Busted: Bankers and The Global Economy

June 27, 2010

Jobs & G20: Budget Slashing Fever & Fantasy

To hear the G-20 proclaim it, the U.S. and other “prime economies” had better slash their budget deficits before the world comes to an end. The U.S. Senate quashes continued aid for the unemployed. Wall Street investment firms and banking succeeds in watering down financial reform. The fantasy continues while economists and politicians worry behind the scenes.  Even VP Joe Biden openly admitted that the United States will not regain the jobs that were lost in the “Great Recession.”

The official jobless rate, projected at below 10%, is pure fiction and must treated as such by those that seek the truth. It doesn’t consider many unemployed people that have dropped off the charts into oblivion. Underemployment is a national plague that the Labor Bureau of Statistics has revealed. Many are the discouraged job seekers and those that have settled for part-time work. The U.S. Labor Department shows that there are 79 million men in America between the ages of 25 and 65. Nearly 18 million of them, a record 22%, are out of work. This doesn’t include the underemployed. The impact is larger in African-American men.

The financial markets, like the government lawmakers, could care less about the deficit. Perhaps they should. As a result, investment rates in bonds is down. Almost all of them ignore engineered inflation which pays off central bankers to the tune of about 10% yearly, the real loss in buying power for the nation. In the meantime, the official inflation rate is a “convenient” 3% most years. Powers that be project an inflation rate 2.3% yearly for the next 30 years. Dreamland. Because of what is really a stagflation economy, falling prices and deflation of the dollar are more likely.

Wall Street and multinational capitalism seems to be in robust condition, to the cost of everyone but them. Corporate profit margins have reached record levels at 36% as the average American is short circuited entirely. These profits have never been so high since record keeping began. These figures are much the same as they were in the Reagan administration.

More than half of the national budget funds defense (don’t forget the wars), national debt interest and Social Security/Medicare. Politicians are eyeballing cuts on the latter, often silent as a senior political voice fades away. Don’t kid yourself. You’ll pay for seniors and the disabled one way or the other. Don’t kid yourself about the other major expenses either. Meanwhile, the national budget has climbed steadily for decades in the 6% to 10% range, much higher than the professed inflation rate.

There are no easy answers beyond beginning to live within our means as a nation. For years, Americans had forgotten about this necessity, encouraged by the system to spend endlessly, until the recession hit us between the eyes. Only bankers, multinationals and Wall Street have profited in their own economic bubble. Government has forgotten what economic balance and locally productive jobs mean, threatening to destroy their own system of weights and balances with unfettered spending and wars overseas, designed to keep terrorist attacks overseas and out of America. We have created our own reality. Are we willing to change?

April 1, 2010

Don’t Get Taken by Pyramid & Ponzi Schemes

What are some of the similarities and differences between ponzi and pyramid schemes?

Pyramid schemes and ponzi schemes are closely related. They both involve paying longer-standing members with money from new participants, instead of actual profits from investing or selling products to the public. Here are some common differences:

Pyramid Scheme
Ponzi Scheme
Typical “hook” Earn high profits by making one payment and finding a set number of others to become distributors of a product. The scheme typically does not involve a genuine product. The purported product may not exist or it may only be “sold” within the pyramid scheme. Earn high investment returns with little or no risk by simply handing over your money; the investment typically does not exist.
Payments/profits Must recruit new distributors to receive payments. No recruiting necessary to receive payments.
Interaction with original promoter Sometimes none.  New participants may enter scheme at a different level. Promoter generally acts directly with all participants.
Source of payments From new participants – always disclosed. From new participants – never disclosed.
Collapse Fast.  An exponential increase in the number of participants is required at each level. May be relatively slow if existing participants reinvest money.

What steps can you take to avoid schemes and other investment frauds?

When you consider your next investment opportunity, start with these questions:

  • Is the seller licensed?
  • Is the investment registered?
  • How do the risks compare with the potential rewards?
  • Do I understand the investment?

Many ponzi schemes share common characteristics. Look for these warning signs:

  • High investment returns with little or no risk. Every investment carries some degree of risk. Investments yielding higher returns typically involve more risk. Be highly suspicious of any “guaranteed” investment opportunity.
  • Overly consistent returns. Investments tend to go up and down over time, especially those seeking high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions.
  • Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company’s management, products, services, and finances.
  • Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most ponzi schemes involve unlicensed individuals or unregistered firms.
  • Secretive and/or complex strategies. Avoiding investments you don’t understand or for which you can’t get complete information is a good rule of thumb.
  • Issues with paperwork. Ignore excuses regarding why you can’t review information about an investment in writing, and always read an investment’s prospectus or disclosure statement carefully before you invest. Also, account statement errors may be a sign that funds are not being invested as promised.
  • Difficulty receiving payments. Be suspicious if you don’t receive a payment or have difficulty cashing out your investment. Keep in mind that ponzi scheme promoters sometimes encourage participants to “roll over” promised payments by offering even higher investment returns.

July 28, 2009

Bernanke: Trying to Save Face

Filed under: banking, corporatism, credit, economy, inflation, investment, money — Tags: , , , , , — digitaleconomy @ 1:31 am

puppetFor 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.

July 19, 2009

Economic Depression: American Resentment Flickers Against Corporate Wealth

money green with envyThe 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

June 30, 2009

No Excuses for Bernie Madoff

Filed under: economy, investment, money — Tags: , , , , , , — digitaleconomy @ 10:21 am

madoff slammer 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.

June 17, 2009

Federal Reserve Discovers Deviancy

affordable bankingAbout 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.

fed_warsh_kevinWarsh 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

June 14, 2009

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.”

financial literacyFor 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

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