Posted tagged ‘depression’


October 7, 2010


Erle Frayne D. Argonza

Magandang araw, mga kapamilyang global! Good day, fellow global family members!

Let me echo a theme that has been reverberating among circles of economists in the USA lately: a new cycle of economic crash. I’ve already begun to echo notes about whether the ‘stimulus package’ did its task as effectively as it can to deliver the goods, notes that connect to what the economists have been saying of late.

Among a leading light of the US economist circles is Joseph Stiglitz, former executive at the World Bank. A brilliant and dynamic mind in America, Stiglitz represents a coterie of rare experts who can be adjudged as independent-minded, for most of America’s experts are intellectual prostitutes whose purses are fattened by their loyal patronage of oligarchic and political interest groups.

America’s economists are again echoing the alarm calls about another round or cycle of recession which could lead the USA into a ‘double-dip recession’ the impact of which could be the worst that the U.S. work force will have ever experienced. The alarm call practically resonates with an identical forewarning by European economists on the bigger crash that could happen to Europe’s already burning economy.

The very same experts are very keen observers of the global economy aside from their deep grounding in their own domestic economies, and so the cautionary echoes include Japan’s and Canada’s economies as well. Practically all of the pillars of the Western economy—all powerful members of the OECD—have been receiving alarm calls from their own economists.

Maybe the media should better seek audiences with other experts as well, notably the sociologists and public policy as well, who have been keenly observant of the domestic (USA’s) and global economies. Why not consult the likes of Peter Evans and Theda Skocpol for instance, who have been doing works over the past decades that run parallel to what economists have been doing?

Chances are that the experts across a broad spectrum of the social sciences will end up with parallel if not identical evaluations about the impact of the stimulus package and the directions of the US economy and society.

The last round of financial reforms and a new stimulus package announced by White House recently just don’t seem to fit into the expectations of the noblesse experts who all trace the economic malaise of America to the effects of excessive liberalization reforms. Those reforms saw the diminution of the ‘real economy’, to note: (a) de-industrialization, (b) agricultural decay, (c) infrastructure neglect and collapse, (d) neglect of transport & communications sectors, and (e) decay/erosion of science & technology.

Whether the Bush & Obama stimulus package was able to shore up the collapsing ‘real/physical economy’ is now doubtful. The recent Obama-initiated reforms is only putting some caps on regulation problems for big business and ensuring some fairness in the games of the financial-monetary sectors. The coming tax cuts are added incentives to big business that do not necessarily ensure the revivification of the physical economy.

And that’s where the rub lies in America today. By the very fact that a new ‘stimulus package’ is being prepared in the pipeline means precisely the failure of the recovery program. As already shared by me in a previous article, the pronouncement of a new pump priming package is already causing jitters among portfolio and long-term investors.

With the investment field blurred anew in the USA, the resuscitation of employment to full employment level had been turned into an elusive dream. Whether tax cuts can induce new investments (inclusive of the realty sector), factoring the new financial reforms, will be a raging debate not only in America but among other global observers as well.

I am now of the opinion that Obama has been badly advised by his own economic team about the policy and institutional options for salving the structural ailments of the US economy. Bad advise means the resort to ‘bad economics’, a behavior that is ‘bad science’. Bad science breeds bad practice, and bad practice breeds disasters and catastrophes.

Will Obama and the policy-makers listen to the independent-minded economists this time?


[Philippines, 01 October 2010]







January 26, 2009

Erle Frayne Argonza

Magandang hapon! Good afternoon!

2009 will be another bleak year economically, more so for the North (USA, EU, Japan are topmost). The recession that began with the subprime mortgage bubble burst in America in 07, will ensue with even mightier turbulence, as there are no coherent policy solutions of a strategic nature that can salve the economic ailment on a global scale.

As already articulated by this economist/analyst in various articles, the policy environment must be changed and regulatory mechanisms strengthened to immediately gain business confidence and reverse the tide of catastrophe. On the domestic front, the solution begins by following a New Deal type of policy set, which will bring back the fervor of production-driven growth and full employment. On the international/global front, a new financial architecture must be agreed upon via a global summit called for the purpose, akin to a New Bretton Woods.

The only intervention mechanisms we observe today are bailouts of failing financial and business institutions, which are toxically immoral as those criminal oligarchs are even rewarded for their sordid looting and corrupt practices. Only Russia and China have openly resorted to a New Deal type solution, in consonance with the practices of the late regime of Franklin Delano Roosevelt of the USA. As far as the international-global front is concerned, the concurrence of a new treaty that will resonate a new financial architecture is nowhere in sight.

In the absence of genuine solutions that can stabilize ailing economies on both the domestic and international fronts, the downward spirals will continue, until the economies of the North will hit rock bottom depression that will be worse than the one that crashed the USA, UK and Germany almost a century ago (USA, UK, Germany were then the world’s top industrial & military powers). In the absence of capital control policies up North, capital flight will ensue at dizzying speed, draining their respective countries of trillions of dollars and/or euros at levels far higher than the 2008 drain.
The smart money that will sneak out will find better shelters in the South (emerging markets notably East Asia + India).

The possibility of North-based companies transferring their headquarters to the South is not entirely ruled out. The other option is for the corporate owners to transfer domicile from the North to the South, leaving their ailing mother companies in the hands of trusted stewards. The era of distance remote control-type management by corporate owners could very well begin this year, which will modify corporate governance by no small means.

The positive light for the global economy is that finally the corporate and state leaders will see light at the end of the tunnel and call for a global conference to carve out a new financial architecture. Laissez faire, a cadaver doctrine before the 2nd world war that was revived by the monetarists and greedy financiers, will finally lay to rest as it gives way to dirigist or interventionist economics.
Stronger regulatory mechanisms may be charted this year too, at least on paper.

New Deal, Keynesian, and welfare state doctrines will be blended together to produce an eclectic admixture. Since New Deal has an international facet into it thus rendering it more comprehensive, as the late FDR cogitated the need for international cooperation and development for all countries to end all wars and foment lasting peace, this doctrine will more or less be followed. We will not be surprised if, after the Davos conference, the shape of the future will already be definitively of the New Deal type.

Conclusively, even if the Northern economies will flatten down to zero and/or negative growths, the downward spiral may stop by the last quarter of the year. The full effects of the intervention solutions won’t be felt this year though, as it will take some more years to get them to galvanize. So let us brace for more turbulent winds, while hoping that the storm would finally stop so we can enjoy a delightful holiday season comes December.

[26 January 2009, Quezon City, MetroManila]


October 11, 2008

Erle Frayne Argonza

Good afternoon, Fellows of Planet Earth!

The planet’s bourses are still plunging as of yesterday (Friday), a day that was dabbed as ‘black Friday’ in Japan which saw the Nikkei plunge by 10%. ‘Bloody Friday’ may be a better term, as the word ‘black’ in ‘black Friday’ could be construed as a racial slur.

This gentleman is among the economists/social scientists in Manila who forecast, way back in the late 1980s yet, that the Western economies led by the USA will experience another horrific depression this decade. We were then following the trends of a yawning gap between the ‘financial economy’ or ‘virtual economy’ and the ‘real economy’ based on the GDP statistics. The American economist Lyndon LaRouche devised a very potent graph of the event which he termed as ‘collapse function’.

As of late 2007, debts in the USA already exceeded the GDP by four (4) times. That means that, in the event of a bubble burst (which came from the realty markets), the economy will come crashing down. It is simply impossible for a $13 Trillion GDP to pay up for debts approximating $50 Trillion last year. In the secondary debt markets, financial derivatives exposures breached the $120 Billion mark in the USA last year, and that all the more exacerbates the weakness and fragility of a $13Trillion economy that simply doesn’t have the money to pay up for ballooning private and public debts.

My own forecast is that the stock market plunge across the globe, which is now in the vogue of a ‘freefall’, will continue till next year yet. At its best, the Dow Jones index reached past 13,000 points about less than a couple of years ago. The same index had already shrunk below 10,000 points at its worst. By next year, the Dow will further shrink by as low as 8,000-8,500 points, the range that actually represents the real value of the entire US economy.

1 Point in the US bourse is equivalent to $1.5 Billion more or less, at its best. A shrunken size would deflate the value to around $1 Billion. At 13,300 points, the Dow index represents a value worth $20 Trillion, which seemingly exceeds the GDP of the entire federation. But that amount is largely speculation, the speculative value exceeding beyond 50% of the real value of the commodity lines traded.

8,500 points in the Dow index would yield, at deflated value, around $8.5 Trilion dollars. That same estimate is the real value of the US economy in GDP terms, per year, as of today. The value of $13 Trillion includes the value of speculation and fiction, on account of the predominance of the ‘virtual economy’.

As I’ve already explained in a previous article, the Bush-Paulson bailout, allocated an amount of $700 Trillion, is a faulty measure to salve the financial ailments of the USA. It follows from the flawed Japanese ‘crisis management’ bailout of huge banks that went in the red last decade, a tragic measure that flattened Japan’s growth to almost zero for around ten years at least. It is a band aid solution to a gargantuan problem that is equivalent to cancer, and everybody knows that band aid doesn’t cure cancer.

That explains the jittery situation of the post-bailout law scenario. Financial traders and investors who still recall well the Japanese fiasco just couldn’t be appeased by a repeat of the same band aid solution, this time to an economy almost three times bigger than Japan’s (in real value). For as long as no strategic solution to the global financial crash is in site, the stock markets will be jittery till next year, and before long we would see both the USA and Europe plunge back to the depression years of the mid-1920s to early 1930s.

Let’s see what will happen to the election fever in the USA. Some liquidity will be produced by the election spending there, and the optimistic pitch created by the electoral situation may somehow drive back the bourses up a bit. That is just a temporary respite from the blazing flames of the crash, rest assured.

[Writ 11 October, 2008, Quezon City, MetroManila]


October 4, 2008

Erle Frayne Argonza

Magandang hapon! Good afternoon!

It’s been some couples of weeks now since the financial downspin in the USA took a further plunge as mega-banks sought help from federal government for rescue. The closure of the Lehman Brothers and the S.O.S. by other big banks that are now in the red rocked the global stock markets to a new round of instabilities and volatilities, even as the US economy is in danger of another Great Depression.

As I’ve already expressed in many articles of mine, the US financial collapse, an event that economists in many parts of the world forecast as early as the 1990s yet, is bound to happen, on account of many factors. The key factor, as this analyst and fellow ‘nationalist economists’ have been saying since 1998 yet (when I was actively involved with a group of economists in Manila called the Independent Review circle), is the widening gap between the (a) ‘virtual economy’ based on predatory finance that produces mere fictitious values and the (b) ‘real economy’ or ‘physical economy’ that produces real values.

The serial liberal economic reforms that began in 1971 yet, which saw the collapse of the gold standard and the dropping of fixed exchange rate (FER) in favor of ‘floating rate’, and onwards through the liberalization-privatization-deregulation-decentralization (structural adjustment policies or SAPs) of the 1980s, and onwards to the GATT-Uruguay Rounds that created the WTO in 1994, took its catastrophic toll on the economies of the planet, but most specially the USA’s.

The Nixon-era financial-monetary reforms and the Reaganomics (SAPs) were the policy culprits of America. They dealt the final death blows on the dirigist policies of New Deal, initiated by Franklin Roosevelt but which was inspired by dirigist policies of earlier luminaries (i.e. Alexander Hamilton, Abraham Lincoln, Friedrich von List), provided the impetus that created the strong, gigantic ‘physical economy’  of the country, and transformed it into a world power economically, politically and culturally. Without dirigist economics (interventionist) and the New Deal, Middle Class America wouldn’t have been possible. The neo-liberal reforms simply wiped out whatever was left of the New Deal by the 1980s, and with the liberalization of the financial –capital-monetary markets, the predatory financiers had their field day of looting the middle class purses under the rubric of portfolio capital and derivatives operations.

Had the US policy makers just labored a bit and assigned their staff to scour the world for some related experience of bank-financial collapse, their researchers could have easily ‘discovered’ the experiences of Japan in the 1990s. By the early 1980s, when Japan clearly demonstrated its sterling industrial and technological capabilities as the base for its wealth production, the Zaibatsus and the policy makers decided to go the liberalization way, confident as they were that the fruits of decades-old ‘physical economy’ build up can’t just be easily wiped out by predatory financier operators.

Japanese technocrats (both in Japan and overseas) also theorized that the key to producing a sound, healthy, mighty Japanese economy was in the realm of micro-economics more than public policy. Never mind if the policy environment will shift from the protectionist-dirigist policies of the post-war decades to liberal policies, provided that at the level of production and organization, capacity and internal potency can be demonstrated. The likes of William Ouichi’s ‘theory z’ comes to mind, or ideas that spawned strategies and tools dovetailing on quality control, team building, and decentralized operations. The world was so awe-inspired by the ‘Japan Incorporated’ model that was based precisely on the micro-economic route, and was extolling the Japanese corporate firm to the hilt as the new champion of the globalizing economy.

The USA that had demonstrated its strength on macro-economics—In the terrain of public policy—as the route to economic might, must have been seduced by the Japanese ideological onslaught at one point, that it so sonorously echoed the Japanese technocratic jargon of ‘globalization’. But when Japan’s financial system began to buckle down in 1994, which then impacted on the rest of the economic sectors, the US politicians and technocrats simply didn’t pay attention, fixated as they were to the seductive results of the ‘virtual economy’ (bubble operations) on the GDP of America.

To recall, Japan suffered miserably for the bailout mistake it pursued. Dabbed as ‘crisis management’, the state went on a binge of saving ailing banks and financial houses, the very same measures that the Bush-Paulson team is now embarking on. Alarmed at those events than in Japan, which led to a 10-year recession & almost zero growth, I began to raise howl about the ballooning portfolio investments in the Philippines by 94-95, and was among those experts who forewarned the state officials that Japan’s ‘crisis management’ was seriously flawed, was tantamount to giving incentives to looters instead of criminalizing, them, and should never be enforced in the Philippines or ASEAN in case that the portfolio bubble will burst in Manila and the region (the bubble burst in 1997).

To repeat: Japan suffered miserably from that fiasco. Recession howled like unstoppable forest fires for ten (10) years, and were it not for the high growth of East Asian markets, Japan couldn’t have risen back to appreciable growth by 2005. Interest rate was compelled to be brought down to zero percent, a precedent that many countries affected by financial meltdowns were aloof to emulating. Bankruptcies,  corporate closures and downsizing led to dislocations and unemployment. For the first time in many decades, former decent Japanese executives and employees who lose their jobs and had their remaining mortgaged properties confiscated, were rendered homeless and starving, and forced to reside in the streets as paupers and vagabonds..   

Sitting with my fellows in the Independent Review circle from 1997-onwards, we took turns in exposing the maladies of the neo-liberal reforms, spoke in diverse media (TV, radio) to forewarn the public of the imminent financial collapse in East Asia (the meltdown took place beginning in June of ’97), and by 98 were of the consensus that the USA was next in line for a meltdown of even catastrophic proportions than either Japan’s or South East Asia’s (97 meltdown). The very destructive effects of predatory finance saw the decline of industry (de-industrialization), agriculture (land use conversions, decay), infrastructures (some huge infra were even privatized), S & T (low priority in budgets & education), and transport & communications in the USA. If the neglect of the ‘physical economy’ will continue for another ten (10) years, it will be too late for salving the US economy as a whole. Any catastrophic bubble burst and financial-monetary meltdown could bring the economic house down, collapse consumption, and render the US economy much like unto a Latin American economy past 2010.

 As I recall then, we experts from the Independent Review circle strongly opined that the ‘crisis management’ tactic was immoral and extremely perverted. How in the world could the state ever reward criminals at all? The bankers and financiers looted the Japanese purse by probably worth trillions of dollars, they should have been criminalized for their sordid crimes, and yet they were even rewarded! Unbelievable! This is one excellent narrative for the Ripley’s Believe It Or Not!

Fortunately for the Philippines, there was no large-scale bailout of any bank as a result of the 1997 Asian meltdown. Those realty and construction companies affected by the crisis, affected precisely because they over-exposed themselves to ‘hot money’ foreign portfolios that simply dried up as the same portfolios were pulled during the first month of the meltdown, were immediately able to cope up by retooling and re-engineering their strategies and tools. Interest rates were lowered, excess liquidities were flashed out in well managed manner that deserve our central bank accolades from the Bank of International Settlements. In less than a year after the meltdown began, we were back to consumption patterns like there was no recession at all. We didn’t take the Japan route, luckily. By 2001 and onwards our growth patterns were back to appreciable growth, and the local bourse moved up as well.

Today, all over the ASEAN + China-India-Korea (minus Japan), the Asian meltdown seems like an ancient event down memory lane as things have been moving fast. We just can’t believe that our mighty economic partner, the USA, didn’t learn its lessons from the 2001 recession there and from the flaws of the Japanese bailout. ‘Bailing out the rich’ isn’t the issue here, but rather ‘bailing out the criminals’ which is a gross disincentive for the legitimate SMEs and other market players that didn’t receive the same favor.

If we were to seriously search for appropriate short-term tactic for salving ailing financial institutions, the answer lies in a proven approach to corporate ailments: bankruptcy reorganization. The economists Robert Reich (former US secretary of Labor) and Lyndon LaRouche (Executive Intelligence Review) have been airing this solution very strongly, and I am myself bent on accepting this micro-economic short-term solution as an exemplar for the rest of the world. I would not be surprised if the eminent economists Joseph Stiglitz and Paul Krugman would air a similar advisory, and they should better air their counsel strongly.

The entire planet today is watching the horrific bailout in the USA, almost forgetting that this copycat bailout already flattened Japan for a decade at least before. Each one of us should look at our own backyards and make sure that our respective states won’t emulate the rather devious and insane bailout of Japan Incorporated and the Bush-Paulson team.

[Writ 04 October 2008, Quezon City, MetroManila.]


September 12, 2008

Erle Frayne Argonza

Good afternoon!

At this moment, I’m sipping coffee contained in a pack that is sold for worth P130, or $3.00. The pack is one of the domestic brands of brewed coffee blends, ready for the drip coffee maker, of the Arabica and/or Robusta varieties. In economic parlance, this coffee is a commodity because (a) it was intended for exchange and not for the coffee producer’s consumption alone, and (b) money was used to acquire (purchase) it.

I have such deep fondness for coffee, as I acquired my coffee-drinking behavior as a childhood habit yet. In my hometown of Tuguegarao (city), Cagayan province (North Philippines), coffee beans were grounded into powder form and sold right inside the ‘wet’ market, was brewed using the local decoction techniques, and was consumed by people of all ages from pre-school to senior’s age. That was then, and that was how I learned to drink this beverage at age 5 more or less. I was hooked to the habit since then, even as I continued to drink milk that I still do till now. Both coffee and milk are among my health formulas, and both are commodities.

The question I’m asking now is, will commodity-based economics survive the times ahead? Both coffee and milk will survive for sure, but will the money economy that underpins them survive as well? As to the broader world system of capitalism, will it survive too or is it in fact on its death knell today?

Capitalism was the last of the world systems that embodied the ‘money economy’ to which it properly belongs. With the opening of the 20th century, the socialist world system appeared on the social landscape and attempted to serve as an alternative to capitalism, but this experienced its early demise as its implementers found out that it cannot be sustained after all. Both capitalism and socialism are embodiments of the ‘money economy’ as it later turned out to be, they are just but two sides of the same coin: the ‘money economy’.

Socialism is gone, and no matter what attempts there may arrive to survive it in some other forms, this variant of the ‘money economy’ is gone. Now capitalism is all alone, and it is getting more real than virtual that it too is bound to crash a catastrophic end, and with its demise, the “last of the (economic) Mojicans” is bound to disappear (my apologies to Mojicans if my note sounds ethnically incorrect). And with capitalism’s demise, the whole of the ‘money economy’ folds up like unto a book that had reached its last chapter, and deserves more to be consigned to the archives of history.

The Frankfurt school thinkers, notably Jurgen Habermas, cogitated that capitalism’s life span was extended somehow, and was dubbed as ‘late’ capitalism in this last phase of the world system. In this phase, state planning and interventionism were infused into the system to extend its life. Before ‘late’ capital came the mercantile, free enterprise, and monopoly phases of this world system. Will there be another phase to capitalism after ‘late’ capital?

Before I answer that extension of life span, let me stress that ‘late’ capitalism shall end in the following process and manner:

·        The re-introduction of liberalization—of free market and free trade principles—into ‘late’ capital shifted engagements away from production, the real foundation of the economy, to the sphere of predatory finance, thus producing the gargantuan ‘bubble economy’. The ‘physical economy’ of production transmogrified into the ‘virtual economy’ that produces no real value other than imaginary or delusional values. It is ‘mad economics’ in operation, no longer the ‘rational economics’ of mercantilists, classicists and neo-classicists.


·        The ‘mad economics’ led to the yawning gap between actually produced values and the aggregates of financial derivatives and debts combined, to the extent that the former shrinks at a rapid rate relative to the latter. As bubbles burst from one commodity sector to another, leading eventually to a crisis of gargantuan proportion, all the more will production shrink, unable to produce values that can input into the demand functions for fresh money to pay for aggregate credits, primary debts, secondary debt obligations, and so on.


·        The crisis will then move on to the further shrinking of production, tightening of credit sources, and hyperinflationary situation in utilities (notably gas & power), food, base metals and other vital commodities. Total economic collapse results from the foregoing.


·        The economic then leads to social unrests, turmoil, upheavals, civil wars, food wars, water wars, and possibly intercontinental wars such as another 3rd world war. The clash of world powers and their surrogate emerging markets will become the flames of a possible long war akin to the 30 Years War (c.1618-48).  

Let me now end at that instance. Suffice me to proclaim that the death knell of ‘late’ capitalism and the whole of the ‘money economy’ of the last 2000 years or so are ending. The ‘non-cognitive economics’ of the Roman to feudal era, the ‘rational economics’ of the Renaissance to monopoly capital era, and the ‘mad economics’ of ‘late’ capital were markedly the underpinning mediation processes of that entire 2000-year epoch. The epoch and its last phase of capitalism is rapidly drawing to a close.

[Writ 22 August 2008, Quezon City, MetroManila.]  


August 28, 2008

Erle Frayne Argonza

Just exactly what is the overall purpose of the recent Georgia-Russia conflict within the broad context of the agenda of the global oligarchy? Does it have to do with the broad war that was hatched that will begin in the Middle East, with the oligarchic proxy vassal-states taking sides in the conflict? Was the conflict a mere acid test case by the same elites to assess the offensive capabilities of Russia at this juncture?

Below is a report from the Executive Intelligence Review which lends credence to the thesis of NATO forces being honed for that larger forthcoming war. George Soros, the bagman for dozens of financier oligarchs of Europe, was identified as a key operator in fomenting the latest conflict in Central Asia that pitted the oligarchic vassal Georgia with Russia.

[18 August 2008, Quezon City, MetroManila. Thanks to the Executive Intelligence Review database news.]

LaRouche Denounces `Obama’s Godfather’ George Soros Behind Attempt To Start World War III in the Caucasus

Aug. 10, 2008 (EIRNS)—This release was issued yesterday by the Lyndon LaRouche Political Action Committee (LPAC).

Lyndon LaRouche today denounced British agent George Soros, for his hand in the ongoing London-led efforts to trigger World War III in the Caucasus. Soros is the financial and political godfather of both Georgian President Mikhail Saakashvili and the purported Democratic Party Presidential nominee, Sen. Barack Obama (D-Ill.). In the late hours of Aug. 7, as President Saakashvili completed a nationwide television address, claiming to seek a diplomatic solution to the crisis in the autonomous region of South Ossetia, he in fact ordered Georgian troops to fire on Russian peacekeepers, who were in South Ossetia as part of a United Nations mandated force, that has been there since 1994. President Saakashvili’s actions now threaten to trigger World War III—precisely what the British intend as their response to the collapse of their post-Bretton Woods international financial system.

“If you want a preview of what the United States would be like under a President Obama, just look at Georgia’s recent actions. Georgian President Saakashvili, like Barack Obama, is owned by the same British godfather—George Soros.” LaRouche asked: “Would Soros’ man Obama be another Dick Cheney if he got into office?”

Soros’ own Open Society Institute boasts that it was the backbone of the so-called “Rose Revolution” that swept Saakashvili into power in 2003-2004. As of January 2004, the Soros Open Society Institute, which first set up its office in Tbilisi, the capital of Georgia, in 1994, began directly bankrolling the Georgian government, as part of a joint program with the United Nations’ UNDP (United Nations Development Program), then headed by Mark Malloch Brown, who is now secretary general of the British Foreign and Commonwealth Office. Malloch Brown was so close to Soros, during his tenure at the UN, that he lived in an apartment he rented from the hedge fund speculator.

Saakashvili’s reckless provocations, in firing on Russian troops and killing South Ossetian civilians, who are predominantly Russian citizens, drew a strong military response from Russia, which is bound, under its constitution, to defend Russian citizens under attack. The British have been behind the destabilization of the Caucasus region since the collapse of the Soviet Union, funding and arming Chechen rebels, allowing recruitment into the Chechen separatist movements, at mosques in England, and providing safe haven to Russian Mafiya figures, like Boris Berezovsky, who bankrolled anti-Russian separatist and terrorist operations in the Caucasus.

“Now, look at the vast Soros cash flow into Obama,” LaRouche concluded. “Soros is a British agent, under the control of British foreign intelligence and special operations services. He is used by them. His sources of funds, after his initial bankrolling by the Swiss branch of the Rothschild banking interests, are murky, at best. Soros is part of Britain’s new opium war apparatus—and he virtually owns Senator Obama. And now he is fomenting world war provocations against Moscow, at precisely the moment that I am calling on Russia, China, and India to join the United States in creating a new international financial system that would wipe out speculators like Soros altogether.”



August 18, 2008

Erle Frayne Argonza

Is the global economy moving downward towards a devastating collapse?

If we employ a long-term Kondratieff cycle to model the world economy, we can see that the period beginning in 1935 approximately (when the big market economies US-UK-Germany moved towards another cycle of growth approximately after the Great Depression, should have ended around 1995 approximately, after which comes another great depression.

As early as 1989, ramblings of a global collapse began to murmur in the US economy. Mexico, Japan, Argentina, and other economies followed in the 1990s, while Europe went through a general low-growth trend that was the most sustainable for the continent as a whole. Then came the Asian meltdown of 1997. Then the USA again went through a recession in 2001, a pattern that has been repeated again from 2008 to the present. It seems that the pillars of the world economy couldn’t get out of a short-term crisis without having to crash back to another episode of short-term crisis altogether.

Is it really a ‘short-term’ crisis in the first place? Or is it in fact a ‘systemic crisis’, and that the financial downspin the Northern economic pillars are going through could very well be the terminal phase of a very long cycle of growth that began after the end yet of the Treaty of Westphalia (1648)? That in fact, several long-wave Kondratieff cycles have already passed over since that time, and that finally the system is DEAD in the wood?

Well, not only the financial system but the whole of CAPITALISM is already on its death throes. Those oligarchs behind the systems now dying won’t see the systems they built die down just that without “bringing down the other houses” with them, it seems. Which means that, right after the terminal phase of the system, another huge, catastrophic war will come, which will later see another Westphalian-type treaty or so that will re-carve the contours of polities into a Post-Westphalian totalitarian technotronic global order.

Below is a briefer from the Executive Intelligence Review that summarizes the issue at hand.   

[18 August 2008, Quezon City, MetroManila. Thanks to Executive Intelligence Review database news.]

End of the Line for Financial System; Bankruptcy Issue Raised

Aug. 10, 2008 (EIRNS)—The death of the financial system was the implicit subject of several articles in the financial press over the weekend, reflecting the way reality is setting in and attitudes are changing.

  • “Investment banking is dying,” was the blunt statement by William Cohan, in a op-ed in today’s Washington Post entitled “The End of the Masters of the Universe?” Cohan says that the revenue streams of the investment banks are drying up, and that there is genuine fear in the corridors of power on Wall Street.
  • “We have a banking crisis and an agency crisis and a mortgage crisis and a coming credit card crisis. We’ve never seen anything like that before. And it all seems to be coming home to roost at the same time. That’s never happened either,” Charles Geisst, a professor of finance at Manhattan University, told yesterday’s Washington Post. He said the Great Depression was the last time the financial markets were hammered by such a variety of factors, adding: “But we did not even have credit cards in the 1930s; there was no such thing as student loans.”
  • The specter of generalized bankruptcy was raised by Yale finance professor Robert J. Shiller in an op-ed in the New York Times. Citing the failure of Bear Stearns and the government measures to bail out Fannie Mae and Freddie Mac, Shiller asks, “What if the next case is worse? No one in government seems to feel a responsibility for warning about such possibilities and formulating a detailed policy for dealing with them.” Shiller says that “Bankruptcy law is a good place to start. After all, the dreaded financial meltdown would amount to a wave of bankruptcies…. What would happen to the economy if hedge funds had to liquidate, one after another, in a financial crisis? We need to rethink the theory and practice of bankruptcy, given the new complexities.”

Shiller points to the inherent limitations in current bankruptcy laws, which were largely drawn to protect narrow financial interests, and are poorly suited to deal with systemic problems, when a “subsidized system of triage would be needed to identify which companies should be saved, with the main criterion being the possible economic impact of their liquidation.”

These comments, taken as a whole, represent the way discussions of the “unthinkable” are beginning to percolate, and converge upon the outlook of Lyndon LaRouche. Shiller’s mention of triage by bankruptcy echoes the emergency measures proposed by LaRouche, of putting the financial system itself through bankruptcy, protecting the population with a firewall, and freezing the financial paper while we determine what debts will, and won’t, be honored. Whatever Shiller may think about LaRouche’s proposals, he is implicitly admitting that the system is finished, and that we must prepare for its demise, making decisions on the basis of the interests of society, and not merely the narrow interests of financial institutions. Reality is setting in, and reality leads inexorably to the policies outlined by LaRouche.