LaRouche: The Brazil Carry Trade Bubble is Going to Blow, With or Without Oil

LAROUCHE POLITICAL ACTION COMMITTEE

March 16, 2010 (LPAC)—In his "Ides of March" webcast on March 13, Lyndon LaRouche warned: "There's a looming danger of an explosion of the Brazil currency. That explosion, which is now pending, would mean, a general breakdown crisis, for the entire planet...

"The Inter-Alpha Group, today, which is based largely on speculation among Spanish people, you wouldn't like to know, into Brazil, around the Banco Santander, but the Inter-Alpha Group as a whole, is the greatest swindle on this planet. And the British economy, entirely, financially, depends upon this swindle, whose base of operations is now, principally in Brazil.

"Brazil is bankrupt, totally bankrupt... It has a financial system which is a swindle, and the financial system is this Inter-Alpha Group, based operationally in London, the chief vehicle of the British Empire."

In further comments yesterday, LaRouche reiterated his warning about the Brazil carry trade:

"It's all bullshit, but in the short term it seems like it's rich. Then everybody starts going bankrupt as a result of trying to carry the stuff."

All of Brazil's announcements of claimed oil deposits will also do nothing to prevent the blowout of their bubble, LaRouche warned. "They just give you an estimated potential, and don't give you anything on what the extraction is going to cost. It's very deep, and that involves a lot of problems. So it's actually a cover story. Sure, there probably is stuff there—that's not the point. The point is that you've got to process it. They claim certain deposits. But since we know them, we don't trust them, and they don't give us any substantiation that would cause us to believe them," LaRouche stated.

A March 13 article by Brazilian economist and Congressional adviser Adriano Benayon also targetted Santander and the British bubble for blowout. "Banco Santander is a bank with official headquarters in Spain, originally from the Basque region, controlled by the [Royal] Bank of Scotland and, therefore, associated with the Inter-Alpha Group, run by the British royal family," Benayon wrote.

Although not mentioning Lyndon LaRouche or EIR magazine by name, Benayon echoed what LaRouche exposed at the beginning of February that while most observers are focussed on the crisis in Greece, the real crisis is in Spain. Spain, the Interalpha banks, and their financial tentacles, are in fact bankrupt. Benayon said, "competent observers point to Spain as the epicenter of the collapse of the European Monetary Union," and the fact that "Santander is the bank with biggest problems in Spain, and its difficulties worsen the City of London's crisis."

Benayon goes on to target Santander's carry trade activities in Brazil, noting that "Brazil continues to provide immense profits to foreign banks based on incredibly high internal interest rates... The Central Bank continues breast feeding the banks with real interest rates above 12% on the public debt, guaranteeing them risk-free profits ... without their carrying out any economically useful function."

Benayon adds that bank profits in Brazil are growing at an accelerating rate. Under the Fernando Henrique Cardoso government (1995-2003), profits increased by an average 11% per year. Under the Lula government, between 2003 and 2007 they skyrocketed by 19.8% per year.