Bernanke: Trying to Save Face

For the last week, Fed Chairman Ben Bernanke has been advertising his personal integrity without trying to take an actual stand. He admits that criminal conduct in high finance and investment must be prosecuted and that having to bail out the likes of Wall Street firms that continue to play high stakes gambling games makes him ill. Bernanke continues to try to straddle the fence as he justifies the decisions made as his refusal to allow America to enter a second Great Depression. He offers little fire or passion to see any change beyond making admonitions toward change in the system to protect the nation from avarice. Bernanke readily admits that if adjustments are not made soon, America faces the acute risk of uncontrolled inflation. His need to express his personal integrity almost seems comical as he performs what must be one of the toughest and most thankless jobs on the planet, at least in the public eye.

Economic Depression: American Resentment Flickers Against Corporate Wealth

The recession and the rising gulf between the haves and have nots; investment bankers versus newly impoverished and unemployed Americans is changing viewpoints. At one time, any company reporting record profits was certain to earn applause for this was seen as the American way. Americans were firmly invested in what they believed was the trickle-down theory of economics. The scam that investment bankers have pulled on the world with their highly staked leveraging games has changed much of this sentiment. Now that institutions that formerly made up the investment banking capital of the world are recovering with the intent of paying back taxpayer-backed Federal Reserve bailout money, Americans are leering at the possibilities that nothing has been learned from the crisis of financial literacy that prevails itself upon the world.

Writer David Segal has introduced the idea that class resentment is to blame as investment bankers continue to rake in the speculation-based financial dough based on the same numbers games that brought the nation to the edge of financial oblivion. The reality runs much deeper. In the eyes of Americans, the reality isn’t about making money, but how money is earned. Americans feel that they are being scammed because the nation operates by multiple sets of rules depending on how much money and influence you can peddle. Even members of Congress like Charles Schumer have demonstrated that they believe Americans are simply brutes to be used by the system to bolster corporate along with government wealth and influence.

Now that the likes JP Morgan Chase and Goldman Sachs are reporting fantastic encouraging numbers after having enjoyed bailout at the expense of Americans and the system at large, Americans see that the victory is very hollow. Recent financial victories in American are without benefit to anyone that doesn’t directly play the insider financial games on Wall Street. Multinational corporations continue to rule the roost behind the scenes, taking more out of America than they put in. Profit without personal responsibility is king. Most of America continues to be in great pain and America already knows that recent financial victory on Wall Street is a result of the same deluded thinking and policy that still threatens to destroy the financial system. It is not a system based on honesty and real numbers, but simply a gambling game of manipulation and opportunity.

The fact is that the Federal Government likes the control and authority that it wields in the banking community as a result of the bailout. The same can be said for the money that government has invested in the corporate structure. Uncle Sam holds the cards as the government maintains a front row seat at AIG. This is the only means that government now has to rein in the continued greed and avarice of Wall Street and corporate investors. The system hasn’t been reinvented as promised nor have sufficient reforms taken place to insure the safety of financial system on any level. We are still living in the last century. Nothing has changed. That is why government is so quiet about what is a hollow victory on Wall Street. ~ E. Manning

No Excuses for Bernie Madoff

What has been described as a contrite Bernie Madoff appeared in court with an apology to his victims. Madoff expressed that he believed that he would be able to work his way of his financial scheme, but was never able. Madoff was sentenced to 150 years in prison, according to the judge, symbolic for a crime of “extraordinary evil.” Madoff was perceived as a powerful financial advisor because he was able to create double digit returns for his clients in all financial weather.  For more than a decade, even the SEC overlooked the fact that he was running a ponzi scheme, using new investors to pay off old ones as he lived the high life.

Federal Reserve Discovers Deviancy

About 16 years ago, Senator Daniel Patrick Moynihan offered a striking view of the degradation of standards in society. He observed that deviancy was measured as increases in crime, broken homes, and mental illness. These reached levels never seen by earlier generations in the U.S. As a means of coping with the onslaught, society often sought to define the problem away. The definition of customary behavior was expanded. Actions once considered deviant from acceptable standards became, almost immaculately, within bounds. In the case of the authority by the Federal Reserve, deviancy has been all but ignored.

After opening up with a classic comparison of standards in society, Kevin Warsh has other observations about the Federal Reserve that would lead one to wonder if central bankers are really lost, but couching this misdirection as a new philosophy of public exploration of purpose and policy. No such luck fellow Americans and globalists.

Warsh asks: “Will deviancy be defined down with the understanding that a rare crisis is the price for dynamic, robust economic growth?” The Federal Reserve is exploring new philosophy of social and monetary control, but is still thinking within the same old box of capitalism and economic growth via Wall Street and bankers instead of the real economy where the mainstream actually live and grow their lives.

Even Warsh recognizes that over the last few decades that America has not lived in a golden age. He says that periodic, cyclical weakness occur. There were lessons to be learned. Did we learn lessons at any point along the way? Now Kevin Warsh is asking bankers and economic pundits what they want in a new ‘touchy-feely’ approach of philosophy to the recent banking crisis. That’s right…this was a banking crisis, not just another recession. If bankers had not become economic and social deviants, the U.S. and the world would not be in this recession.

Still, Warsh is asking his friends and banking associates whether they choose stability or performance. What do you think bankers will say? The Fed is not really talking change, just more of the same boilerplate economic policies, unchanged for decades and augmented with more control measures and power for central bankers. The Fed doesn’t seek to reform anything, but has plenty to say that supports the status quo. The U.S. and the Fed, through the brotherhood of central bankers, has misused a position of trust. Now the Fed is printing vast sums of money (credit) that will ultimately tumble the dollar and create a larger crisis. ~ E. Manning

Recovery: New Technology and Financial Literacy With a Glimmer of Hope

There are signs that the rapid decline in economic activity of the past few quarters is slowing. Per the observation by the Federal Reserve, stabilization or improvement will begin from very low levels compared with those the levels of previous recoveries. This recovery is likely to be painfully slow and “the economy unusually vulnerable to new shocks. The news remains bad in two areas of direct importance to American families: Unemployment continues to rise and housing prices continue to decline.”

“Government-provided liquidity and guarantees remain as necessary supports in many areas. Because the collapse of these same markets set off the present crisis and the serious recession that has followed, the case for far-reaching reform appears a strong one.”

The Federal Reserve admits the fact that banks are highly leveraged, presumably due to the fractional reserve backlash in this crisis and compounded by creative banking instruments that have brought the system to its’ knees. Many bankers have been highly creative in protecting themselves from public or government scrutiny on an ongoing basis.

The Fed readily admits:

“that a malfunction in the financial industry can immediately and profoundly harm the entire economy…As we have seen to our dismay in the last year, even where such support is forthcoming, the resulting damage inflicted on the real economy by the financial sector can still be extensive, and the potential costs to taxpayers can still be high.”

For some time, the Federal Reserve has heralded the idea of financial literacy as if it were some ‘new technology’. Now the Fed has realized its’ own training regarding the need for a new financial literacy. The Fed now admits “that systemic risk was very much built into our financial system,” spotlighting the too-big-to-fail phenomenon as one of the most problematic systemic risks in the financial system.

Many members of the Fed now admit that we much apply ‘new technology’ to financial literacy and systemic risk in an effort to overcome the greed syndrome that has wracked U.S. and global banking for the last several decades. The problem remains that central bankers, like the Federal Reserve, are now in charge of implementing policy that can pad and perpetuate their own bottom line and purpose for existence since all central bankers are, in reality, a closed brotherhood or society devoted to their own corporate and global power in the financial system as they tap profits from their own system to benefit the global system and the shareholders of the global corporate central banking system. ~ E. Manning

Financial Racketeering: Send Corrupt Bankers to Prison

Buy your own t-shirt and tell the world you want justice!

As a protective corporate reaction to the economic and fiscal banking crisis that corrupt bankers have brought upon the nation and the world, bankers have sought to hide the true nature and scope of the toxic assets that they hold. The government has been frustrated in its attempts to truly grasp or know the true situation because of corporate trickery and subterfuge on the part of many banking institutions as bankers often continue to operate their own protection racket. Yet, once bankers have been bailed out by the federal government for their short-sided thinking and the development of corrupt speculative banking instruments, some have sought to pay the debt back with the hopes of continuing the banking gravy train for themselves including unsupervised and virtually unlimited pay perks. From the reaction of the Federal Reserve, accounting standards appear to be lacking as bankers continue the attempt to operate their own private corporate racketeering.

With the expectation of countermanding this continued rebellion by bankers, the Federal Reserve has issued new accounting rules which will have a material effect on banking organizations’ accounting for off-balance sheet vehicles. The legislation will take hold in 2010 to address weaknesses in accounting and disclosure standards for off-balance banking instruments.

The Fed is also reviewing regulatory capital standards for bankers based on their experience in the banking bailout which they expect to apply to banking institutions, further cramping the style of many bankers. As a result of the review of new banking capital standards for bankers, the U.S. government is not eager to immediately accept paybacks of bailout money. The U.S. government apparently believes that the bailout has functioned as a fairly reasonable control lever in temporarily reigning in the ongoing greed within the banking community. ~ E. Manning

Fed Puzzled by Stats: Are We In Danger?

All interest rates are not equal when it comes to any given investment product. The rates on bonds of different maturities behave independently of each other. Short-term rates vs. long-term rates can move in opposite directions simultaneously. The gods of finance say that what is important is the overall pattern of interest-rate movement: a direct reflection of the future of the economy and Wall Street confidence.

The Fed is not certain what is driving the sharp rise in long-dated bond yields and has noticed a widening gap between short and long term yields. What does it all mean? Is someone like the Chinese manipulating the market?

A steepening yield curve could mean that investors are worried about the deterioration in the U.S. economic outlook… or the possibility for a collapse in the U.S. dollar as the Federal Reserve continues to load the world with newly minted currency as part of its recent program.

Economists are involved in open combat over what is driving the signs and even worse, what the cause or the solution really is. Some Fed officials believe that a recent glimmer-of-hope in economic data is encouraging investors to believe there is less need for ’safer government bonds’. Richard Fisher in the Dallas Fed contends that the steepening yield curve is generally a sign of a recovery, but huge debt may dampen that perception.

What is certain is that the U.S. Treasury is being forced to sell more bonds to cover the unprecented U.S. debt and falling tax revenues as a result of the recession. What does appear to be certain is that the relentless dumping of dollars on the market will ultimately result in inflation that could easily get out of hand. Is it recovery from investor confidence, investor manipulation, worried investors or defective monetary policy driven by central bankers? Not even the gods of finance know the answer. The gods of finance do not know right or wrong. They know theory and are now in uncharted territory.