Busted: Bankers and The Global Economy

May 16, 2008

Don’t Be Spooked, Don’t Give Up

Filed under: banking, federal reserve, investment, money — Tags: , , , , , — digitaleconomy @ 12:18 pm

Federal Reserve chairman, Ben Bernanke, urged banks to prevent deeper damage to the economy by continuing to raise capital despite losses from the credit crisis. “Firms are hunkering down,” he told a conference in Chicago. “They have at least partially replaced the losses with new capital raising, but not entirely. They are being rather conservative in making new loans, which has implications for the broader economy.”

Mr Bernanke and the US Treasury secretary, Henry Paulson, have repeatedly said firms should keep increasing their funds, seeking to alleviate the impact of the credit crunch.

Raising investment capital is the only real hope that bankers have. The measures produced by the Fed are temporary in nature to sustain the banking economy for the short-term. Some banks, like CitiBank are seeking to sell off assets to raise the needed capital.

Once again, let the buyer beware. Using a general aggregrate statement about investments/assets is not a safe business, even at fire sale prices should that happen. A qualified investor will need every shred of knowledge to make a reasonable choice. Bank marketing has proven deceptive. Since the market belongs to the buyers, finding good investments (once again by highly qualified knowledgeable investors) might not be as difficult as it would seem.

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