Dear Colleagues:
First of all, I would like to express my gratitude to the organizers of the conference, who invited me to speak here.
I would like to start my talk with a quotation from the quintessential British imperialist, Winston Churchill, who, in 1940, wrote in a letter, that “Great Britain was fighting not against Hitler, and not even against National Socialism, but against the spirit of the German people, against the spirit of Schiller, so that this spirit would never be reborn.”
But now we are here, at a conference which was organized by the Schiller Institute, and it is our kind of asymmetrical answer to the British Empire. . . .
Crisis has become a code word of our time. But the question is—a crisis of what? We are told that it is a crisis of finance, it is a crisis of state, it is a crisis of education—so, it is a crisis of everything. But what does this mean, to be a crisis of everything? A crisis of everything means a systemic crisis. It is a crisis of the social system, and this social system is capitalism.
So, first, a crisis of capitalism, and only secondly, a crisis of civilization, mankind. But what is capitalism? Descartes used to say “define the sense of the words.” My working definition is that capitalism is a complicated institutional system which limits capital in its own long-term and holistic interests, and ensures expansion in space, externalizing the crisis, and exploitation.
The last element is vital, because capitalism, like antiquity, like the slave system, is an expansively oriented system. When in the course of the evolution of capitalism, the global rate of profit was diminishing, capital used to carve out parts of known capital zones, and transform them into the capitalist periphery, the zone of raw materials extraction, and that of cheap labor. But in 1991, with the fall of the socialist camp, including the U.S.S.R., and with the start of semi-gangster type of capitalism in Russia, non-capitalist zones evaporated. Now capitalism is everywhere. It encompasses all the globe. Complete victory.
But every acquisition is a loss. Now there is no place to expand. Intensification of capitalism is the whole agenda. The problem is that capitalism is an extensively constructed system in principle. Several institutions—the nation state, civil society, politics, and mass education—limit capital’s possibility to exploit the core of the system, in the way, or on the scale it does at the periphery. The institutions I have mentioned externalize exploitation, somewhat compared to the way Solon’s reforms did in ancient Athens.
Lords of the Crisis Rings
I do not want to minimize the level of exploitation in the so-called highly developed countries, but there is a certain limit to it, or, to be more precise, there was in the period of 1945-1975. It is no coincidence that the French called this period “the glorious 30 years.” I say “was,” because since the 1980s, the dominant groups of the capitalist class have been dismantling these protected institutions, the sum, or rather the system of which, constitutes normal and sound capitalism, or its pillars.
During the last 30 years, we have been witnessing the fading away of nation-states, the squeezing of civil society, depoliticization of the political sphere, and deliberate primitivization and weakening of mass education, including higher education. In America, this process took place in the 1970s and ’80s; in Russia, we are witnessing it now. But thanks to the socialist foundations, those who are trying to demolish our education are succeeding, but only partly. This liquidation is the essence of the so-called neo-liberal revolution, or rather, counter-revolution: counter not only to the main tendencies of the postwar 30 years, but also to the whole period of European history since the Renaissance.
It is not just a regression; it is counter-progress. It is deliberate counter-progress.
During the last 30 years, we have been living in crisis. And this crisis, the neo-liberal counter-revolution, is man-made; it is artificial, or it has been artificial, because it seems that at the beginning of the 21st Century, the crisis began to go out of control of its masters, of the “Lords of the Crisis Rings.” We can identify this, indirectly, in the conflicts of different segments of the global elite, in the activities of their closed organizations, and in the statements of high functionaries.
Suffice it to recall what [IMF Managing Director] Christine Lagarde was saying in October in Tokyo, at the meeting of the IMF and World Bank, and what the essence of the report of the Morgan Stanley management in June of last year was.
The guiding document of the neo-liberal counter-revolution was the report “Crisis of Democracy,” written at the request of the Trilateral Commission by Samuel P. Huntington, Brian J. Crozier, and Joji Watanuki, in 1975. The document is very interesting. The authors wrote that the only cure for the evils of democracy was not more democracy, but the moderation of democracy. The report argued that, for a democratic political system to function effectively, it usually required some measure of apathy and non-involvement on the part of some individuals and groups. They meant the middle class and upper groups of the working class.
The democratic surge, the report said, was a general challenge to existing systems of authority, public and private; and the main conclusion was that a diminution of public influence was needed. So, in fact, this document was a reaction to the rise of the middle class and working class, due to industrialization in the 30 postwar years. The solution was very simple: deindustrialization. The deindustrialization of the North Atlantic core, and an offensive against the middle class and working class. And we saw it in Thatcherism and Reaganomics.
Deindustrialization of the West, which began in the 1980s, ideologically has been under preparation for a long time, since the 1860s-1880s in Great Britain. In the 1950s and 1960s, the environmentalist movement was added to it. The environmentalist movement of the ’60s was organized by the Rockefeller Foundation, and it was paving the way for future deindustrialization.
The same role was played by the youth culture and different minority movements, and, of course, by de-rationalization of thinking and behavior. The ’80s saw the rise of irrational cults, the deterioration of mass education, and, of course, the supplanting of science fiction by fantasy. The Harry Potter series is a very indicative example, where we see the future, or a picture of reality, where there’s no democracy, where there’s a hierarchy, and where power is based on magic, not on rational choice.
The Project To Stop History
In fact, the neo-liberal counter-revolution, which organized the redistribution of incomes in favor of dominant groups, and at the expense of the middle class and working class, was part of a much greater geo-historic project, or plot, as you wish: the project to stop history. Because the redistribution of income, and de-democratization of society, demanded a civilizational U-turn, which I call the three Ds: de-industrialization, de-rationalization, and de-population.
This last plays an important role, not only from the economic point of view, or from the resource point of view. It is much easier to control 2 billion people than 7 or 8 billion. The de-population project is financed by the same structures which financed the ecology movement, etc.
The neoliberal counter-revolution was a crisis in itself, but it was intended to be a managed crisis. Yet, in the beginning of the 21st Century, the process seems to be going out of control, as I said; Hegel used to call such situations the perfidy of history.
So, we have a double crisis: one man-made and planned, and then, a new crisis, a chaotic one.
To deal with the crisis, one has to have will and reason, or rather, first, reason, to understand, and secondly, the will to put reason into action. In our case, reason is social science, but the problem is that social science, in its present condition, is not adequate to the challenges of our epoch. The main agent of social science is the expert, who knows more and more about less and less. And there is a de-theoretization of knowledge. Knowledge is becoming more and more empirical, statistical case studies without theory, without scientific imagination and so on.
First, the disciplinary net of the late 19th Century, which is our inheritance from the 19th Century—economy, sociology, and political science—in fact, doesn’t capture social reality as a whole—only parts of it. The basic unit of analysis of sociology is civil society, but if that is shrinking, it means that sociology can tell us less and less about the world we are leaving and the world we are entering.
[The French historian] Fernand Braudel used to say: “Capitalism is the enemy of the market.” Rather, capitalism is balanced between monopoly and market, but now we can see that transnational corporate monopolization is pushing the market away.
I would like to remind you about the research by Andy Coghlan and Debora MacKenzie, published in October 2011 on the site of the New Scientist. This group of scholars showed that 147 companies, 1% of all companies, controlled 40% of the world economy. This is very indicative. This means that the modern economy, whose basic unit of analysis is the market, conceals more than it shows. Politics and the nation-state are fading away, and this means that political science, with its basic units of analysis—politics and the state—not only cannot adequately conceptualize, but cannot even merely depict real power relations, especially on the global level.
Secondly, there is another serious problem with political science. Real power is usually secret or semi-secret, shadow power. Conventional political science has neither concepts nor methods, to analyze this type of power. The more democratic the facade of the western society was becoming in the 19th and 20th centuries, the less real power it had. This power was channeled into closed clubs, super-national structures, etc.
What I am saying is banal and trivial, but political science in its present condition cannot analyze real power relations. The integration of these structures as units of analysis in conventional political science will in fact blow it up.
Cognitive Intelligence Organizations
So, a new social science is needed, studying the real world, and not that which professed scholarship defines as real. A new social science with new disciplines, new concepts, a social force which will be able to create such a new type of scholarship, has the best chance to win in the 21st Century, or at least to undermine attempts to cut us off from our European legacy.
It is evident that a new scholarship can be created only by structures of a new type. Which organizations are analyzing reality today? Above all, these are scientific organizations and the analytical branches of secret services, but both are in deep crisis. Today, we are witnessing a crisis of both scientific organizations and secret services—their analytical branches. Scholarship appears not to be able to work with enormous volumes of information and feels awkward in analyzing informational streams. The gap between informational streams, including professional ones, and the standard level of a standard scholar is growing. Instead of scholars, as I said, we have experts who know more and more about less and less.
The whole picture reminds us of the situation of scholasticism at the end of the 15th Century: the miniaturization of research, case studies, and no universal lexicon among different spheres of knowledge. As for the analytical branches of the secret services, they seem to be unable to work in a world where almost all significant information can be found in open sources. And this transforms the whole business.
So, there is a need to create fundamentally new structures. I prefer to call them cognitive intelligence organizations. They must combine the best features of scholarship structures and those of the secret societies. Like the latter, they must analyze the real world, not the imaginary one, paying attention to certain indirect evidence. Social science usually neglects indirect evidence, which is, however, very important.
At the same time, like scholarship, they must concentrate on the laws and regularities of mass processes. Such structures must be not just analytical units, but also organizational weapons in the struggle for the future. I understand very well that it is much easier to pronounce such things, than really to create these organizations, but one must try.
Thank you.
Transcript
TranscriptI think we all are aware of the fact that we, right now, are finding ourselves in the middle of a world drama which is so gigantic, that if Shakespeare or Schiller were here today, even they would be challenged to put something onstage, bigger than the present world-historical moment. Because if you look at the world situation, in the totality of what is going on, it is mind-boggling. We are on verge of a blowout of the financial system, which could happen any moment, and would make all previous financial crises look like peanuts—and that includes the Great Depression of the ’30s.
The financial system could evaporate overnight, in what the CEO of a large consulting firm has called a supernova: That is, when a star comes to its end, and just goes up in a huge burst of light and energy.
The financial oligarchy which is in control of this present financial system, plans to establish nothing less than a world dictatorship. They are clearly intending to eliminate all leftovers of national sovereignty. In Europe they have succeeded already very far, and in the United States, the Constitution will be almost gone, if this is not reversed.
They want to eliminate, and have already done so pretty much, all accomplishments of international law of the people. They want to return to a feudal order, which is based on a population density that goes with a feudal order, and that means a severe reduction of the world population—who knows?—from 7 to 1 billion, or no people at all.
They risk the existence of civilization by playing around with a thermonuclear war, and they’re pushing regime-change policies against every country on the globe which is not agreeing to submit to this world order.
So therefore, we are looking at a policy which, at best, would throw civilization into a new dark age, and bring about misery for generations to come; and at worst, we are looking at the complete extinction of civilization, wiping out all the works and creative contributions of all our forebears. Even the memory of it would be eliminated.
On the other side, we have the potential to end oligarchism forever; and to fulfill the promise of the great American President John Quincy Adams, of forming an alliance of perfectly sovereign nation-states on the globe. We could create a peace process among these nations through development, eliminating the poverty and misery of billions of people who are suffering from it now, for good! And that could be done in a very short period of time.
We consciously could initiate the next era of history in human civilization which could be so dramatically different, as it was with the Middle Ages and the new era which was initiated by the great mind, Nicholas of Cusa, who laid the foundation for modern times.
So we could initiate a new era of mankind, which would leave behind this unworthy oligarchical system, and put in its place the identity of mankind, the true nature of man, that is, creativity; of creating a mankind where people are grown up. They would be united through the common aims of mankind, and stop being greedy for foolish, virtual money which soon will evaporate anyway.
Restore the Greatness of America
Now, to contribute to the second version, to the better outcome of present history, we have initiated these Schiller Institute conferences, and naturally, a fight around the world. But it is very clear that whatever we do in Europe or in other parts of the world, the decision of which way this present historical branching point will go, lies with the United States. Because it is the United States which has the power: It’s a huge country. I reminded myself by traveling from Washington to California, that it’s really a very big country! And it has tremendous richness, which if you don’t travel, you may not be so conscious about.
It’s a great country; it has made a tremendous achievement in world history. But, right now, I can assure you that this is not the image people have of the United States around the world. Because the legacy of three Bush administrations and more than one Obama Administration, has blurred the image of the United States, and people forget about the great tradition of the United States.
So, let’s have a solemn oath, to restore the great America, to rebuild the United States after all of these years of destruction since the assassination of John F. Kennedy.
The United States must go back to what it used to be with the Founding Fathers, with Alexander Hamilton, John Quincy Adams, Lincoln, Franklin Roosevelt, Martin Luther King, and John F. Kennedy. It must become again, for the whole world, a beacon of hope and a temple of liberty. It must be what the aspiration of the Founding Fathers was, that it becomes the place where all the republican forces of the whole world want to go. It must be again, what it was under FDR, a liberator of the world against fascism. It must be again the image of hope, as it was represented by John F. Kennedy and the Moon landing, which created a whole generation of optimistic children, who thought everything was possible, if you apply science and technology.
We must have again the cultural optimism associated with the idea that mankind is capable of exploring and colonizing outer space. And that by realizing another of John F. Kennedy’s great projects, NAWAPA, that we can continue the civilization and colonization of the West, which stopped somewhere with Teddy Roosevelt.
Abraham Lincoln had said that infrastructure development is deepening the society through modernization and urbanization, instead of a simple horizontal expansion. And therefore, we have to have great infrastructure projects in the tradition of the TVA, as a stepping stone to the realization of the World Land-Bridge and the reconstruction of the world economy.
The Fight for Glass-Steagall
But the most hopeful momentum, which we see right now to go in the direction of the second option I mentioned, is the fight for the reinstitution of the Glass-Steagall Act in the United States, which is the absolute, indispensable first step. Because we face the danger of a new fascism, and only if we turn back to this Glass-Steagall tradition do we have a chance.
Now, Glass-Steagall is one of these things which the United States owns, and all the Europeans are telling us, “Well, that’s an American thing. We don’t have that tradition; we have universal banking.” Which is not quite true, but, I think Glass-Steagall is an American property, in the same way as the American Constitution and the Declaration of Independence, to which all great minds and Presidents have always turned back. In the same way as Lincoln went back to the Declaration of Independence; so did Martin Luther King.
And so, we have to revive Glass-Steagall today, because that was the dividing line, where, in the ’30s, Europe went in the direction of fascism, and Franklin D. Roosevelt ended the danger of fascism, by applying Glass-Steagall and going for the separation of the banks.
Ferdinand Pecora.
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He added the Pecora Commission, putting these bankers in front of hearings; and most of them, or many of them, were put in jail, which Pecora described so inspiringly in Wall Street Under Oath, the book he wrote about that.
Now, the U.S. population, contrary to the Europeans, has in its memory, in its sort of collective, genetic memory, that with the policy of Glass-Steagall, you can bring the country out of the depression. And if you look at the long process of undoing the FDR measures, which unfortunately started immediately with Truman—who allied with Churchill and really was a traitor to the legacy of Franklin D. Roosevelt, who had defeated fascism—that was then followed by Nixon, who repealed the Bretton Woods system in 1971; this, as a prophetic prognosis, was recognized by my husband, Lyndon LaRouche, who forecast that it would lead to a situation where the world would be faced with either the danger of a new depression and fascism, or a new world order.
Then, the next step of this repealing of the FDR legacy was what the Trilateral Commission did in 1976, with its policy of “controlled disintegration of the world economy,” which is the reason why the hopeful development of many Third World countries was interrupted. “Never again, a Japan” was the slogan of these people—“Japan,” meaning to turn a feudal country within years, into a higher industrial country, on the basis of the method of the American System.
Then, in 1984, you had Alan Greenspan, who worked at that time for J.P. Morgan, already plotting to undo Glass-Steagall, together with Mr. [William] Dudley, who is presently the head of the New York Fed.
In 1987, when Alan Greenspan became the chairman of the Federal Reserve, he started to undermine Glass-Steagall, by giving more powers to the banks to speculate.
Then, in 1999, the repeal of Glass-Steagall occurred, and since that time, you have had an orgy of deregulation in the United States and in Europe. And a casino economy developed worldwide. Step by step, out of the financial system, a monster developed! Now, that formulation, “monster,” is not from me, but it comes from Horst Köhler, the former President of Germany, and he was the head of the IMF at one point. And we are dealing with a monster.
John Perkins, who wrote the autobiographical work, Confession of an Economic Hit Man, described with what method this system is operating toward the Third World. And if you look at the long list of crimes which the banking system has, for a long time, engaged in, you see that it long ago stopped being the servant of industry, which is what a banking system should be. They’re not working in the interest of the general welfare, as it is demanded in the Preamble of the U.S. Constitution.
The bankers have cheated their customers, again and again: The Libor scandal, which went on for decades, cheated customers in the three-digit billions; the “too big to fail” banks, the so-called G-SIFIs—global systemically important financial institutions; they have swindled their customers by selling worthless paper, like Goldman Sachs and many others; they have cooked the figures to cheat to get Greece into the euro; the Hongkong and Shanghai Banking Corp. laundered the Mexico drug money, and made $80 billion profit—and when they were hit with a $1.9 billion fine, and they had calculated that based on their operating costs, this was nothing but a slap on the wrist.
So, Viktor Ivanov, who is the Russian drug czar, together with Antonio Maria Costa, who was the UN drug czar, both made, repeatedly, the point that the entire banking system would have long gone bankrupt, but for the influx of money laundered from the international drug trade.
A Giant Ponzi Scheme
I could go on with that list. I just wanted to identify what we are dealing with: that we are not dealing with bankers and a banking system which is not legitimate, or nice; we’re dealing with a system which has become systemically criminal. For example, the Madoff scandal, in which the former chairman of Nasdaq stock exchange swindled his customers in a Ponzi scheme, whereby they lost $50 billion.
Since the deregulation of the system, I have repeatedly made the point that the entire international financial system is nothing but a big Ponzi scheme. They deliberately create bubbles, appealing to the greed and the profit hunger of the people through gambling; they lure small investors into this, and then cheat them, so you have a gigantic system of transfer from the poor to the rich. They create bubbles: the New Economy bubble, the so-called dot.com bubble, which popped in March 2000, where only $16 trillion were wiped out, and a lot of people were cheated. Then, the secondary mortgage bubble which popped in July 2007, and where, again, prophetically, my husband had warned one week earlier, that this would happen, and that all we would see after that would be the disintegration of the world financial system—and he was absolutely on the mark.
Then, on the 15th of September in 2008, when Lehman Brothers collapsed, this, for a very short period, sent a shockwave around the world. And they invented the so-called bailout instrument, which was essentially a way of transforming private gambling debt into public state debt, and making the taxpayer pay.
That was combined with brutal austerity through the Troika—the IMF, ECB, and the EU Commission—and they destroyed about 30% of the real economy in Greece, Spain, Italy, Portugal; they ruined health systems, increased the suicide rates—in one year alone in Greece, more than a thousand people committed suicide out of desperation, and these were figures from 2010. In Greece, you have today, 64.2% youth unemployment; 60% in Spain! These countries are being turned into Third World countries.
This has been named by the United Nations, a “human rights violation.” Manuel Alegre [of Portugal] has said that what the EU policy is doing to all of Europe right now is turning it into a concentration camp, where those who are not yet going to the slaughterhouse should not rejoice, because they will be next.
So, it is a big mistake to think that all of this does not affect you. Because, in the United States, you already have pockets like Greece: Look at Detroit. Detroit used to be the fourth-largest city; it had the highest per-capita income in the 1960s, and since 1960, it has lost 63% of its population; 40% of the street lights don’t function; 60% of the children are living in poverty; less than 50% of the people living there work; 47% of the population in Detroit are functionally illiterate. The murder rate is 11 times higher than in New York, and only 10% of the crimes are being solved because the police force has been cut back so much.
The bailout instrument which has been used for five years—and somewhere between $24-30 trillion has been pumped in, to keep this afloat—has come to a certain end, because we are looking at the potential of immediate hyperinflation. So, [Fed chairman Ben] Bernanke has announced that he would slow down quantitative easing, which immediately led to an extreme volatility in the markets; the emerging market figures collapsed, and the markets reacted with extreme nervousness.
Morgan Makes It Official
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If you want to see what’s in store for every American city, look at Detroit: Since 1960, it has lost 63% of its population; 47% of the people are functionally illiterate. Shown: the former Detroit Public Schools Book Depository.
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View full sizeNow, if you look at the permanent bailout fund which has been created in Europe, the ESM [the European Stability Mechanism], there is a only a ridiculously small amount of EU500 billion in it; the Financial Times just had a column by Wolfgang Münchau, where he said that this is ridiculous, because this bailout fund is standing against EU2.5 trillion of probable bad debt in European banks alone.
So the European crisis is fully coming back. Italy will soon need a new package; Spain, Portugal, Greece, Cyprus, and then, the next big one will be France. So therefore, this can not be done with normal means. So, recently J.P. Morgan published a research paper with the title: “The Euro Area Adjustment: About Halfway There,” meaning halfway toward a banking dictatorship which has already been established—no national sovereignty any more—but saying that the obstacle is still the so-called political legacy of countries of the southern periphery—meaning Greece, Italy, Spain, and so forth: that they still have constitutions which were made in the postwar period, and therefore have anti-fascist guidelines in them, so that has to be broken. And because the political systems of these countries typically have such features as “weak executives; weak central states relative to the regions; constitutional protection of labor rights; consensus building systems which foster political clientalism; and the right to protest if unwelcome changes are made to the political status quo.” Meaning the right to demonstrate against unjust policies.
“The shortcomings of this political legacy have been revealed by the crisis. Countries around the periphery have only been partially successful in producing fiscal and economic reform agendas, with governments constrained by constitutions (Portugal), powerful regions (Spain), and the rise of populist parties (Italy and Greece).”
Now, this is unbelievable! If you eliminate the bankers’ talk from what they’re writing here, what they’re saying is, when people are demonstrating to keep their jobs, that has to go. Trade union rights have to go. Human rights have to go. Democracy has to go. And I can assure you, much of this has already been eliminated in Europe!
The BIS, the Bank of International Settlements, at their annual meeting on the June 23, went even a step further, and said quantitative easing has to stop. Instead, there should be brutal austerity combined with the bail-in policy. The bail-in instrument has been worked on since 2009, by the Financial Stability Board, which is located in the building of the BIS in Basel, Switzerland. And the line with which this is sold is to say, “Oh, no longer should we have bailout packages, the taxpayer should no longer pay. But the banks themselves, the stockholders, the rich people, they should now pay.”
That’s obviously a whole bunch of baloney, because if you look at what the bail-in does—the so-called “Cyprus template”—at a certain point, when it was clear that Cyprus was reaching a point of insolvency, they gave a “haircut” of 60% to the two largest banks; and in the three months since that happened, the real economy of Cyprus has shrunk by 70%. This country is flat: bankruptcies, unemployment; already there is a reduction in the life-expectancy. And this is just finishing off Cyprus! Cyprus under the present regime has no chance to come back!
So, the EU Commission, which, together with the Financial Stability Board, worked on the legislation for the bail-in, admits that this law was written by the ISDA, the International Swaps and Derivatives Association. And if you look up what that is, it is made up of the 28 too-big-to-fail banks! So they write a law that the politicians are supposed to carry out, and the bail-in simply means that there will be a hierarchy of creditors who will have to pay, butderivatives are exempt. Because, as they write in their explanation, some people are mistaken in thinking that derivatives are a normal form of capital, and therefore, think, for reasons of fairness, that they should also have a haircut, but this is not so; the derivatives should be exempt. And then the bondholders, the shareholders, the people who have deposits, should all be asked to contribute.
The Intention: Shorter Lives
Now, the EU finance ministers this week agreed on this legislation of the EU Commission, and this will now go to the European Parliament to be voted on by the end of the year. So this is supposed to be the first step in the direction of a banking union, where the European Central Bank would be the bank supervision, and then the European Stability Mechanism would be put together with the cross-border resolution authority in one institution.
That means that the German savings banks would have to pay, and therefore, the people who have little deposits in these banks, pay, if, for example, a big French bank goes belly-up—and that will happen fairly soon, as we are absolutely certain of.
The Belgian online publication Express.be just reported that the EU finance ministers meeting which took place this week, based itself on a paper from the Boston Consulting Group (BCG), which is the second-largest management consultancy, a paper they wrote in 2011, which is basically a game-plan for wiping out large chunks of the financial assets at a stroke. They say that the financial system is so overindebted, that you have to have a drastic haircut, 34% across-the-board in Europe, 26% in the United States, 27% in the U.K., 47% in Greece, 56% in Spain, 57% in Portugal.
Now, if you do that, in the highly industrialized parts of Europe in the same way as the agricultural regions, you are, on the spot, killing people on a mass basis. Because this goes along with cuts in health care, cuts in pensions, and destruction of the real economy.
Then they say in this paper from the Boston Consulting Group, “There would have to be a clear commitment by the European governments to address the pressing issue of age-related spending increases.” Now, what that means, as you know, you have a demographic development—in Germany for example, where a lot of people are now above pension age, and you have a very slow birth rate, and therefore, there is a certain problem—which you could easily solve: If you had 3% economic growth, you could solve this problem with no trouble. But if you have zero growth, or negative growth, as we have it now, naturally these people, they think instead of a Nazi-style euthanasia, by wiping out pensions, social security, raising the retirement age, which for some people may function because they want to work, but some people who have worked very hard, who have creaky bones when they get into pension age, it is shortening their lives! And that is intended.
So this measure, this sudden haircut, would cause a deleveraging, and would risk social unrest, they say. It would cause a social explosion.
Wolfgang Schäuble, the German finance minister, at this recent meeting, proposed an 8% across-the-board cut, which was rejected, but, the BCG says, 30% and more will be needed to get out of this crisis.
This is totally insane, because it would lead to mass deaths in Europe and in the United States, and it would not even address the fundamental problem, namely the $1.4 quadrillion outstanding derivatives contracts, which according to the ISDA are to be exempt from the haircut. It would kill the people, and keep the virtual assets of the speculators.
Top EU Commission officials recently discussed, in a private circle—and we have learned from extremely reliable people who participated in these discussions—that it’s too bad, but we have to reduce life-expectancy to 66 years—we can’t pay these pensions.
Also, it is discussed in Europe at this point, that the national budgets, this year, will have to pay an additional hundred billion euros or so into this European fund which is supposed to be created.
So, the bail-in policy would wipe out everything that is good—the real economy, wages, pensions, social systems; and it would keep the worthless speculative area alive. Therefore, we absolutely have to go on the warpath, and say: “No more bailout, and no more bail-in!” We have to stop the robbery against the part of the economy which is still productive, stop that which enhances the waste system. This is why LaRouche has basically proposed recently that the United States has to call in all those unpayable debts from the big London and European banks, and that has to be done preemptively, before this bail-in policy sets in. It has to be done now. It would be the equivalent of an immediate margin call to that debt, and then the utter bankruptcy of these banks and their U.S. counterparts will be obvious.
Obviously, it has to be followed, instantly, with the implementation of Glass-Steagall by the U.S. Congress, and something like a Resolution Trust Corp. could be created, which was used in the Savings & Loan crisis. Glass-Steagall would then separate the banks: You would put the commercial banks under state protection, and the investment banks will have to take care of themselves, without taxpayer money, without bailouts; and if their books then reveal they’re in the red, too bad; then they have to declare insolvency.
So, then, naturally, it has to be followed by a credit system, which immediately restores growth, creates productive full employment, and, as we all have worked on for quite some while, and will hear more about, NAWAPA has to be the immediate driver of the U.S. economy, creating 6 million jobs, as only the beginning.
A Global Versailles Treaty
Let’s look briefly at the history of what we are dealing with. Because the BIS-EU Commission-J.P. Morgan bail-in scheme is, de facto, a repeat of what the Versailles Treaty did to Germany after the First World War—only this time, they want to apply a Versailles Treaty to the whole world.
Bildarchiv/Creative Commons
The Versailles Treaty imposed the entire cost of World War I on Germany. To pay the reparations, the Reichsbank turned on the printing presses, leading to the famous Weimar hyperinflation. Here, thousands demonstrate against the Treaty in front of the German Reichstag, May 1919.
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At the end of World War I, the Allies came up with the verdict that Germany was the sole guilty party of World War I, which no honest historian today is claiming any more, and it is completely absurd, if you consider the British role in the geopolitical manipulation of the chessboard, which started with the ouster of Bismarck as the Chancellor, after Bismarck had transformed Germany from a feudal state into a highly industrialized nation, based on the American System of economy! Because Bismarck completely changed after he learned the theories of Henry C. Carey, and started to reject free trade, and establish protectionism instead.
Out of this, came the building of the Trans-Siberian Railroad, between Germany and Russia, and other parts of Europe; and that was why, then, the British came up with the theory of geopolitics: Mackinder, Milner, and Haushofer, saying that whoever controls the Eurasian heartland, will control the planet. And this puts at a disadvantage the Atlantic rim countries.
The British role in preparing the stage for World War I, is well documented, and you can find it in our publications. The Versailles Treaty put the entire war preparation cost on Germany, which at that point was 169 billion gold marks. This was 295% of the German Gross Domestic Product, which, if you apply that for U.S. figures for 2012, where the Gross Domestic Product is $15 trillion, it would be the equivalent $44.25 trillion, the U.S. would have to pay! Or $4.425 quadrillion over three generations.
These payments were demanded by France, Britain, Belgium, and Italy, which, in turn, owed the funds to the City of London and Wall Street. And one of the banks that mediated that was the Morgan bank, run by J.P. Morgan, Jr.—John Pierpont Morgan, Jr.—and according to the statement of the bank itself, it played a significant role in the financial victory for the Allies. For example, in September 1915, it financed an Anglo-French loan of $500 million, which was the largest loan that Wall Street, at that time, had ever made; and it was used to buy weapons, because J.P. Morgan was also the U.S. Commissioner for this period.
Now, there was no way the German economy could pay this. So, as is known, the Reichsbank started to print money, and by the spring of 1923 when the French Prime Minister Poincaré and the Belgian King said we want more payments, and the Germans couldn’t pay, they occupied the Rhineland to confiscate the coal directly. And then, between Spring ’23 and November, the hyperinflation exploded, and the whole thing came to a standstill, where people, at the end, were bringing reichsmarks in wheelbarrows until 12 o’clock, because at 12 o’clock the next inflation rate was fixed, and the money was worth nothing any more.
At that point, the Allies designated ten banks from five countries under the leadership of Charles Dawes, a banker selected by J.P. Morgan, aided by Owen Young, another J.P. Morgan banker, and in 1924, the Dawes Plan was signed in London. It included a reform, under which the French and Belgian troops were withdrawn, there was a reduction in the yearly payments, a reform of the Reichsbank, and the Allies decided to put in Hjalmar Schacht as a director of the Reichsbank. He was a board member of Dresdnerbank and a founder of the German Democratic Party.
Schacht worked closely with J.P. Morgan, and they issued an 800 billion reichsmark bond, supposedly for industrial and infrastructure development, to enable Germany to pay back more of these reparations. In reality, that money went largely into a network of financial firms which were allied with J.P. Morgan—IG Farben and others—who became the financiers of Hitler.
And Then Came the Crash
In 1928, it was clear that Germany could not pay these exorbitant sums, and they decided on a new bailout plan, the Young Plan, who again was a Morgan banker. Now, the negotiations to implement that started in February 1929, between Schacht and J.P. Morgan, who was the U.S. negotiator. But then came the big Wall Street crash in October ’29, and nobody could give any credits any more to anybody. And at that point, Germany was put under an extremeausterity regime under Chancellor Brüning, which caused, between 1929 and 1932, unemployment to rise from 1.5 million to 6 million—without which, Hitler would not have been able to take power. And naturally, Hitler was financed by some bankers from London and New York, Montagu Norman, Averell Harriman, Prescott Bush. There was a big affinity with the American Eugenics Society, which had worked with the Nazis since the 1920s, because they liked Hitler’s race policy.
These were the circles who were involved in the coup attempt against Franklin D. Roosevelt, who tried to convince Maj. Gen. Smedley Butler to make a coup against Roosevelt, which did not function, because Butler revealed it to the U.S. Congress and the media.1 So this is what we are dealing with. And obviously, by their own admission, these people, such as the Boston Consulting Group and others, have put themselves in that tradition, by referring to the 1930s.
The lesson to be learned from all of this, is that the combination of the debt tyranny and Schachtian economics breeds fascism. When the BCG says, “Programs we describe would be dramatic, and they would not be popular. The longer politicians wait before they implement them, the more necessary they will become. Unfortunately, reaching a consensus is a tough question and might require an environment last seen in the 1930s.” Now, that is the policy which the EU finance ministers just agreed on, with their bail-in policy: It’s open fascism.
In 1971, Lyndon LaRouche debated one of the leading Keynesian economists, Abba Lerner, at Queens College in New York, and he got Abba Lerner to admit: He said, “If people would have accepted Hjalmar Schacht, we would not have needed Hitler.” Now, the EU finance ministers just accepted Schacht.
The trans-Atlantic world is in a debt trap just like the Versailles Treaty. The quadrillions that Germany had to pay are the equivalent of the quadrillions in outstanding derivatives, which are presently about $1.4 quadrillion. And if you reduce that by half, because this is the amount which goes to the counterparty in the derivative contracts, it still would leave a sum between $700 and $800 trillion as compared to a meager EU500 billion in the European Stability Mechanism!
The Versailles bail-in policy holds the world hostage to the past. And as you know, that led to World War II, hyperinflation, and the Great Depression. Today, I can assure you, if we don’t change that, it will lead to World War III, but much faster. Because if you look at the situation in Syria and Iran, which is already a powder keg, one more step, and this will go into an escalation without any stopping it.
There was recently a paper published in the Strategic Studies Quarterly, of the U.S. Air Force, which said, blatantly, that the previous NATO strategy of Mutual Assured Destruction (MAD) is no longer valid, meaning that you can not use thermonuclear weapons, because if you do, then everybody eliminates each other, and there’s nothing left; because, they argue, now, new technologies have developed, which allow you to take out the nuclear arsenal of your opponent, without nuclear fallout.
That is going from MAD to sheer madness!
Realize Cusa’s Mission
Creative Commons
Nicholas of Cusa’s concept, that Man is endowed by God with inalienable rights, is the principle on which the American Republic was founded. Shown: “Writing the Declaration of Independence, 1776,” by Jean Leon Gerome Ferris (ca. 1921), featuring Franklin, Adams, and Jefferson.
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Now, the Glass-Steagall policy, and what FDR did, has shown how we can get out of the depression. Lyn, in the webcast last evening [June 28; http://larouchepac.com/], which you should absolutely all look at, called for a national campaign for the real Glass-Steagall; what it really means: What are the principles of a credit system? What is the image of man associated with it? And I think we have to be committed to a sacred mission in the United States to adopt Glass-Steagall. Because the United States cando it! Because you have the precious good of national sovereignty, even if it’s in danger. You have the Preamble of the Constitution; you have the Declaration of Independence; and this is a very, very precious good.
Because if you look at the evolution of the sovereign nation-state, it was combined with enormous struggles. It’s not something which evidently was there! Because in the Middle Ages, you had imperial structures; the papacy, and the emperors, were a universal system, and you did not have states. So, it took enormous struggles to come to the first sovereign states, which were implemented in England by Henry VII Tudor, and in France by Louis XI, and in Sicily by Frederick II Hohenstaufen.
But it took Nicholas of Cusa and his very important, groundbreaking writing of theConcordantia Catholica, where, for the first time, the representative system was elaborated, including the idea of the equality of all human beings before the law, defining that government has a legitimacy, only with the consensus of the governed.
This, obviously, is a real question, in light of the recent NSA developments, because there is no consent of the governed. And I think that that has to be invoked again.
Nicholas said that this consent of the governed to be ruled, is a human right, not only for Germany, but for all people in the world. He said, even in places far away like Ethiopia, people should have the same right. So, he defined it as a universal principle.
He also said that all legitimate authority results out of the chosen concordance, and the voluntary submission of the governed, because of the fact that all human beings are endowed with equal natural rights; that there is a divine seed, so that all authority, which comes from God, as from man himself, is regarded as divine if it results from the consent of the governed. Therefore, a system of equality before the law, the representative system, where the representative has to fight for the rights of the governed, and represent the right of the government, is the only way that the inalienable rights of all individuals can be protected.
This was written by Nicholas of Cusa in 1433, and it took exactly 343 years before it was realized in the U.S. Declaration of Independence and Constitution.
Now, in Europe, we have some constitutions which are approximations of this, but never in the forceful way that the American Constitution defines it. Also, we lost all sovereignty already to the EU dictatorship.
Therefore, that leaves a very special responsibility to you, to the American people, and to the U.S. Congress, because it is the representative of exactly this representative system.
So let’s organize a passionate campaign, to say what we used to say in 1945: “Never again!” I appeal to you, the American people, to once again save the world from fascism.
We have a world drama, but it does not take place on the stage. It is real history, and we, our organization, are the main actors. So let’s make sure it does not end as a tragedy, but instead, it is the beginning of a new paradigm, of a second American Revolution, and a new Renaissance for all of Mankind.
1. See “Wall Street Backed the Plot To Kill FDR,” EIR, Oct. 21, 2011.
Transcript
Dear friends of the Schiller Institute, distinguished guests from many countries: We are coming here together at the fourth conference of the Schiller Institute within less than five months, because we are determined to inspire a new paradigm in the history of mankind, a paradigm which is reflected in the true identity of the human species, man as a cognitive being whose identity is that of a creative species, where each individual on the planet, in principle, has a limitless potential for self-perfection.
The sense of identity must be governed by that innate creative potential, not only to develop our own creative abilities, all the potential abilities innate in us, but to do so with the explicit desire to contribute one’s own life to the further development of the human species as a whole; so that, when our own life comes to an end, since we are all mortal beings, that we can die with the certainty that we have contributed with all our ability to the progress and progression of mankind, to the best of all our possibilities; that we have, with our life, added something to ennoble our species.
And it is with that vision, that in the new paradigm, the relations among human beings will be guided by agape;the relations among nations will be guided by the fact that we are happy about the development of the other nation, and that we understand that harmony, concordance on the planet, and in the future beyond that, is only possible through the development of all human beings and all nations, in a vice versa relationship.
This new paradigm must also be guided by a new method of thinking: It is the method which Beethoven has called “so streng wie frei,” “as rigorous as free.” It’s Schiller’s idea of achieving freedom through necessity, and the only condition in which this is possible is the beautiful soul, according to Schiller—the person who does what is necessary with joy, who finds his freedom in fulfilling necessity, and for whom duty and compassion are the same thing. And as Schiller correctly said, the only individual for whom this is possible, is the creative genius.Now the future paradigm has to be guided by love for mankind, by compassion, and joy in the realization of the creative potential of all other individuals. In the same way that we are joyful about the compositions of Beethoven, or the great poems and dramas of Schiller, or the discoveries of Leibniz and Einstein, or the elevated perspective of our astronauts and cosmonauts, when we as human beings relate to each other, as scientists do, discovering a new principle, discussing the hypothesis of how mankind can progress as artists, communicating metaphors about a better future condition of civilization.
Now, this image of man must be the basis of the new paradigm if mankind is to survive. And it is only from this positive vision of the future that we will mobilize the moral strength and courageous energy to replace this present paradigm, which is completely based on depravity and evil.
The Present Road to Catastrophe
Now, with the present paradigm, it is very clear, that we are, as a civilization, on the direct road to a catastrophe. We are now experiencing the full disintegration of the trans-Atlantic financial system: between the quantitative easing, hyperinflation, and quantitative stealing, we see right now the most brutal expropriation scheme, expressed in what the new head of the Eurogroup, Dijsselbloem, called the “Cyprus template,” which means the total destruction of the real economy for the sake of maintaining the life expectancy of the casino economy, for just a few weeks or months. It is combined with a violent attack on the living standards and life-expectancy of the population. It is killing people by the millions!
The second fundamental danger, which is coming from the same source, is the danger of thermonuclear war. Because even if the crisis around the Korean Peninsula can be contained, which people on that peninsula hope very much, if you look at the totality, you have the Syria situation spinning out of control; you have the danger of a strike against Iran; and it could very well be that Southwest Asia develops into the cockpit for World War III. Now, it seems that in light of all of these dangers, which everybody can see, nevertheless, the governments of this world are not doing anything efficient to get the world on a different course. So, it seems that civilization is almost on autopilot toward self-destruction.
In light of this mortal danger, there is almost no public debate about what is really important. The public debates, as they’re raised by governments, politicians, the media, are completely trivial, in light of what we really are facing. In reality, we have a truly murderous expropriation scheme underway. We are threatened with a new fascism, we are losing democracy, we are losing our constitutions! The trade unions are losing all the labor rights which have been fought for, literally for centuries. We are losing the social welfare state. We are losing all accomplishments of civil and human rights, without there being any public outcry.
It is exactly the process which started, really, with the death of Franklin D. Roosevelt, and which was basically a fight, where the oligarchy was determined to eliminate the axioms which had made Franklin D. Roosevelt possible. And I must say that I’m very happy that Lyn is here, because, if you reflect over the last 40 or even 50 years, or in Lyn’s case even longer, he has been the one individual who has pointed to each change of the paradigm in the negative direction. It was Lyn, who on Aug. 15, 1971, in an absolutely visionary way, said, if this paradigm is continued, and if we continue on this road of monetarism—this was really the beginning, with Nixon’s decoupling the dollar from the gold reserve standard, by eliminating the fixed exchange rates, and by creating the casino bubble, or starting this money creation in offshore islands—it will lead to a new depression and a new danger of fascism.
Now, if you look at the series of deregulations which took place in the ’70s and the ’80s, ever more away from production, toward speculation, the next major blow was the repeal of Glass-Steagall in 1999. This was really the absolute escalation of this present bubble economy, the creation of the so-called “creative financial instruments,” the derivatives market. Then came the final blowout in July 2007, when Lyn made the famous webcast on July 25, one week before the crisis erupted, saying the system is hopelessly bankrupt and all that we are going to see now, is how the different elements of the destruction will come to the surface.
Lyn immediately introduced the Homeowners and Bank Protection Act, which would have stopped the disintegration right there. We had, at that point. tremendous support in the Congress, among the mayors and the state legislators in the United States; but you had the brutal intervention of such evil individuals as Felix Rohatyn and others representing Wall Street, and the Congress, at that point, capitulated.
Shortly thereafter, on Sept. 15, 2008, you had the Gau [worst-case scenario], the threat of a systemic collapse, from the collapse of Lehman Brothers and AIG. And for a very short period of time, the international governments and financial community and many others were so shocked, that they considered, for a very brief moment, to return to the Roosevelt idea of a Bretton Woods, in the form of a New Bretton Woods; but instead, at the next G8 meeting, they decided to go for the most gigantic bailout process ever. In the United States, and in Europe, they literally put in trillions of dollars and euros, maybe up to 30 trillion altogether. And I think some of you may still remember the famous words of Federal Chancellor Merkel, ((Press conference http://articles.marketwatch.com/keyword/merkel/recent/4 with British Prime Minister David Cameron, June 7, 2012.)) who said at some point: We don’t have to worry, because the EU has provided us with a magnificent toolbox. So we will take these tools as they are needed, and these tools will be sufficient to fix the problem.
The EU ‘Toolbox’
This EU toolbox was designed after the British example, and Merkel declared that you all can be confident, because your savings, at least up to EU100,000, will be absolutely safe. The first tool which was taken out of this toolbox was the bailout mechanism, which was essentially a scheme to transform the private debt of high-risk speculators, into public debt. It was the idea to turn the speculative gambling debt into state debt; so all of a sudden, the states were indebted, while the managers received big bonuses, and the banks, being saved this way, continued their speculation against the very states which had just bailed them out, impoverishing the population ever more, because now the state debt had to be compensated for with draconian austerity programs, in the tradition of Brüning, and for the sake of the sacred cow of balanced budgets, fiscal pacts—and so, they proceeded with absolutely brutal cuts.
So, as a result, the countries of Southern Europe are dying: Greece, Italy, Spain, Portugal, have experienced a complete destruction of their economies. And then came the Cyprus crisis, and the famous “Cyprus template,” as it was called by Dijsselbloem.
First, they had the proposal to tax the deposits of up to EU100,000 by 6.75% and almost 10% for those above, which was rejected by the Cyprus Parliament. Then, finally, they said the “Cyprus template” is what we mean by the “bail-in” tool.
Now, in investigating this more deeply, it turns out this tool was in preparation for a long period of time. It was discussed and worked out in a paper by the Bank of England and the FDIC in the United States. It was supposed to steal deposits on behalf of the so-called “G-SIFI,” the “global systemically important financial institutions.” And if you look at that paper of the BOE-FDIC, it has relatively tame language, as compared to a paper by the EU Commission already written in 2011, namely, the “Discussion Paper on Debt Write-Down Tool—Bail-In.”
What they basically prescribe there, is, rather than relying on the taxpayers for another round of bailouts, they came up with the scheme to stop the contagion by allowing the public authorities to spread the unmanageable debt of the banks to the shareholders and creditor-depositors. And they called this the “debt write-down tool.”
This tool, they say, should be “efficient and avoid any circumvention.” But the most scandalous formulation in this text is: “Liabilities originated on derivatives exposures should also, in principle, be included in the scope of the tool. However, the effective application of the tool to those exposures is not as legally straightforward as for other types of liabilities and it may raise some concerns in terms of financial stability.” Now, if you free that language from the usual bankers’ gobbledygook, what it actually says is: Burning the derivative debt might be legally too complex to carry out and have grave implications for financial stability; or it would blow out the system right away, so therefore, let’s pay the derivatives debt, and instead seize the depositors’ money, which is legally easier to take, because they cannot resist it, and it does not pose a grave risk to financial stability.
So theft from the depositors is easier, and it really gives new meaning to the famous phrase of Bertolt Brecht, ((In The Threepenny Opera.)) who I (as an exception) want to quote, who says that it’s one thing to rob a bank to make a lot of money, but if you create a bank, you make a lot more money.
And everybody who brings their money into a bank from now on should know, that the moment you give your money to the bank, the bank owns the moneyde facto, and is at liberty to grab it. Because this is what the “Cyprus template” really means, where, in one case in Cyprus, they cut 40% of deposits in one bank, and all others, above EU100,000, were taxed. And EU100,000—you know, you should not fall for the spin! Because, they say, “Finally we forced the banks to contribute to the bailout!” Well, EU100,000 is easily the operating capital of any small firm to pay wages, materials costs, and so forth. So it’s really a complete, deliberate destruction of the economy.
So this is one form, and the other form is, like in Spain, where they encouraged, or basically forced more or less, more than 1 million households into buying so-called “preferential stocks”—the preferentes—of banks, and then, in the case of one large bank, Bankia, they just said, “Sorry, we’re writing down the debt of this bankrupt bank, so all of you who have stock will lose more than 99%—so, too bad!”
So that is just simple theft, it’s a crime, it’s robbery. And this is exactly what preceded the implementation of Glass-Steagall in 1933, when, in the case of National City Bank and National City Company, the depositors and employees were also forced to buy stocks, and then the National City Company speculated in these, and those who were insiders in these speculations made a lot of money out of it, and filled their pockets with it. Then, in the wake of the crash of 1929, and in the following years, 1930, 1931, these depositors lost most of their money, their life savings were gone, while National City Bank remained open. It was one case of “too big to fail.” So, this proceeded until the FDR came in, and the Pecora hearings.
Franklin D. Roosevelt closed all the banks, and declared a banking holiday for 11 days, and made, in that period, a thorough inspection of all 14,000 banks in the United States, forced them to write off worthless securities, and 4,000 of these banks were closed permanently. Other categories of banks that were sound, but lacked liquidity, were provided with that liquidity through the Reconstruction Finance Corp., and then the sounder banks were allowed to open again. Under the Glass-Steagall Act, the commercial banks from then on, were inspected quarterly by the Federal Reserve, to make sure that they would not return to the gambling procedure as before.
Ferdinand Pecora describes in great detail, in a very nice booklet called Wall Street Under Oath, how he interrogated all the CEOs of the big Wall Street banks and how amazing admissions came out that they didn’t even know the scope of their taxes, because they had never paid them in their whole life, and things like that.
The Cyprus Template
So, if you look at how the Glass-Steagall Act and the Pecora Commission ended the Depression in the United States, and if you compare what these EU guidelines are proposing, you can see that it is the exact opposite: That what the EU is now preparing, is a guideline, which was admitted by [European Commissioner for Economic and Monetary Affairs] Olli Rehn, to make the Cyprus template the new guideline for the entire EU, which can be applied whenever you have to save the so-called systemically relevant banks. That means that the derivatives speculation will be protected, and they want to have absolutely murderous austerity for the people and the nations.
And if you only look at the result this has caused so far, you have Greece, which has been turned into a Third World country, where young children and students are looking in the garbage cans for food; where children come to school and cannot follow the what the teachers are saying, because they’re malnourished, they’re hungry, and they can’t concentrate! In Italy, the suicide rate is going up. Greece and Spain have youth unemployment around 60%! Portugal is disintegrating.
In Great Britain, there is going on right now, the total slashing of the social system: 660,000 households which have received rent subsidies, have now had to move to smaller apartments or face reduction of their subsidies. But since there are not enough small flats, and since the free access to legal services has been cut, many of these people are ending up on the streets. The social payments are no longer indexed to inflation, and even the government admits that all these measures will send at least 200,000 children below the poverty line. At the same time, they have reduced the income tax for millionaires by 5%, which means they will earn £100,000 more per year.
Large categories of disabled people no longer are recognized as disabled, and have to pay for their care and transport themselves. In many cases, five or six services are being cut out at the same time. The needy are no longer receiving even a tiny amount of money: Instead, they get food stamps or coupons for the soup kitchens.
In the United States, the same thing is going on with the new Obama budget. Obama wants to cut $1.2 trillion over ten years: out of this, $400 billion from Medicare, which is killing old people; $200 billion from Social Security; $380 billion through the so-called chained CPI, which is behavioral economics gobbledygook, which says that if you have an increase in the price of beef, well, then just buy chicken and you won’t feel the inflation in the beef price! And this is only the beginning.
The Cyprus template gives people a very mild foretaste of things to come. Basically, after the Lehman Brothers crisis in 2008, nothing was done to write off the toxic waste, and nobody knows the exact figure, because all of these derivatives are traded in OTC arrangements, over the counter, so no central bank, no government, no authority knows the amount. Then you have the huge shadow banking sector, which is probably bigger than the official sector. And French economist Jacques Attali in 2010 said it may be as much as $1.4 quadrillion! And in Europe alone, the derivatives market is supposed to be $230 trillion of outstanding derivative contracts.
So if this derivatives bubble bursts, you will have a larger blowup than was threatened after Lehman Brothers, because the whole system is filled with much more hot air and virtual money than it was then. It could come then, to a complete systemic collapse.
One has to consider that the “template” remark by Dijsselbloem was not really an accident. It was part of a strategy to get the population used to the idea that their income will be stolen, because this is the only method which is left: to take the savings and deposits of the population. And it should be also clear that under these conditions, the deposits up to EU100,000 are not safe! Because they cannot be: If you calculate all the people who have up to EU100,000, the banks in no way can ever pay this, because you are looking at several trillion, which would have to be compensated for, in Germany alone, for people who have these savings. And this money is not there, except if you print it, which is actually happening already with the quantitative easing of Mario Draghi, Ben Bernanke, and now also the Bank of Japan.
So, if you look at these things together: You have the brutal, murderous Troika austerity, the bail-in bank robbery, and you have now the entire world financial system at a hopeless point of collapse.
Fight for Survival
So therefore, the only remedy, which we have to discuss at this conference—and I want people, through the different presentations today and tomorrow, to go out of this conference with the absolute resolve that Glass-Steagall must be implemented, and it can be implemented, exactly as Franklin D. Roosevelt provided the example, because this is the absolute necessary first step, to prevent an unimaginable social explosion, which nobody can imagine the consequences of.
It is also obvious that the EU Commission, the Obama Administration, and the British oligarchy in general, want to use this crisis to go for a final dictatorship. When the new U.S. Secretary of the Treasury, Jack Lew, was in Europe and met with the EU Commission, they issued a joint statement that they want to use the new “resolution tools,” which is exactly the Cyprus template, and to go for a banking union, the collectivization of the debt, a full-fledged fiscal union, and a political union—i.e., a political dictatorship in Europe.
In Southern Europe, the people have already understood that this is a fight for their survival. The measures implemented increase the death rate; there is a complete destruction of the real economy. In Germany, there is discontent, supposedly only “fatigue” by the population at being the paymaster of the whole thing; and in the meantime, the media and the politicians are still successfully playing the different peoples against each other. So the media portray the Greeks as lazy, the Cyprus crisis as being caused by the “Russian oligarchs”; in Spain, Mrs. Merkel is pictured with a [Hitler] moustache, and if you look at all these things, it’s like the blind men and the elephant: One man says the elephant is a thick column, because he happens to be the man who touches the leg; the other one says, “Oh, no, the elephant is a flexible snake,” which is the one who touches the trunk; and the third one says, “No, the elephant is a thin cord”—he happens to have the tail.
Now, it is high time that we throw off these blinders from our eyes. The monster which we are dealing with, which is threatening life on this planet, is the British Empire. The name of the game is population reduction. Every five seconds, a child under ten years of age dies, for no good reason! Because the present planet would have the potential to feed,easily, 12 billion people or more.
But the Queen of England and Prince Philip have stated repeatedly that their aim is to reduce the human population from 7 to 1 billion. And Hitler already gave the example, that through conscious starvation you can weaken groups of people up to the point of extinction. So what we are seeing right now, in terms of the Third World, and now increasingly, in terms of Europe and the United States, is exactly that kind of deliberate starving people to death.
The Threat of War
But the British Empire, which is really the combination of the financial institutions, the central banks, the investment banks, the hedge functions, the private equity funds, the insurance companies, that British Empire wants global domination, and wants to destroy, once and forever, the sovereign nation-state. And it is clear, that from that standpoint, Russia and China are the biggest obstacles.
The policy of regime-change, which, since it destroyed Iraq and Libya, is operating against Syria and Iran, really is aimed at confrontation with Russia and China. And if you look at the NATO and EU expansion after the collapse of the Soviet Union; the expansion and building of the U.S. anti-missile shield in Eastern Europe, with the Patriot deployment in Turkey; the development of the so-called “Asia pivot,” it is very, very clear that what is in preparation is a first-strike capability against Russia and China.
This was admitted in the official journal of the U.S. Air Force, Strategic Review Quarterly, about two months ago, where they claimed that the modernization of nuclear weapons, the delivery systems and targetting, in the meantime has become so precise, that it would be possible to take out, with a first strike, the nuclear arsenal of any nuclear opponent, without nuclear fallout.
Now, if you remember, both the UN Charter, but especially the Nuremberg Tribunal, clearly stated that not only a war of aggression, but the intention of a war of aggression, is committing a war crime, I think that what we are looking at is war crimes. And I mean, we have to bring these people to account. The war against Iraq, which wascompletely based on the lies of Tony Blair, who was the author of the famous memo which was used by Colin Powell in his speech in the United Nations, was all lies. Afghanistan, all based on lies.
Right now, there is a big motion by the families of the Sept. 11 World Trade Center victims, who demand that the 28 pages of the 9/11 Commission Report, which are still classified to the present day, have to be released, and you know, the truth will come out. Sept. 11 was not what the official line is, and therefore, the whole Afghanistan War was based on lies, because it was not an attack by an enemy force from Afghanistan, requiring the invoking of Article 5 of NATO.
The war against Libya was a war crime. What is going on in Syria right now, is a murderous policy against a legitimate government of Syria. And it is not even al-Qaeda and al-Nusra: The anti-drug czar of Russia, Viktor Ivanov, just made a statement saying that the rebels in Syria are financed by the transnational crime cartel, financed by the heroin from Afghanistan!
One of our speakers on the podium, Bruce Fein, made an argument in New York, that war legitimizes the killing of an enemy which, if it would not happen in the case of war, would be murder. Now, since all these wars are based on lies, that makes the initiators of these wars—that makes the British Empire, and it makes the present administration of the United States—de facto war criminals. If it comes to a thermonuclear war, which is the immediate danger of the extinction of the entire human species, then the crime is a bigger one than at any time in history. And if we cannot change this paradigm, which is extremely close, then we are no smarter than the dinosaurs who became extinct, together with about 98% of all living species, 65 million years ago.
Organizing the Future
So therefore, let me come back to the beginning: We must have a new paradigm if mankind is to survive. The absolute, necessary, irreplaceable first step must be Glass-Steagall, where we implement the Glass-Steagall law in the United States first, and then in every European country and possibly other countries around the globe, and simply wipe out all these trillions, hundreds of trillions of derivatives debt and other toxic waste.
Glass-Steagall must then be followed by a credit system, the idea that a credit system is not based on money. Money has no intrinsic value and if you need proof for that, you just have to remember December of 1923, where people used the reichsmark bills for wallpaper, because that was the cheapest paper people could have.
A credit system, on the other side, is the means to organize the future, to organize the prolonged, continuous existence of society, with the only aim to unleash the creative potential of the population, to increase productivity for the common good. So what does the sustainable existence of civilization then mean? Well, I think we have to remember that on Feb. 15, the events at Chelyabinsk in the Urals—where, not only did the asteroid pass by the Earth, which was known about in advance, but you had a meteor shower which was not detected by any agency in the West or in the East—was a very useful wakeup call: that our planet is not a self-evident phenomenon, sitting where you can only be concerned about life on the planet, but that we are situated at a very vulnerable moment in processes which are governed entirely by the Solar System and the galaxy.
Yesterday, Russian Deputy Prime Minister Rogozin made a proposal to make the meteorite danger a leading topic at the G20 conference which will take place in St. Petersburg: “The scope of the task of neutralizing the asteroid danger will require the concentration of global intellectual resources, and the scientific and technological capabilities of Russia, the United States and other countries, which will require collaboration. And that cooperation will promote trust among the countries and as a byproduct, the condition resolving the conflict over the ballistic-missile-defense crisis.”
Now, this is the option, because if we move civilization away from the present thinking of defending the past, defending the banking and monetary system, we can start thinking about how we can now invest in the kinds of things which we absolutely need as a civilization to survive. We have to think about the world from the lofty perspective of the astronauts, the cosmonauts, where several, after returning from space travel, reported that when you look from outer space at our blue planet, you don’t see borders, you don’t see military blocs, but you see, actually, one humanity.
I believe absolutely, that if we get rid of these present policies, through the combination of the policy measures which we propose—Glass-Steagall, credit system, global reconstruction—then the present paradigm, which is based entirely on depravity, on greed, on a complete lack of compassion for the suffering of billions of people, on finding pleasure in sadistic entertainment, that these will be overcome, as the childhood disease of mankind, and that we will outgrowth it. We will outgrow it, in the same way as little, nasty four-year-old boys who hit and kick their neighbors in the shins, eventually outgrow that nastiness, and become scientists and artists, and become human beings.
I believe that through the development of man, the idea of Nicolaus of Cusa, that sin is the lack of development, that evil can be overcome by intellectual development, and especially the aesthetical education of man; when we reach what Krafft Ehricke called the “extraterrestrial imperative,” namely that man becomes a species in space, that we will leave this behind us.
For those who are believers in the fact that there is a Creator, I think that the true identity of mankind is to be imago viva Dei, the living image of God, where we, as instruments of God, carry on the process of creation on the planet, and beyond. And for those who don’t believe that there is a Creator, well, you have to study the laws of the universe more deeply, and then come eventually to the same conclusion as Kepler, who said that the more you study the beauty of the laws of the universe, the more you come to the conclusion that there is a magnificent plan behind all of that.
So, with this optimism, let us proceed with this conference, and after this conference, go out with the absolute passionate love for mankind, that we are not going to allow this beautiful species, which is capable of such fantastic achievements, to die, just because we have now reached a low point. And that we will achieve, with the passion for mankind, with the love for mankind, a foretaste of what future generations will perfect.
