Muslims Prepare for Global Banking Power

Dubai Bank plans to become a major global Islamic lender over the next five years through acquisitions and has set up a $5 billion financing program to assist in the expansion of its authority. This is similar Noor Islamic Bank, which seeks to be the largest Islamic bank within 5 years.

The ruler of Dubai currently holds 40 percent shareholder interest in Dubai Bank. There are negotiations for joint ventures with certain countries targeting the business world to ensure Middle East control of business resources.

Demand for investments and financial services that comply with Islamic law are all the rage among Muslim authorities. Islamic banking includes a ban on the receipt of interest, a concept that is growing among the world’s 1.3 billion Muslims as they seek more ethical ways to invest personal resources.

With the continued influx of global cash, American greenbacks and business savvy, Muslims are prepared to launch a new era of banking and business success with the intent to spread that influence around the globe. The ambitions of family-ruled Dubai have soared during the last few years, benefiting from the profits of oil revenue. Dubai plans to build two of the world’s 10 largest financial institutions by 2015, Dubai official Omar bin Sulaiman told Reuters last year.

The role of central bankers in the scenario, if any, is currently not spelled out in clear writing. Islamic banking could be a rival to central bankers in the near future, since Islamic banking does not agree with the premise of the International Society of Bankers. Any compromises and affiliations could prove to be very interesting as the digital economy of power continues to build. Will the coalition that results clip the wings of liberty as implicated by the image in this article? That reality is likely.~ E. Manning

FDIC Prepares for Banking Slaughter

The FDIC is seriously considering its future workload by expanding offices in Dallas, Texas that handle banking closures. However, the FDIC is trying to indicate that the 125,000 foot expansion is due to an increase in workload from the failure of ten banks this year, completed yesterday with the closing of Integrity Bank of Alpharetta, Georgia. 117 banks are now on the FDIC trouble list. The FDIC says that “it’s important to note most banks on the problem list will either cure themselves or end up being acquired by another company.” That is true. What is also true is that many failed banks don’t show up on the list at all. The silver lining in the situation is the number of government jobs that will be needed in the Dallas Metroplex area.

The FDIC reports that non-interest income at banks waned as trading and securitization services slowed. That is an understatement to be certain.

Sheila Bair reported: “We’ll be proposing changes to the current assessment system that will shift a greater share of any assessment increase onto institutions that engage in high-risk behavior to encourage and reward safer behavior.” The lack of honest information from banks has been and continues to be the Achilles heel in FDIC efforts. Fraudulent banking is reported as up by corporate information specialists while government regulators play down the significance of fraud and failure. The fear is palpable, but regulators are full of blather in an effort to convey confidence. ~ E. Manning

Check out an interesting article at RGE Monitor.

GDP Up: Why the Panic?

Bernanke and a much needed visit...

The economy performed far better than expected in the Spring (second quarter), reportedly led by exports and increased government spending, notably the stimulus program. Still, many economists like Wachovia’s Mark Vitner are talking up recession. Figures are continually revised up and down as more information comes in. “To many, it still feels like a recession.” Indeed it does!

Because of the weak dollar, nations have been buying more U.S. goods resulting in a foreign trade bonanza for the U.S. despite economic weakness on the home front. Consumer spending was up as well, reportedly sponsored by the $91 billion federal government fiscal stimulus program. Uncle Sam is still sitting on the remaining third of money allocated for the stimulus. What Congress will do with the surplus is anyone’s guess. That stimulus is now part of the burgeoning national debt that is approaching $10 trillion. The presidential candidates report that they are unconcerned with national debt as they propose new fiscal budget-busters.

unemployed.

The reality is still pessimistic as everyone realizes that all isn’t well. In fact, if you read enough news, you might get confused over the sundry viewpoints expressed. Still, nothing has changed except that when quarterly figures are updated, sometimes the nation comes out ahead in the statistics department. In the meantime, a weak dollar will help multinationals to consume more U.S. products or purchase from more U.S. suppliers. The world of business simply isn’t sharing that monetary goodness with their employees as they prepare for the reportedly bleak future ahead, continuing to fulfill the prophecy of recession. The labor market is still in decline, perpetuated in part by the continued offshoring of U.S. jobs to foreign markets. ~ E. Manning

IBM Continues to Escalate Global Tracking

IBM’s strong financial performance lately can be attributed in part to the growth of IBM’s System z10 mainframe. On an increasing basis IBM has been developing global banking and tracking software to serve the needs of multinational corporate clients. In fact, IBM has received a notable patent for tracking which could be used for the creative tracking of not only data and products, but human beings as well.

The IBM mainframe allows for additional protection of sensitive data such as credit card information and client’s personal information from hackers which is a very attractive feature in banking operations. From a computer standpoint, the beauty of the mainframe allows for a policy-based system that distributes, manages and tracks all data in a simplified fashion over older computing. Multinational bankers are investing in the system because of huge expandability promises combined with flexibility in use for multiple types of banking simultaneously: commercial banking, Islamic banking, investment banking and insurance.

If you use your imagination, you can visualize where this advance in computing is taking the global banking system and other multinational corporate capabilities. IBM is almost single-handedly creating the means to elevate a digital revolution in the global economy, quickly becoming a completely digital economy. ~ E. Manning

Desperate Bankers, Desperate Times

witless regulation

To listen to the tone of regulators and lawmakers, you would think that bankers would be on their best behavior, especially with all the arrests early this summer for mortgage and banking fraud. “Crackdown efforts” are apparently failing as desperate bankers continue to commit banking fraud to keep surviving.

Mortgage Asset Research Institute (MARI), the mortgage information gathering arm of information monger Choicepoint is reporting that mortgage fraud is on the rise despite record lows in the number of loans issued. This makes the situation all the more alarming.

The study found that the number of fraudulent loans issued during the first three months of 2008 skyrocketed 42% compared with the same period in 2007. This is true, even considering a much lower loan rate to consumers.

The credit histories of many applicants are no longer good enough to get approved for mortgages in the declining economy, except through the creativity of brokers and loan officers. An identity theft level of as much as 6 percent is also playing a role in the banking chicanery, as the criminal element gets involved in shady and predatory banking.

witless lawmakers

Apparently many bankers haven’t learned a thing. Why bother, especially with idea of massive bailout protection by the Federal Government. The number of arrests for banking fraud hasn’t been huge in the banking community itself and many bankers appear to be escaping the net of the Feds. With that in mind, many bankers are willing to keep up the faith in bad banking.

Despite the press, the reality is that the structure of the banking industry has changed not one whit. Commission and loan volume are still the hallmarks of the mortgage banking industry. Overwhelmed regulatory agencies and legal eagles aren’t making a dent in the huge problem. Apparently, the government isn’t up to the task.

If a private institution like Choicepoint can query and discern the truth behind a continued banking and mortgage debacle, surely a public institution like the Federal Government can move in and close down immoral banking with all the subpoena and legal power at its control. Instead, government regulators show that they don’t have the will to deal with the national blight effectively. Bankers are going to continue to practice what they have learned to depend on. The poison must be rooted out of the system in order for the system to continue. In the meantime, “Wild West Mortgage Banking” is on the rise, with a stupified witless government on hand, unwilling or unable to quickly take corrective action.

Mortgage Twins Suffering Corporate Death

For many weeks, economists have been looking for the decline of Fannie and Freddie. It’s only been a matter of time and confidence. Central bankers unloading and refusing to buy the usual amounts of stock have put the the U.S. mortgage twins in a world of hurt.

Then, there is the nationalization theory, which would put all stockholders out in the cold; hence the concern of central bankers and now most investors, almost forcing the federal government to play the bailout hand for Fannie Mae and Freddie Mac.

A number of banks own large chunks of the $36 billion in invested preferred shares in the twins. J.P. Morgan is the largest, holding $1.3 billion currently. These banks have already lost about half the value in these shares and face losing the remainder, especially with the prospect of nationalization. Unhappily, some smaller banks could be wiped out or at least face capitalization issues.

The bottom line is that it is in the interest of the U.S. Government to bail out the preferred shareholders to avoid an enhanced banking crisis. This is a temptation, although not popular among many, especially those with bailout envy. The problem with bailouts is that once you commit to one, picking and choosing becomes a political issue. That is exactly what the government doesn’t want in an election year. Either way, bailouts are the watchword of this ailing economy because of overcommitment by the U.S. Federal Government. ~ E. Manning

Are You Better Off This Millenium?

Media pundits, in any economic times often present the idea that it doesn’t matter how the economy is doing, but how well you are doing. This is an especially potent question during this election year as Americans prepare to vote their conscience for the next 4 years of public and political policy.

Most people consider the foundation of economic well-being as their job. While this aspect of life puts food into your mouth and determines what kind of car that you buy or the size and beauty of the house you live in, a job is probably not a realistic determination of where you truly stand in the economic world.

Most people consider income as the ultimate measure of economic success. You may have seen your wages remain flat over the years. Does your money go as far as it used to even if you do make more? Wage stagnation has been a national problem for years.

The crumbling housing market is at the root of much of America’s current economic instability. Despite declines in value, most homes at this point and time are still worth more than they were at the turn of the millennium. How has your asset value fared?

What about your net worth? Have you managed to put away money for the future or are you stuck in an endless cycle on the treadmill of debt? How you feel about your life probably hinges in large measure on a combination of all these sentiments. What is the reality?

Inflation is what determines the real value of all these measures and sentiments. Inflation is a silent robber that you don’t always see and yet is responsible for a large measure of any financial issue that comes along, whether accidental or intentional.

Inflation is often understood to mean a rise in the general level of prices of goods and services over time in any given economy. Inflation is much more. Inflation also refers to the increase of the money supply without the increase of monetary value or devaluation of currency.

We’ve grown fond of referring to the inflation as a beautifully small number such as 3%. At this level, inflation seems well-controlled and quite harmless. However, the grand scheming lie is that inflation is a low as it is. While inflation figures are computed monthly and change constantly, monthly figures, often average over time are the figures that are used for public consumption.

You only need to visit a place like inflationdata to begin to understand inflation’s effect on your finances in the grand payment plan of life. We have been taught to understand that common statistics are somehow an average of economic forces for the month, magically balanced for the year at a certain point and time. The reality is very different. Inflation is always portrayed as low and controlled.

The reality is that modern financing is built on monthly estimates to make the appearance of costs appear lower. Take the figure presented for any month as a reduction in your income for that given month. In theory, if the rate could stay the same, you would multiply that rate by 12 (for the number of months in a year) to get your inflation rate for the year. Whatever that yearly inflation rate is the amount of loss in your real spending power. That is the brutal truth.

Business may create new ways to lower costs, for example, by sending work overseas to make less expensive products and thus fueling other economies. When money leaves a regional economy, that money further devalues the currency you are using. Inflation is a fool’s game. Ultimately, whether costs are immediately higher or not, you will come to suspect that your money isn’t going as far, even if you spend conservatively.

Economists and government statisticians are constantly jiggering with how inflation is computed and creating new ways to make inflation appear low or non-existent. The myth of 3% inflation is just that: a myth promoted by the Federal Reserve Bank and global central bankers.

Next time you ask the question as to whether you are better off, you now know the correct answer. As long as bankers run the world using the current standards, including fractional-reserve banking, you cannot be better off unless you beat the real inflation rate. In the workaday world of a 9-to-5 working joe, that is a virtually impossible task. Only creative investors and business entrepreneurs can hope to beat the devaluation of currency after the onslaught of taxes, fees, labor costs and overhead. Even they still lose over time. Devaluing currency is a no-win situation over the long haul. Perhaps now you can appreciate the desperation of investors to beat the system and bankers to devalue your currency to make more money for themselves, while putting a smiley-face on the inflation rate as the value of your money drops.

~ E. Manning