Bernanke Admitted, Implicitly, LaRouche Was Right and He Was Wrong In Summer-Autumn 2007

In his Sept 2, 2010 testimony to the Financial Crisis Inquiry Committee, Fed Chairman Ben Bernanke admitted, implicitly, that LaRouche was right and he was wrong, in the summer and autumn of 2007, when LaRouche insisted that the entire history of the period since the beginning of September of 2007, first under George W. Bush, Jr., and then continued at an accelerated rate under Obama, has been a general breakdown crisis of the entire world monetary-financial system, a crisis which is not limited to, but is particularly concentrated, politically, in the United States itself.

On Sept. 2, when Douglas Holtz-Eakin asked Bernanke about his 2007 assurances to Congress that the crisis would be "contained, and not spill over," the latter replied, "The thinking was that if house prices did come down some — and that 25%-30% was not really what people were contemplating, but if they did come down some, that the economy could manage that OK. And when I said what I said, it was based on the observation that even under very bad scenarios, the total losses in subprime, adjustable rate mortgages, for example, were unlikely to be more than, say, $300 or $400 billion, which is a lot of money, obviously, but compared to global financial markets, where there's $60 trillion of equity value in markets around the world, it was just a very small amount of money. So, you know, the loss of $300-400 billion of equity value would do almost nothing to the world economy.

"But what happened here was that the financial system had these vulnerabilities and weaknesses, which I talked about in my longer testimony [today]. And what was a relatively small factor in the scheme of things triggered these weaknesses and led to a much bigger crisis. And so what I did not recognize when I thought and said that this crisis was contained, was that it was based on view that the losses were going to be, you know, manageable. What I did not recognize was the extent to which the system had flaws and weaknesses in it that were going to amplify the initial shock from subprime and make it into a much bigger crisis."

But well before these false reassurances of Bernanke's to the Congress, Lyndon LaRouche had dramatically and unmistakably told an international webcast audience on July 25, 2007, that, "the world monetary financial system is actually now currently in the process of disintegrating. There is no possibility of a non-collapse of the present financial system—none! It's finished, now! The present financial system can not continue to exist under any circumstances, under any Presidency, under any leadership, or any leadership of nations. Only a fundamental and sudden change in the world monetary financial system will prevent a general, immediate chain-reaction type of collapse. At what speed we don't know, but it will go on, and it will be unstoppable."

Thus, "Bernanke has admitted that he was wrong, in whoever it was he contradicted, in ignoring my warning," LaRouche said today. "And what I warned, occurred, exactly as I forecast it."

In that same July 25, 2007, webcast, LaRouche also spelled out in unmistakable terms the required emergency measures which were shortly afterwards put in legislative form as his Homeowners and Bank Protection Act (HBPA) of 2007. He said, for example, "We are at the point that we need emergency legislation to provide for non-foreclosure. Look, you've got two problems. First of all, the whole banking system of the United States, the major banks, are all bankrupt in one sense. And you can't have them closing their doors, so therefore, you're going to have to provide these banks with protection."

"And the guy who was used by the forces behind Bernanke," LaRouche said today, "to sabotage the Homeowners and Bank Protection Act, was Barney Frank, who has the misfortune of being rushing to a [Sept. 7] debate with Rachel Brown, in Massachusetts, in which I'm sure this fact will be prominently represented, that Bernanke is incompetent."