Financial Crash Is Accelerating: FDR Would Shut Wall Street Down, Fast!

December 16, 2015

"Good news! Wall Street is finished. Now let's rebuild the country."

That's the word going from LaRouchePAC rallies in Manhattan and major cities across the country with the statement, "The Financial Crash Is On: Only a Policy Revolution Can Avert Disaster." The so-called "junk debt collapse" in the American financial system is the herald of a general financial crash which can be upon us by the end of this month.

EIR Founding Editor Lyndon LaRouche issued the statement for a national mobilization because he had warned of this crash -- it's much more than a "junk bond collapse" -- and called for President Franklin Roosevelt's policies to be implemented right now, to stop it.

LaRouche said yesterday that the only certainty about this crash is that it is "accelerating at an accelerating rate, and is out of control; the control factor to stop it, is the use of President Franklin Roosevelt's policies against Wall Street, and for national economic recovery."

FDR came into office and literally stopped a crash, with a bank holiday and the Glass-Steagall Act to shut down Wall Street speculation; then issued national credit for productive employment and new productivity.

As LaRouche emphasized, this crash is already deadly. In Italy, where four banks have just failed, bank customers had their savings expropriated by the big bank "bail-in" policy, and at least one has committed suicide. In Canada, where the "energy junk bond crash" is more intense than in the United States so far, there is mass unemployment and waves of suicides of productive workers in Alberta and Saskatchewan across the border -- a warning to the United States.

Wall Street, and City of London speculative finance, have to be shut down. If we allow this crash to accelerate further, people will die. As LaRouche said, you have to protect people from dying -- no more suicides!

Putting FDR's policies back to work now, is the only alternative to accelerating chaos. Start with Glass-Steagall, to put Wall Street out of business. LaRouche is warning: Do this right now.

Restoring the Glass-Steagall shuts Wall Street speculation down in an orderly way if done immediately. Then, a Hamiltonian national bank can take care of national credit, liquidity, interest rates, all the economic factors the Federal Reserve has made a mess of. The policy is productive credit, employment and productivity per-capita.

But Obama? He has brought on this collapse, by blocking the restoration of Glass-Steagall, and by imposing "British policies": anti-technology, anti-industrial "climate change" policies.

As was so often said of Herbert Hoover, Obama sucks. He has to be removed from office, as an essential part of the solution to this economic and financial crisis.

Participate in a Live Q&A Discussion with Lyndon LaRouche tonight, 9pm EST



The Accelerating 'Junk Debt Crash'

Vulture investor and former Rothschild banker Wilbur Ross, in an interview with CNBC-TV Dec. 15, warned of a "wall of maturities of junk debt," and said the junk bond is putting pressure on higher-quality corporate debt in a "daisy chain" that started from the energy sector.

Ross said: "There are no bids for the energy bonds...So if you have a liquidity need, you've got to sell something that there's a bid for. That's starting to bring down the rest of the market." As for the junk debtors, Ross estimated they have $1.4 trillion in debt coming due and few or no options for refinancing it, especially with the Fed raising rates.

The "junk debt crash" was scarcely discussed two months ago, and has suddenly accelerated. As recently as Sept. 1 the default rate in "high-yield" corporate debt was still just about 2%; now, according to Thompson Reuters, it has quickly gone to 5%, and for energy/mining and metals companies, to 12%. To take one company, Chesapeake Oil, based in Oklahoma City, as an example, its bonds on Sept. 1 were valued at 80 cents/dollar; now they are in the 35-cent range; its stock has gone from $60 to $5; it could go any time. And Chesapeake, after only Exxon Mobil, is the largest oil producer in the United States.

The Office of Financial Research (of the U.S. Treasury) issued a financial stability report, which said distress in the junk-bond market could spread to other parts of the financial system. "Credit risks are elevated and rising for U.S. non-financial businesses and in many emerging markets. In the United States, non-financial business debt is growing rapidly, boosting leverage; in relation to GDP, it is at a historically elevated level."

That is an understatement of the corporate debt bubble. The median ratio of gross debt to earnings for the largest 1,000 non-financial companies is 2.2 for the 12 months through Sept. 30, 2015, according to an analysis by Fortuna Advisors LLC. This figure is 47% higher than it was in September 2007, the bubble year before the bank crash, when the median ratio was 1.5. A wildfire of mergers and acquisitions this year has been valued at nearly $5 trillion, the highest since the 2007 merger wave, and has added nearly $3 trillion to corporate debt.

The U.S. industrial economy continues to sag under this debt burden. The Commerce Department today reported that U.S. industrial production dropped by a large 0.6% from October to November; and now, industrial production is down for the year as well, by 1.2%. Industrial capacity utilization fell to 77.0% from 77.5%. Drilling of oil and gas wells is at the lowest level since 1999.

Suicide Rates of Young Male Unemployed Workers in Alberta and Saskatchewan Soar in Oil Bust

Suicide rates have exploded among laid-off workers in Canadian oil fields in Alberta and Saskatchewan provinces in recent months, increasing by 30 percent in the first six months of 2015, as compared to the first six months of 2014, according to Alberta's chief medical examiner. In Saskatchewan, the rate is even higher, with 19% more suicides this year than in 2014.

American statesman Lyndon LaRouche has long warned of the crash of the worthless paper of London and Wall Street, and pointed to the thousands, and perhaps millions, of middle-aged, active people driven out of the workforce, turning to drugs, driving the recent spike in the suicide rates. LaRouche pointed to the exemplary case of the Italian citizen who committed suicide last week, after his life's savings were stolen in a bail-in.

Canadian Broadcasting Corporation this week has published a story correlating Alberta's suicides with the oil field collapse. Mara Grunau, who heads the Centre for Suicide Prevention, said, "This is staggering. It's far more, far exceeds anything we would have expected." This year, calls to the Calgary Distress Centre have changed tone, and become more frequent, said counselor David Kirby. "For me it says something about the horrible human impact of what's happening in the economy." Demand for counseling services has increased by 80%, Kirby said. Another Distress Centre worker, Nancy Bergeron, said, "People are just at wit's end, and they're contemplating it, right?"

Suicides in Canada's oil-producing Saskatchewan province are reported by The Guardian to be even higher; it gives no specifics.

The Guardian's Edward Mouallem on Dec. 14 reported from Edmonton on the economic background to the suicides.

Since the collapse of the price of petroleum at the end of 2014, 40,000 oil jobs have been eliminated. Just two years ago, Alberta accounted for 87% of all new jobs (net) in Canada. The Guardian cites the case of a 26-year-old oil worker who never finished high school and was earning as much as $5,000/month. In February, he was laid off, and within a few months, he and his girlfriend were homeless, living with his parents, and he was failing to pay child support. He had sent out several hundred resumes, and was turned down for a job at MacDonald's. One social worker told The Guardian, "I talked to several people laid off after going through various concessions to keep their job, but the economy turned too quickly. Now they're having to downsize, change cities, and dispose of all their toys, like their big trucks and Ski-doos, but nobody wants to buy that stuff because they can't afford it, either."

CBC reports Mara Grunau of the Centre for Suicide Prevention saying that for every 1-percent increase in unemployment, there will be a 0.79-percent increase in suicide rates, but it takes two years for the data to appear.

In Alberta, 75 percent of all suicides are male, and the vast majority of victims are under 55. Gladys Blackmore, Executive Director of Men at Risk, believes that many of the recent suicides are young male workers living high-risk lifestyles in work camps, where they "fly in/fly out" for up to 24 days at a time