Thirty Years Ago, Lyndon LaRouche Forecast the October Crash, Warns It Could Happen Again

Thirty years ago, on Oct. 19 1987, the biggest stock market crash in one day occurred on Wall Street. On that “Black Monday”, the Dow Jones dropped by a spectacular 22.6% in panic sales. Many articles were published on the occasion of the 30th anniversary, but virtually all failed to correctly answer the question generally raised: “Can it happen again?”

The answer to that question lies in the forecast effected by Lyndon LaRouche and EIR five months before the Oct. 1987 crash, which you can read here.

“Whether the great financial crash of 1987 erupts by October, or later, will depend upon what leading governments do at the international monetary ‘summit’ held in Venice on June 12,” LaRouche wrote on May 26, 1987. If that summit decides to continue the current monetary and economic policies, he warned at the time, “a crash in October would not be absolutely certain, but it would be, at least, a very good guess.”

LaRouche did not make a crystal-ball prediction, of the type “there will be a stock market crash”, but he forecast a collapse of the financial system, which the stock market is part of. “A ‘zero-economic-growth mafia’ inside the IMF and World Bank bureaucracies, acting with U.S. government support, has been collapsing the internal economies and world trade of both developing and Western industrialized nations, while piling up the financial obligations of both developing and industrialized nations. We have been increasing nations’ obligations to pay debt, while destroying their means for paying that debt.”

Sound familiar? This very same policy, which continued to be implemented after 1987 to prolong the life of the financial system, then led to the global financial crisis of 2007 and has now created the conditions for a second, larger systemic collapse which is now imminent. Back in 1987, the chain-reaction of bankruptcies and a systemic collapse was prevented through the large-scale introduction of financial derivatives by Alan Greenspan. In 2007, the system collapsed again, not in the form of a one-day crash on Wall Street, but as an implosion of the subprime bubble, which caused a continued stock market crash over weeks and months. As the chain-reaction was on the verge of being unleashed, the system was bailed out by massive government and central bank interventions, totaling USD29 trillion.

That unprecedented monetary expansion has inflated a debt bubble whose dimensions are larger than the 2007 bubble. Therefore, the answer to the question of whether the 1987 crash can occur again is: yes, the system will explode, and the stock market is just one among many potential triggers.