Busted: Bankers and The Global Economy

August 13, 2010

Fed Policy Lacks Real Power, Drains Economy

Filed under: banking, corporatism, economy — Tags: , , , , , , , — digitaleconomy @ 10:49 am

Quantitative easing (QE) by the Federal Reserve did plenty for Wall Street and international banking, but hasn’t warmed up the real  U.S. economy. The Federal Reserve creates money out of thin air to buy U.S. Treasuries, mortgage-backed securities and corporate debt for temporary funding purposes with the  hope of selling them at an advantageous time.  Indications (based on gov’t figures) are that either the stimulus did not work or it did work, but the real economy was more severe and harder to control than advertised. Your opinion?   The ongoing structural and underlying massive debt is now more pressing thanks to the Federal Reserve policies. At this moment, Fed Chairman Ben Bernanke is arriving in Washington to testify before Congress to answer for the disaster. No doubt, he will bumble on about financial literacy, like this knowledge actually helps anyone when greed and corruption were and are the largest issues behind the meltdown. The Fed is just another large corporation with their own money-making agenda.

The policy followed by the Fed has bailed out the system that was initially responsible for the meltdown, but has done little to nothing for unemployment, exports, small business, consumer spending or declining revenues. For years America lived on credit as wages have not kept pace with real expenses.  Moral support by the banking community has vaporized since the they have been unable to monetize securities. On balance, the simple act of loaning money isn’t enough for them. They want another way to make runaway profits, as if the fractional reserve isn’t rich enough for them!

The Fed itself is aware of what they are facing and the obvious disconnect from all their past projections. This was published in a chart included in the latest economic paper by the Fed in Dallas titled “Unemployment Exceeds No-Stimulus Forecast.”

July 11, 2010

Recession: The Ol’ Double Dip?

What is happening in the U.S. economy? The  newborn atmosphere of a slow recovery has plummeted since the start of the year when financial agencies were debating when to announce an interest rate increase. That is no longer the case.

The tax credit for first-time home buyers for up to $8,000 was over in April. Since then, housing transactions have nearly vanished. The mortgage loan interest rate has fallen to historic lows. The economic upturn that authorities claimed earlier this year simply the result of economic stimulus measures by the United States government.

Events are just as somber outside of the United States. From all appearances, a $1 trillion relief package ended the financial crisis that hit Europe. Still there is not a sign of recovery. Germany provided the needed stimulus funds, but is no longer providing capital to keep failed economies that have squandered credit with bankers solvent. Efforts to revive the economy have resulted only in more loss as bankers continue to plunder with their derivative cons. The U.S. has been fearful of making changes for the banking and finance community. Central bankers are still in charge, printing dollars as if there were no tomorrow.

Job are gone in the United States, likely forever. This is the admission of VP Joe Biden a little more than a week ago. States are looking at emergency measures to see what they can do to avoid the bleeding of jobs to other lands and to other peoples. Arizona is due to begin enforcement of a controversial immigration policy that is designed to return employment back to Arizona residents since measures by the federal government have been lackluster to non-existent in many places. The nation is full of illegals, the exact number unknown.

The price of a global economy is likely to be high. Every economy is subject to bring another one down. No one has discovered a way to move out of the doldrums. $787 billion in the U.S. was designed to boost domestic consumption, but the market is still cold. Congress has moved to bolster the economy through The Buy American Act, a ancient law passed in 1933 that requires the suppliers of the government to use American made products. Lawmakers are afraid to close tax loopholes that have remained open for corporations since 1991. As a result, nothing changes.

This has cooled temporary benefits of trade by corporations in the U.S.  known as the trade deficit. Corporations don’t care about this public denuding of wealth. They simply look to their own profits, not a sustainable relationship over time. Politicians outside of the U.S. want to promote free trade, as if the United States has more to offer in this regard. Even during the recession, the States were the primary agent of consumption for the world. Reckless spending, careless law and the rise of the corporate oligarchy has resulted in a new world, with a more level playing field. That is, after all, what globalists have wanted. This means that the big players that the globe depended on for economic sustenance are no longer the powerhouses they once were.

The nation is in an economic quagmire because it has ceded its wealth to corporations, a.k.a. multinationals and central bankers. The common opinion is that nations should not try to survive at the expense of other nations. Even so, the reality is that this has always been the case. The homogenized sameness of global balance supports only those that are in place to take advantage of it. The majority of the world will suffer at the hand those few that won’t. What’s new about that? It’s simply more political pandering that benefits a few.

March 18, 2009

The Corollary of Banking Greed

greed-is-good-2“Greed is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.” Michael Douglas was privileged to echo those memorable words in a timeless Hollywood movie that resounds the philosophy of much of the financial world without apology. Those words now cut into the souls of mainstream Americans.

The corollary of banking greed dictates that financial greed is opportunity and entitlement magnified by lack of authority. Wall Street has reveled in this truth for decades and the results of this unpleasant law have come to roost. AIG, once held to be the bastion of risk management, has proved the effect of this corollary as they continue to mandate runaway bonuses for what amounts to the summary destruction of everything that America holds dear where money is concerned. Americans are taking their authority back.

Government is apparently into the payoff. We now have a mystery amendment in the recent stimulus package. Senate Banking Committee Chairman Chris Dodd added a compensation restriction to the bill. The Dodd Amendment provides an exception for contractually obligated bonuses agreed on before Feb. 11, 2009.

The Senate Chairman has egg on his face. He claims that the original amendment did not include that exemption and he denied inserting the provision. “I can’t point a finger at someone who was responsible for putting those dates in. I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.” One of AIG’s key offices resides in Connecticut. Connecticut Senator Dodd was AIG’s largest single recipient of campaign donations during the 2008 election year totaling more than $100K.  Heck, it’s just more convoluted behind-the-scenes favoritism and payola in the highest ranks of federal government.

The good news is that this writer does not need to rail about the entitlement attitude of AIG, Wall Street or Senator Dodd. The good people of America have this issue firmly in hand. The uproar of the public has brought threat of injury and permanent demise to what used to be seen as harmless financial types. America isn’t waiting on Senators and Representatives to utter their glib proclamations about how they are preparing to tax the bonuses to get your money back. How is that for ‘in the box’ thinking? We are now taxing our own money back?

Heck, America isn’t waiting on government reaction or platitudes. Americans are ready to take this matter into their own hands. A few choice folks are willing to go into AIG gun’s-a-blazing to stop the abuse of trust in a company that is now 80 per cent owned by the American taxpayer, while millions sit idled at home with recent job losses. AIG employees now fear to go to work. Extra guards are posted at the door. Chaos is in the ranks as the corrupt corporation structure reels at the public reaction. Americans are prepared to take matters into their own hands. The federal government isn’t prepared for a lynching. Congress is exploring the possibilities in hearings. ~ E. Manning

February 9, 2009

Mortgage Bailout on the Way?

obama-mortgage-fingerprintsRemember the mock outrage of so many politicians last year as the U.S. economic national debt ceiling approached $10 trillion? Last October, when we heard about a $700 billion bailout of the financial system, it seemed like all the money in the world as a manner of speaking. Never mind the debt ceiling since President Obama doesn’t recognize national debt as an issue. Since then, the collective “we” in this country have managed to spend another $10 trillion without accomplishing a thing beyond buying preferred shares in certain banks. The year isn’t over yet (it’s only February 9th) and more economic stimulus is probably on the plate as job losses continue.

How has the nation lost its’ way? A lack of common agreement regarding simple principles and a common vision for the future that makes sense reveals the true crisis. Deceptive flawed thinking among lawmakers portends a real problem for the future as far as the common American is concerned.  Disagreement and strife is the real standard that lawmakers hold to. There has been no presidential honeymoon that this writer can see. We have forgotten what stewardship really is. Hope isn’t on the plate where elected lawmakers are concerned. A divided house cannot stand indefinitely. Perhaps President Obama needs to campaign to the American people to grip some sort of vision….but I digress from this mental exercise.

Another couple of trillion dollars would pay off every residential mortgage in the country and Americans would be home free…literally. What foreclosure crisis? Every American with a home would have a piece of America to call their own without a bank involved. Think of the quick national stimulus  the nation would enjoy as everyone spent their house payment on disposable income and new vehicles, the current blight of lack in the current economy.

The fact remains that the national foreclosure crisis is always on the back burner, yet is blamed as the basis for the nation’s economic demise. Naturally, lawmakers can’t support any kind of quick national housing stimulus that I sarcastically penned because of the $40 trillion plus in potential interest  income that scandalous bankers would never receive because of early prepayment before the term. Any bailout like that won’t happen because it takes power away from the system. Taking money away from bankers would be far too simple while firing and imprisoning financial thieves is too difficult and embarrassing.  Real economic stimulus is far too simple when it comes down to rewarding honest income producing activities. Instead, politics simply gives bankers more money as if that will really solve the problem as they complain about esoteric banking derivatives that nobody knows how to fix. Let Timothy Geithner have a go at this bailout.  Based on what has been discussed, the nation is still looking at investment shell games that are no better than what bolstered the economic crisis to begin with on Wall Street. That is the financial literacy that the Federal Reserve and Wall Street know. ‘Democrats’ deserve a chance to repair the system and they will have that chance.

Can you imagine a retired economist presenting such ideas and speaking in such a way? Remember, it is always about money and authority, but then it always comes back to money and the status quo. That’s all about authority too. ~ E. Manning

January 31, 2009

Unemployment and Government Stimulus

economic-ideaAs Digital Economy has previously noted, the heralded stimulus plan is mostly a safety net for government services, government jobs and the disadvantaged, including the recently unemployed. What is the current ‘$825 billion’ stimulus plan going to do for the recent numbers of jobless Americans?

• $43 billion for increased unemployment benefits. Weekly benefits will go up by $25 a week and the amount of time the unemployed may claim them will be extended by at least 20 weeks, plus another 13 weeks for those in high-unemployment states.

• $39 billion for expanded health care benefits for the unemployed. The federal government will reimburse states to extend Medicaid coverage for the jobless through Dec. 31, 2010. For those who want to keep their old employer’s insurance plan, the government will subsidize their Cobra payments – paying 65% up to 12 months. Cobra eligibility will be extended for some groups of workers.

• $20 billion to increase food stamp payments by 13%. For a family of four, that means an average increase of $79 a month – from $588 now to $667 if the current legislation passes.

internet-personal-businessThe largest opportunity for economic growth, especially for small business and the individual in these times, remains on the internet segment of the digital economy. In other words, Americans need to get creative and found a personal small business based on solid business principles while employing creativity. I am not referring to internet hype or ‘affiliate business’ that has become the rage and plague of the internet. The fact remains that you cannot depend on Wall Street or Main Street Corporate America for your livelihood. Counter to the intuition of business activity and the economy, the internet remains a bright spot for many, Amazon.com among them. ~ E. Manning

January 29, 2009

Unemployment Chills U.S. Economy

Filed under: banking — Tags: , , , , , , , , , — digitaleconomy @ 10:06 pm

unemployedInitial claims for state unemployment insurance benefits increased to a seasonally adjusted 588,000. That number is actually larger and growing by the day. For example, an assortment of companies across various industries announced more than 100,000 job cuts. Media publicity is calling the job losses the worst since 1945. Last year, the U.S. lost more than 2.6 million jobs. This year, Digital Economy is projecting at least 4 million in U.S. job losses based on current evaluation of the economic crisis and the inability to stem the tide of the recession.

More and more Americans are continuing to draw unemployment instead of finding employment. The curtailing of basic economic activity has great repercussions as the swath of unemployment grows. “If people aren’t coming to work, then they aren’t buying gas, they’re not stopping by the store or the pharmacy and they aren’t going to local eateries,” stated Tennessee Chamber of Commerce board member Susan Meece.

Wall Street firms like Standard and Poors long for the appearance of economic healing so that Wall Street can get on with the business of continuing to loot the economy and reaping corporate and investor profits. You always hear a mindlessly optimistic edge from their economists, who are little more than profiteering cheerleaders that hope to ignite a flurry of economic activity and profitaking on Wall Street in the name of business expedience. Right now, the reality is otherwise.

unemployment3What is worse, many are settling for underemployment or part-time work in an effort to make ends meet. This doesn’t account for fixed expenses like house payments, auto payments and child support. To make matters worse, many states are far behind on processing the unemployment payments, resulting in additional risk of the recipients losing what assets they have including housing. Some states are reported to be experiencing a backlog of more than 3 weeks waiting time before the first check is received. This reality place heavy stress on an already stressful situation, especially where other family members like children are concerned.

Because of record energy costs last year, energy rates in most states are at record levels without hope of reprieve for the average citizen. Electric companies have been granted record rate increases and are now enjoying a bonanza during a time when other energy costs have dropped and stabilized. Still, no effort is being made to adjust electric rates. Instead, federal grants are being made to municipalities to help citizens keep their electricity on.

unemployment4The recent government stimulus is designed to cover the intensive needs of federal and state government now. Jobs and promotion of economic activity is not the priority of recent legislation. A band-aid approach is preferred. Apparently, economic stimulus is now considered to be government giveaways and federal programs. While covering those in need is commendable, it does little to directly assist the ailing economy beyond supporting the current safety net for displaced workers and the disadvantaged. ~ E. Manning

January 28, 2009

Congress: We are not the Experts (The Real Truth about the U.S. Economy)

kanjorski-banking-economyIn a CSPAN interview, Democrat Representative Paul Kanjorski, the Capitol Markets Subcommittee Chairman, made some revealing confessions about the expertise of the U.S. House and Senate, the facts behind the scenes during the EESA Stimulus plan last year and the real plight of the U.S. economy.

the actions of the Secretary of Treasury and EESA bailout

“Things were done that were misunderstood. We did not give the $700 million for the purpose of lending money. It was never in the program (TARP, EESA) It was misconstrued initially and put together with the suggestion by the Secretary of Treasury that we would be buying what we called dirty assets, defective mortgages and securities in these banks and that the government would find a way to create a market, buy them in, take them off the balance sheets so that the banks could continue to function normally…I supported that. But another part of the bill, we gave jurisdiction and authority to the Secretary of the Treasury to make investments in banks. He had very wide authority because, quite frankly, we (Congress) are not the experts on the Hill as how to solve this problem and the problem is multifaceted, so we gave great flexibility to Secretary of Treasury to act.”

The near collapse of the economy and U.S. government

“I was there when the Secretary and the Chairman of Federal Reserve came those days and talked with members of Congress about what was going on. It was about September 15th. Here’s the facts: we don’t even talk about these things. On Thursday, at about 11 o’clock in the morning, the Federal Reserve noticed a tremendous drawdown of Money Market Accounts in the United States to the tune of $550 billion. It was being drawn within the space of an hour or two. The Treasury opened up it’s window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. The decided to close down the operation, close down the money accounts and announce a guarantee of $250,000 per account so that there wouldn’t be further panic out there. That is what actually happened. What if they had not done that? Their estimation was that by 2 o’clock that afternoon $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States and would have, in 24 hours, the world economy would have collapsed. We talked about, at that time, what would have happened, if that had happened. It would have been the end of our economic system and our political system as we know it.”

“That’s why, when they made the point, we’ve got to act and do things quickly, we did. Now, Secretary Paulson said, Let’s buy out these subprime mortgages. Give us latitude and large authority to do many things as we decide necessary and give us $700 billion to do that. Shortly after we enacted our bill with those very broad powers, the UK came out and said ‘No, we don’t have enough money to buy toxic assets. Instead, we are going to put our money into banks so that their equity grows and they’re not bankrupt. The UK started that process. That’s true, it was much cheaper to put more money in banks as equity investments than to start buying their bad assets. It was early determined that we would have to spend 3 to 4 billion dollars of taxpayer money to buy these bad assets. We didn’t have it. We only had $700 billion.”

“So Paulson made a complete switch, went in and started putting money in and buying securities and investing in banks in the United States. Why? Because if you don’t have a banking system, you don’t have an economy. Although we did that, we didn’t have enough money and as fast as we did that, the economy has been falling. We are really no better off than we were off today than we were three months ago because we have had an decrease in the equity positions of banks. Other assets are going sour by the moment.”

the real truth of the matter according to Paul Kanjorski

“Now, we’ve got to make some decisions. Do we pour more money in to the extent that the money goes in…I, myself, think that we ought to take the time, analyze where we are, have the people (American public) understand…We need to really inform (the public) as to the facts and get input (from them). Perhaps (the public) has better ideas. We aren’t any geniuses in economics or finance. We are representatives of the people. We ought to take our time, but let the people know that this is a very difficult struggle. Somebody threw us out in the middle of the Atlantic Ocean without a life raft and we are trying to determine the closest shore and whether there is any chance in the world to swim that far. WE…DON’T…KNOW.”

Remember who actually threw the economy into “the middle of the Atlantic Ocean without a life raft.” We can offer that credit to greedy unscrupulous bankers, a corrupt banking community, unattentive government regulators and politicians that gloried in the temporary economic bubble that the moral bankruptcy created. Never forget that America! ~ E. Manning

U.S. stimulus trivia: the latest stimulus provision provides enough spending to give every man, woman, and child in America $2,700.
President Obama has said that his proposed “stimulus legislation” will create or save 3 million jobs. This means that this legislation will spend at least $275,000 per job. The average household income in the U.S. is $42,000 a year. The way that the stimulus is currently written will probably save mostly state and federal government jobs. The current stimulus is not designed principally for economic stimulus for Main Street.
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