Busted: Bankers and The Global Economy

August 19, 2008

All Quiet on the Western Front

Overall the news has been moderate with folks talking on and off about recovery sometime next year. Earlier in the day, the scuttlebutt was about recession concerns and corporate defaults, but later in the day, that worry had faded compared to inflation fears. Fear is what we have sold ourselves as the bankroll of greed and carelessness. Banks think that they have managed their resources well as they have cut back and are watching for corporate defaults as several prime economies continue to decline. Authorities are quiet, waiting for the next shoe to drop with inflationary and recessionary pressures.

The only man with a soul in the Federal Reserve, Richard Fisher, has been complaining about the refusal of the Federal Reserve to do anything meaningful about inflation. He proclaims food and oil prices have “overshot” on the upside, and that the Fed cannot afford to “gamble away” its credibility by failing to act against inflation. Strangely, based on what overseas influence says, the Fed has already done just that based on talk from as long as a few months ago. The Fed has no credibility. However, the Fed’s credibility is a symptom of banking abuse, by now a tired haggard topic. Raising interest rates is all the Fed can really suggest to combat inflation. Intelligent people know that Fed interest rates have little to do with inflation or recessionary recovery. Maintaining a viable economy is the key. Politicians have forgot that.

The Federal Reserve is in disagreement about what they can do to stem the tide of increasing and debilitating inflation. A few say that tightening the credit market is the answer. Inflation is double the Fed’s underestimated estimates and expectations. That reality isn’t much different than Europe. Inflation is a symptom of a lack of economic viability. The U.S. economy and global economy is rife with overprinted devalued greenbacks much like a cancer. Authority is focused on economic keys instead of allowing the individual to prosper.

Central bankers and economists really don’t know what to do about inflation, much less admit the real severity against global economies. The reality is that once a downward cycle begins, quietly waiting is the single best thing that can be done as the correction made by peoples and businesses in the economy adjust to the current economic reality. There is no disgrace in recovery for that is exactly what we want. A return to what brought the U.S. and the U.K. to the current recession is exactly what we don’t need. Bankers need to be bent over and heavily spanked for they are the ones that have precipitated the crisis we are dealing with aside from the fact that the country has lost its’ soul where independent job creation is concerned. The problem has become systemic because of the insistence on the U.S. government on crippling personal control.

The reality is that bankers have a huge advantage with the fractional reserve. The are able to loan out 90% of everything they have on the books over and over. In that regard, the banker’s ability to make money would seem almost limitless, but that isn’t enough for them. Instead, they have developed creative banking instruments like CDOs, designed to catapult profits into the stratosphere. Bankers abused the mortgage marketplace for predatory and creative profit, selling off loan securities to investors. That was unsustainable and dangerous. Instead of doing what bankers do best, the boring hum-drum of bean counting with interest and closely judging and rating those they loan to, they have involved themselves in gross speculation. Unfounded speculation is the debacle and outlook that the world has been hesitant to stop because of the temporary glory of profit. We have become a nation, even a world of shiftless gamblers with an aversion to hard work of any kind.

Everyone is worried because, as Standard and Poor’s says, “lots of damage has been done”. This economist says that if we are willing to learn from mistakes without repeating them, something real and meaningful has been accomplished. Those bankers that have involved themselves intentionally in criminal activities will be taken care by federal authorities, but most banking institutions will seek to buy off the authorities while passing off blame to certain internal authorities as scapegoats.

Since Congress closed for vacation, the U.S. has been in a waiting frame-of-mind with little to do. Everyone is in limbo waiting for a handout instead of getting to the business of life building. There is nobody to petition or to manipulate, the favorite pastime of America. All is quiet on the western front. The war against inflation and the economic roller coaster ride isn’t over yet. We are just now breaching the top of a rather large decline. Have we learned that life is not just an intellectual pursuit?

~ E. Manning


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