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Canada Must Join A Global Glass-Steagall Now !
28 June 2011
Canada and the world are facing a crisis without precedent in modern history. We must relaunch the economy with rapid and massive injections of credit where the needs and potentials for development are to be found : energy, high speed rail, research, hospitals, education. The financial institutions whose behaviour has led to the present situation are both unwilling and incapable of transmitting to the economy the advantages that the State has provided them with. Given such conditions, we urgently demand that the Canadian government enact a Glass-Steagall modelled legislation, separating commercial from investment banking, as the most important first step in the process of an orderly national reorganization of our financial system. LaRouche and Glass-SteagallOn June 10th, Lyndon LaRouche, the world-renowned economist and most accurate economic forecaster of his generation, addressed a seminar in Frankfurt, Germany on Glass-Steagall. We will highlight some relevant remarks by Mr. LaRouche from that occasion, since several of his points touching upon the implementation of Glass-Steagall in the United States and Germany would also apply here in Canada: “The adoption of a Glass-Steagall resolution now, as law of the United States, would mean that every bank in the United States would be purified. The Federal government would enact law, which would protect the legitimate, commercial banking deposits, and savings deposits, in all banks, even if the banks, as such, were technically bankrupt at that time. And we would throw to the dogs all other kinds of banking claims. Now, you have to remember, one thing is very important: That the mass of debt, of financial debt, technically out there, is beyond anybody’s imagination! “My intention is, and I think I can speak for other people in the United States, too — some of them, at least — my intention is to do this immediately. This would mean, the immediate wiping out, of virtually every speculative bank in the world, and every account which is not a stable, commercial banking account, as defined by the former Glass-Steagall practice. That’s what Roosevelt did in 1933, the original Glass-Steagall Act, which is actually also implicit in the U.S. Federal Constitution. “Now, my point is, that, the minute we do that, the minute we go for that act, and for its immediate implementation, Europe has a problem: Because then, every bank, in every European country, has to go through the same cleaning at the laundry. Which introduces a third element, as essential: We must save institutions, including banking institutions, which are valid, that we’re saving, make sure they don’t fold up, too. “Okay, now what you do, is you cancel all the illegal, or stinking, or false kinds of financial claims. Instead of bailing out fraudulent financial claims, the national governments, sovereign governments, must now issue credit into the banking system, the purified banking system. You don’t want any more of the burden on, say, European banks, European nations, of this false kind of debt. But most banks today in Europe are bankrupt. How can you save it? You have to support them: How? With Federal credit. State credit. Because, what you do, is you deposit the credit of the state, in the bank, for it to use in a banking form, to practice banking. Because if you don’t do exactly this, you see the end of civilization, very soon. Because you have a mass of debt beyond all calculation which is sitting on the backs of nations, including virtually every nation. So therefore, you have to cancel the unlawful debt. “Now, by doing that, to the extent that the bank is losing a margin of asset, and you want to save it, you have to give it another asset of lending power. And the addition of lending power, for projects which governments promote, largely in infrastructure and other projects, will enable you to stabilize the financial system, on a Glass-Steagall basis. But you have two problems: the loss of the Glass-Steagall kind of protection. You have a real problem here: Because what has happened is the collapse, like the collapse of industries in Germany, for example, which you’re familiar with, this collapse of industries has brought Germany below a breakeven point in terms of real economic operations. And the key thing, is, you have to take the German potential, as you do in each country, in its own characteristics, you have to realize what is the potential for building up the economy, rapidly, based on an existing, qualified population, with projects which exist in the capability of the nation. “Now, what we will have to do in the United States, where this problem is quite acute, already, but it’s also throughout Europe, right now; it’s also true in Russia, very much so: So therefore, you have to bring the nation up to a physical breakeven point, so therefore, you have to have projects. Now, the way in which, economically, you can do these projects, is you start with basic economic infrastructure. You have a firm, like you have a big auto firm that’s collapsed. That auto firm not only produces autos, but it represents labor, machine-tool, and other capabilities, for doing other things as well as automobile manufacturing. Because, what your problem is, the population is not productively employed at a sufficient level and with sufficient quality to maintain the nation. “That’s the problem inside the United States; it’s the problem inside Europe. Europe is being treated, by the imperialist power, like a colonial victim, a colonial nation. It’s a destruction of nations, it’s a destruction of their economy, destruction of nation. And without extraordinary measures, which are shocking in the sense that they are extraordinary, you can not possibly save any part of Europe today. And without the active cooperation of the United States, the European recovery can not work. “Take the case of China — it’s another case, which is crucial: The level of output of China, is such that you have a recession, a virtual depression, coming down on China, and the more that the nations, the markets for China’s goods, collapse, the faster China collapses. India is a less vulnerable nation, but it has a similar problem. The good quality of China and India, is that China is building nuclear power plants, and it is also building mass-transportation systems, which are absolutely indispensable for the future existence of China. But without a growth of China’s external market, China can not make it. India has more stability than China, on the surface; India has a very aggressive nuclear power project; it’s a leading market for the thorium nuclear reactors, but it too has approximately 80% of its population is extremely poor, and unskilled. “So therefore, we have to build up, not only infrastructure of the world, but we have to make sure that the different parts of the world which are markets for other nations, are able to be markets for other nations. “We must always think in terms of humanity, as a whole. Humanity organized in sovereign nation-states. Therefore, we must have not only a Glass-Steagall standard, in all countries — or in as many as we can recruit to that purpose, at least major countries — we must also develop a fixed-exchange-rate system. Without a 1.5% ceiling on basic lending, you can not build up the market we must build, throughout the world. Under these kinds of conditions, we can solve the problem. Without these conditions, we’re going to Hell. There is no other alternative, because we’ve gone so far down, that we have to take the measures which are appropriate, in intensity and scale, to move us up. It’s going to take two generations to get where we want to get to.” Canada and Glass-SteagallA Glass-Steagall standard will determine what is viable and necessary for the legitimate functioning of the Canadian banking system, practices that can be maintained and supported; on the other hand, practices which are based on irresponsible imprudence or exotic operations will be subjected to organized bankruptcy procedures under Glass-Steagall. Canada must not make citizens pay for the bad debts of financial institutions who have gone astray, but rather must ascertain the lack of value of these claims and eliminate them in order to protect the general welfare. The time-frame the world’s most accurate forecaster is looking at for the urgent implementation of a global Glass-Steagall capable of stopping a desintegration of the world financial system already in progress is approximately mid-July. A point beyond which no responsible government who claims to have the general welfare of his population as its most pressing concern would never dare, in conscience, to extend. Gilles Gervais |