Immediate Glass-Steagall Needed to Stop Global Crash
October 17, 2014 • 8:40AM

Lyndon LaRouche today called for immediate emergency action to reorganize the global financial system to save valid active accounts from wipeout along with the unpayable gambling debts that are set to detonate at any moment. The starting point, LaRouche emphasized, must be to save those valid accounts by reinstating Glass-Steagall right now—before the imminent blowout occurs. Bills are pending in the United States Congress before both the House and the Senate to reinstate Glass- Steagall bank separation, and Congress should be called back to Washington immediately to pass those bills, at the same time that Congress is taking up the emergency measures required to defeat the Ebola pandemic.

Oct. 26 is the date that the European Central Bank is scheduled to release the results of the stress tests on major European banks, and it is widely known already that at least ten of the biggest European banks are going to flunk, despite the one- trillion-euro injection of bailout from the ECB that was recently announced by Mario Draghi. Once the names of those banks are released officially, the crash could begin immediately, as none of those banks are able to access any new commercial credit.

Ambrose Evans-Pritchard, the City of London and MI6 mouthpiece who writes for the Daily Telegraph, penned a column published Thursday under the hysterical headline "World economy so damaged it may need permanent QE." Pritchard warned that "global liquidity is evaporating" and that unless this is reversed now, the whole system is set for a blowout far worse than 2007-2008 or 1937. "If this growth scare presages the end of the cycle," Pritchard wrote, "the consequences will be hideous for France, Italy, Spain, Holland, Portugal, Greece, Bulgaria and others... The higher the debt ratio, the worse the damage."

Evans-Pritchard warned that the Federal Reserve's plan to end the Quantitative Easing before the end of the year could alone be enough of a liquidity draw-down to trigger the crash. "Put another way, it is possible that the world economy is so damaged that it needs permanent QE just to keep the show on the road."

This was the second day in a row that he published an hysterical fit over the pending blowout. And he is not alone. Thursday's New York Times featured a panicked front-page story on the 460 point crash of the Dow on Wednesday (a late in the day intervention reduced the end-of-the-day losses to 178 points), warning in the opening sentence, "The party is over." In a series of further articles, the Times also noted that oil prices are tumbling, as the result of a genuine downturn in global economic activity and the fact that the Saudis are not pulling back on production to end the glut and force a price adjustment upward as they have traditionally done in the past. Evans-Pritchard also noted that the collapse in crude oil prices is adding to the panic situation globally and is feeding the fear of an imminent crash.

St. Louis Federal Reserve Bank President James Bullard told Bloomberg News that "a logical policy response at this juncture may be to delay the end of QE." The next FOMC meeting is Oct. 28-29, at which point it has been expected that the Fed would end the QE altogether. A second Fed official from San Francisco is already calling for QE4.

In contrast to Evans-Pritchard and others' lunatic call for infinite QE, LaRouche reiterated that the only course of action that is viable is to reorganize the entire global financial system by wiping out all of the gambling debt which can never be paid. "And that means you start with Glass-Steagall now," LaRouche warned.