators
who were present at the hearing—Carl Levin (D-Mich.), John McCain (R-Ariz.), who
is now the Ranking Member of the Committee, and Ron Johnson (R-Wisc.)—there was
never a mention of Glass-Steagall.
"More
controls are needed," Levin exclaimed, "if derivatives books can be cooked as
blatantly as they were in this case, then the rules need to be revamped." In his
opening statement, Levin lambasted JPMorgan for having the lowest percentage of
loans going into the U.S. economy of all the big banks, although it is the
biggest bank holding company in America, and the biggest derivatives
trader.
Levin,
McCain, and Johnson lectured the JPMorgan Chase officials for using taxpayer
money from FDIC-insured deposits to cover some of its $6 billion in derivatives
losses. (Most observers believe the losses are much larger.) Most explicit in
attacking the gambling with publicly insured money by JPM was Johnson, who
briefly badgered the bank witnesses with the question, "Don't you consider
yourself 'too big to fail?' " and demanded that they say whether Dodd-Frank
was effective in ending "too big to fail."
This
particular JPM theft, of course, is a tiny portion of what the Wall Street,
London, and other major world banks have ripped off over the past decades,
through usury, Libor-rigging, derivatives, and bailouts—all the while, stripping
the physical economy in the interest of "making money."
That "money,"
as the Cyprus case exemplifies, means absolutely nothing if these financial
predators are in control. The only solution is a reassertion of control of
economies by sovereign nation-states, using their powers to wipe out the
gambling debts with Glass-Steagall, and starting up the real economy once again.
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