LaRouche: State of the Union Address, 2003

The Only Solution: Bankruptcy Reorganization
page 49

The Only Solution: Bankruptcy Reorganization

Question: There are two questions from a meeting ongoing in Lima, Peru. The first is from Rogelio Fernandez Ruiz, who is the vice president of the National Federation of Small and Medium Businessmen. He asks:

"As a response to the inefficiency of the economic system in countries such as Peru, there is a growth of economic activity in the informal sector, as a means of survival, because the IMF is dictating the economic policies of the country. Mr. LaRouche, if you were to become President, would you write off the foreign debt of those countries, since it has been paid many times over? And, how concretely would you promote the development of small and medium businesses in countries such as Peru?"

The second question is from Dino Gavancho on behalf of the LaRouche Youth Movement in Lima, Peru. He asks:

“Given the economic and cultural crisis ongoing today, how can the LaRouche youth movement in countries such as Peru and in the rest of Ibero-America, efficiently be a political university on wheels, given that cultural pessimism dominates on the universities, and the left is beginning to appear once again as a political force on these universities? Thank you.”

LaRouche: You have to put this in an international context. The international financial system is dead, now! The international financial and monetary system is now, implicitly dead. It is disintegrating before our eyes right now. Not as something to be forecast. This is now already ongoing. And until certain fundamental changes are made, it will continue to disintegrate.

Now, in a case where banking systems and financial systems and monetary systems are collapsing, what do you do? The only solution is bankruptcy reorganization. It matters who should do that. It must be governments or concerts of sovereign states, governments. Therefore, what needs to be done is along the lines I've laid out in Operation Juárez in 1982. To create a new facility which the United States government should support. That is, endorse, collaborate with, recognize. It should be a cooperative institution of the nations of the Americas, South and Central America. This institution should become the repository for resolving the bankruptcy reorganization of systems of each of the countries. The major function of the United States is to find ways of reorganizing debt, in such a way that we cancel a good part of it, because it's illegitimate, and we reschedule and otherwise rearrange other debt, or convert it into capital. Use it as financial capital for investment.

So, in the case of Peru, this is the way it must be done. It must have an Ibero-American facility, as I described this in some length in Operation Juárez. A facility which is recognized with, and a partner of, the United States, as a hemispheric enterprise. This facility must reorganize the accounts of the countries, with the intent of serving the general welfare of each and all of the countries. General welfare means a program of reconstruction and growth. So therefore, we put a program on the table: What is the program for reconstruction and growth of these countries, which are now in imperilled financial, monetary and other conditions? So we make a plan, a budgetary agreement, with objectives for growth, and we reorganize everything for the purpose of growth.

For example, in an ordinary business bankruptcy--and you can't foreclose on a country. That's what they tried to do in the 14th Century, which led to this New Dark Age. So you can never foreclose on a country. You must reorganize it in bankruptcy, but you can never foreclose on it. Therefore, your first assumption, as you would in any bankruptcy, is to say, we must have a plan of bankruptcy reorganization, in which the first condition is, this entity must be able to survive successfully. Everything else is subordinated; this must apply.

For example, in certain areas of the community, the community interests in the bankruptcy, say, of a large firm may come in, even though the members of the community, many of them don't have an interest in the firm as such, but the community has an interest in the effect of that firm on that community. Therefore, in the bankruptcy proceeding, a good bankruptcy proceeding will take the interests of the community into account in determining how to reorganize the firm in bankruptcy. In other words, you want the community to come out of this intact and whole, so you have to have a program where that comes first, and then the collection, if there's any to be had, comes after that. So we do the same thing in the Americas. But again, I've laid it out, as I've said, in Operation Juárez. I think the principles essentially apply today. The conditions are much worse than they were then, but that's the way it is.

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