[Campaign] Central Bankers Say, "Let It Blow!"

[CEC Media Release]

Citizens Electoral Council of Australia
Media Release 9th of August 2007 
Craig Isherwood, National Secretary
PO Box 376, COBURG, VIC, 3058
Phone: 03 9354 0544 Fax: 03 9354 0166
Email: cec at cecaust.com.au
Website: http://www.cecaust.com.au 

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Central Bankers Say, "Let It Blow!"

August 7, 2007 (LPAC)--"The central bankers have decided to let [the 
system] blow up," said Lyndon LaRouche this morning... "As of now, the word 
is, 'let it blow!' If nothing changes in the meanwhile, it will probably 
happen. It will be horrible."

Consistent with this forecast, the Federal Reserve announced from its 
meeting today, that it was making no change in monetary policy or 
"outlook."

Why? LaRouche says they looked at the figures, and saw there was no way 
this could be bailed out. It simply could not be done. For a week or more, 
they counted all their fingers and toes. It's not that they were negligent; 
they saw that given the scale of the problem and of their resources, it 
would be worse if they tried to bail it out, than if they did nothing. They 
said to themselves, "If we throw our inadequate resources at this, it'll be 
a disaster!" Better save their limited resources for urgent future use. 
They had to say, "Let it go!"

To the question, "but what's their plan?", LaRouche responded: "They have 
no plan. We have the plan!"

A City of London analyst told LPAC yesterday that, "there has been no 
Greenspan-like bailout response from the world's central banks to the Bear 
Sterns and other hedge fund/investment bank disasters, and there will not 
be any." As the City of London sees it, recent statements by European 
Central Bank head Trichet indicate that it is "about time" that this 
blowout of the vast credit bubble took place, and the central banks will 
not do anything to stop it. Alan Greenspan would have done so in the past, 
but Bernanke will not do it now.

The central bankers are saying: "Let it happen, and the wilder investors 
will just have to take their losses," the source said. There will be a lot 
of damage, and many casualties, but, as far as Bear Stearns and their ilk 
are concerned, so what if they lose 25% or much more of their assets? 
Everything was far too inflated anyway. However, there is a real risk that 
the whole thing could "go over the top," the source said. There are real 
systemic risks, especially where the private equity control of the real 
economy is concerned, pension funds being threatened, and so on. But the 
view of many is that the system HAS to "get rid of all this stuff" before 
anything can function sanely again.

Along just the same lines, the lead editorial of the City's The Economist 
this week is that it is "A good time for a squeeze". The editorial says 
that "Tighter credit conditions are just what the markets need," and that 
whatever bankers and investors may say, "the recent sell-off in financial 
markets is good news. It may, at last, have brought people to their 
senses." While the frenzied US housing market could not be saved, the 
Economist says that the takeover boom might be brought under control by the 
tight credit squeeze. But the "big question now is how serious those 
consequences are likely to be." The debt markets are being hit hard." While 
the Economist fantasizes that bigger investors can survive, it does warn 
that the "biggest risk to the global economy probably lies with debt-laden 
American consumers." And, if the squeeze sets off a broader market 
meltdown, there will be trouble. "The real worry comes from a well-known 
source--the banks. They will face trouble on several fronts, and it is they 
who could turn a healthy credit squeeze into a nasty crunch." But 
essentially, the Economist endorses such a credit crunch, as does today's 
Financial Times.


See http://www.cecaust.com.au for more information, or visit 
http://www.cecaust.com.au/freecopync.html to have a copy of LaRouche's 
latest webcast on DVD and our latest New Citizen posted to you!


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