PRESS RELEASE
LaRouche: The Great Danger
of a Financial Crash Today
June 23, 2007 (EIRNS)—This release was issued today by the Lyndon LaRouche Political Action Committee.
As banks scrambled to organize a Bear Stearns hedge fund bailout—"the largest since the 1998 bailout of the Long-Term Capital Management hedge fund" whose collapse threatened a general financial crash—Lyndon LaRouche had this comment in his June 21 Internet broadcast speech in Washington:
"The great danger of a financial crash today, is that most people, in what they call economics, believe actually not in economics: They believe in gambling. It's called a financial system. It's a gambling system. And people understanding that, ever since Galileo came up with this idea about gambling as the basis of discovering how markets would work, everyone has tried to get a better statistical system for gambling. Like breaking the bank at Monte Carlo, making a killing at Las Vegas, probably one's own. And therefore, these guys who are running the financial world today, depend on the assumption that they've got a 'better system'—as they used to have at the race tracks, a 'better system' for handicapping the horses. And it would really handicap the bettor, in the end, as he found himself on the street without cash—and being pursued by his lenders.
"But what you've got today, as was typified in the calamity that occurred in August through October of 1998, was that the bettors now rely upon mathematics. And computers have helped them to do this: They can now bet faster, they can do mathematics faster than ever before, statistics faster than ever before. But they're all trying to find the best system of gambling. And they're all competing to get in on what they believe is the best system of gambling. The result is that, when all the gamblers come close to the same system of gambling against each other, but they're all gambling according to the same formula, what happens? They all go down together, in one big flop!
"And that is what we saw, in a [1995] forecast of the events of the LTCM collapse in 1998: Was a general collapse of the system based on confidence, and competition, using the same system, as a world system, which doesn't work at all. And they all went bankrupt.
"And President Clinton and his Secretary of Treasury collaborated with others to organize a bailout, to postpone the inevitable collapse of the entire world system, which was implicit in what happened in September-October of 1998. We have never paid the bill for that bailout. We have been bailing things out more and more ever since.
"And we now have reached the point, the system is about to collapse."
