Busted: Bankers and The Global Economy

September 13, 2008

Investment Bankers Fear Panic and Unrest

Paulson's Grand Staircase?

Paulson at the Grand Staircase?

With the shakeout of Fannie Mae and Freddie Mac, Lehman Brothers almost seems an afterthought these days. The firm is clearly looking for salvation, but Big Government doesn’t seem so eager for a Bear Stearns type bailout. The problem is that the panic on Wall Street doesn’t affect only the plight of Lehman Brothers, but has the ability to touch the entire scope of Wall Street resulting in economic ripples and collateral damage throughout the U.S. economy.

Are the U.S. Treasury and the Federal Reserve in such fear that no solution is evident or is the weakness of banking institutions creating a problem in an effort to support failing Lehman Brothers? It doesn’t take a rocket scientist to discern that the nation is in the midst of another economic crossroads. However, the national and investor confidence doesn’t ring true with the “optimism” suggested by the press last Monday with Fannie and Freddie in the stock market.

In the past, the god of confidence has been the mainstay of U.S. economic policy. Confidence can only be harmed by allowing failing Wall Street to collapse. Yet, if decline and collapse what were to happen, that is exactly what should happen. The federal government has put themselves in the business of shoring business up instead of allowing for the consequences of business risk or business failures as a result of banking abuse. The reluctance of U.S. authorities to shore up the perception of a crumbling system indicates other more severe economic issues at hand behind the scenes. Wall Street stress is just the tip of the iceberg.
~ E. Manning

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