by Robert King

Created on: August 28, 2010   Last Updated: August 29, 2010

Is this a depression? It would be a relief to many people if it were just a depression. After all, a depression is defined as merely a severe recession of at least a 20% drop in GDP. While the talk now centers on fears of a double dip recession, the reality is that the entire global financial system is poised to disintegrate; in what the world's foremost physical economist,

Lyndon LaRouche, has identified as a "general breakdown crisis" of civilization, which, if emergency action is not taken in the next few months will result in a generations-long new dark age.

Comparing the present economic crisis to that of the Great Depression is obviously misleading for the reason that the modern global financial system is a relatively recent invention. The year 1973 may well have been the year the modern financial system came into being. That was when President Nixon took the United States off the Breton Woods fixed rate exchange system. Since then a casino-like system of FOREX currency swapping has more and more come to dominate the economies of the nations. According to the Bank of International Settlements in Switzerland on any given day approximately $3 trillion in financial turnover is transacted, half of it being funneled through the City of London. (See the chapter London-Satan's Throne in the book Jehovah Himself Has Become King)

As computers began to take over in the latter part of the 1980s financial derivatives also came into being. Again, according to the Bank of International Settlements there are now approximately $600 trillion worth of derivatives contracts. But considering the opaque nature of the derivatives markets some say the actual notional value may be over a quadrillion.  The size of the derivatives market dwarfs that of the underlying economy. To grasp the size of the derivatives bubble the total world GDP amounts to about $50 trillion. It has been reported that one Wall Street bank has derivatives contracts in the range of $100 trillion. In other words, the side bets of just one Wall Street bank are twice as large as the entire world’s economy! Even if their assets are in the range of $1 trillion, the notional value of their derivatives contracts exceeds their assets by a ratio of 100 to 1. As was seen in the case of AIG staggering losses can be realized when these massively leveraged bets go awry.

"Systemic risk" or "too big-to-fail" is banker's-speak recognizing the fact that the failure of merely one mammoth financial institution

• 1
• 2
• Next Page >>