Busted: Bankers and The Global Economy

September 23, 2008

Global Liquidity Crisis: On the Brink

crisis solution

crisis solution

Turn on the TV, read the paper or peruse the latest internet news. You’ll be told that we’re on the brink of imminent crisis, a lock down of liquidity that must be remedied immediately. The Fifth Avenue Rush is on. The only solution is bipartisan unity in Congress to turn over vast power to the Bush administration and the U.S. Treasury without accountability. The Republican feel-good legislation is in place to save the home of the brave. We can do it if we can do it together. We will save the world for democracy.

The American taxpayer must trust that Henry Paulsen will use $700 billion wisely to snatch up worthless securitized bonds. Sound familiar? In the same way that the Federal Reserve Bank is totally unaccountable and is never subject to audit, the current proposal contains this proviso:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Henry Paulson, because of the massive liquidity freeze, is about to receive kingly authority to solve the current liquidity crisis. Even after the nation spends an initial sum of $700 billion, there is no guarantee of success beyond maintaining the current business, investor climate and monetary markets, shaky though they may be. The entire proposal is designed to bailout the collapsing U.S. financial system and save the world so that the current power structure can continue unchanged, further supporting control over the failing system. In the words of the administration, the fate of every American’s retirement and savings hangs in the balance. That makes many Americans nervous, at least for those that have managed to prosper, save and invest.

bailout money grab

bailout money grab

In one more segment of authority, the executive branch of the Bush administration wants to perform another magnanimous service while exempting itself from any chance of responsibility or review for the pending results.

While the media and Congress are fussing about the lack of oversight on the project or who Henry Paulson uses to assist him in the huge money grab, the Federal Reserve Bank and the International Society of Bankers sit quietly by watching the drama like ripe fruit ready for picking. A few have pointed out that the lack of oversight is a grand opportunity for abuse or profitaking.

This current idea proposed is bold and transparent in simplicity. Have the Federal Reserve wave its monetary wand, giving buddies in the former investment banking industry piles of cash for rooting out the bad bonds and making a huge chunk of debt go away as the Federal Reserve apportions more American gold to send quietly to Swiss vaults while clueless Americans aren’t watching. No rush about the physical location of gold. International Bankers will count it anyway as their personal profit and add it to the national debt. Never mind that the Fed is already holding all the nation’s gold. Fort Knox is an illusion.

fort knox gold

fort knox gold

The funding credits will never actually need to leave the Fed. The entire process can be done electronically without a trace. The craft is in the paperwork that the U.S. Treasury will alter, permanently erasing a mountain of fraudulent debt that only the banking community and authorities can see. The scheme is perfect because the scheme is all about semantics anyway.

Never has such a bailout been proposed with such secrecy. Even the federal bailouts during the Great Depression and during the Savings and Loan collapse of the 80s never suspended judicial review. Enter an emboldened U.S. Congress led by a Democrat majority that seeks oversight and taxpayer protections. Congress claims to be keenly interested in recouping any possibility of future income derived from currently worthless securitized bonds as the Bush Administration claims. Yet, the American taxpayer will never see a penny from these worthless pieces of paper.

homeowner bailout

homeowner bailout

Democrats want to be certain that going forward, any institutions that benefit from financial insurance also bear the cost of that insurance. Congress is also interested in bailing out beleaguered homeowners that face losing their homes. On “The View,” Whoopi Goldberg and Bill Clinton agreed that enraged Americans need the same bailout consideration that Wall Street and the financial system is getting. Unlike Congress, Whoopi and Bill weren’t talking about new bankruptcy laws that Barney Frank thinks will do the trick. Americans want cold hard cash that they can retire on, like the bankers that robbed the nation.

While all of these opportunities can be justified and even supported, the possibility of pork barrel spending is likely to escalate as Senators and Representatives see the opportunity to bolster their interests. That is the part and parcel of shameless American politics in this age.

credit addiction

credit addiction

Meanwhile, a desperate executive administration and U.S. Treasury Secretary are prepared to do most anything to get legislation through Congress. Reputations are now on the line.

Paulson and President Bush have argued that the alternative is that credit markets will remain frozen. Businesses will fail because they can’t get the loans they need to operate. The economy will grind to a halt because consumers that account for two-thirds of U.S. economic activity, won’t be able to get the credit they need to keep spending. Just think, it all started with broadening the profits of bankers by using compound interest instead of simple interest. We’ve come a long way baby.

national security

national security

Unbridled credit is the insanity that this nation has been built on in the last four decades. Unbridled credit is what has enabled this nation to rise prices without raising wages. Unbridled credit is what has allowed the American consumer to sell himself into slavery to financial interests. Unbridled credit is what has built the power that politicians and business have come to depend on. Unbridled credit is why even Big Business seeks cheap Federal Reserve funding. The Federal Reserve and the International Bankers hold the key to that credit through the auspices of the federal government. The spectacle is all about power and the fear of change. This is the nation’s new national security issue. ~ E. Manning

September 7, 2008

Freddie & Fannie: The American Dream

For years, Freddie Mac and Fannie Mae have bragged that they are in the “American Dream Business.” If that is the case, the American Dream has just gone bust. In many respects, it is the beginning of the end although the U.S. Treasury wants to paint the idea of a new beginning.

The process ends a 70-year experiment that began as an attempt to get a struggling nation back on its feet after World War II, ending in arguably the largest nationalization in global history. Fannie Mae and Freddie Mac have been forever tainted by the mortgage meltdown and securitized loans.

Essentially, the mortgage twins are a colossal fraud full of failed policy decisions and misplaced trust. Banks loan the “creditworthy” money for mortgages. Fannie and Fannie bought the loans as-is and packaged them into bundles to create bonds that external investors could purchase. All the while, the government and taxpayers are on the hook for the entire spectacle as the entire scheme for profits unraveled with the introduction of the mortgage meltdown.

For decades, the perception of these bonds has been the same as the safety of the U.S. government bonds. The mortgage twins were established with the complete backing of the federal government. What could be safer? Whether such a guarantee ever actually existed is the subject of much financial debate now. The “government-sponsored enterprises”, now failed is the result of twelve months of slow painful devaluation in the mortgage market combined with the idea of government guarantees that couldn’t solve the problem of worthless securitized bonds and suffering confidence.

mad lady liberty

mad lady liberty

The disingeniunity of the government and the mortgage twins was so large and the undercapitalization so pronounced, that investors bailed out in large quantities. That reality is also a reflection of the deceptive state of mind of the U.S. federal government. The federal government is no longer based in any kind of true reality where policy or money is concerned. They have lost their way and their collective minds, hopelessly addicted to wishful thinking and the addiction to monetary power without the ability to back it.

The Feds were limited as to how much they could borrow to cover the mortgage twins. Now that Fannie and Freddie are nationalized, the federal government vainly hopes that full confidence will be restored so that investors can be coaxed back into the fold of business. The burden on the U.S. taxpayer is huge and the moral hazard brought about by carelessness is no smaller.

How can anyone trust an agency or body of people so corrupt or hopelessly addicted to wishful thinking. Politicians and bureaucrats are addicted to notions that have permanently altered and depressed the perception of the American Dream of owning a home.

will lawmakers wake up?

will lawmakers wake up?

Barack Obama mentioned that the bailout must somehow protect taxpayers. Republicans have made no such statement to date. Still, the truth is that taxpayer protection as a result of government oversight and abuse of regulation shows the moral and financial bankruptcy of the federal government is the worst way. They are incapable of any measure of trust or faith.

To make matter worse for Republicans, they have touted smaller government and lower taxes while promoting and acting out the opposite. The takeover of the mortgage twins implies that anything the current government order says is implicitely flawed, a mere placation of the public. John McCain and Sarah Palin are tied into that reality directly by the Bush Administration and Republican policy.

The Congress is not free from blame either and Democrats are guilty by implication as well. The struggle for power and the adoption of ideas that clearly don’t work are rarely corrected. Instead, the steamroller of Congressional law makes constant adjustments in failed policies that will somehow become miraculously repaired if lawmakers just care enough and spend more money that the nation doesn’t have from international bankers and foreign sovereign nations.

The bottom line is that American taxpayers have been greatly wounded and no placation offered by the current administration or long-term politicians have the respect of true patriots. We see the lies, the seduction and the abandonment. Government and lady liberty has become hopelessly addicted to vain thinking where money and endless promises are concerned. The nation is a laughingstock of pathetic liars, made worse by bumbling incompetence and mismanagement. The American people are muddied by corruption and slavery through ineffective and misguided leadership. ~ E. Manning

September 4, 2008

Inflation: Sick of the “I” Word

Yes. Every American knows what the Fed is reluctant to admit. The economy is struggling. Prices remain high. Booyah. It’s a revelation.

It took the Fed and the federal government almost 9 months to admit the truth about the mortgage, banking and finance debacle. They had all the facts and saw it coming. They looked the other way in the hope that you might not notice or in the vain hope that a pied piper might come along and enchant all the rats. Shortly after that mortgage and finance truth was reinforced by reality, Bear Stearns collapsed, threatening the fall of U.S. investment bankers. Now the Federal Reserve has effectively nationalized every important sector of the banking community within the United States in the effort to keep the show running in the spirit of confidence. The federal government a/k/a the American taxpayer is theoretically on the hook for the entire expense, enslaving the nation to an uncertain future unless we wise up.

We’ve heard about the “R” word, but never has another word meant more to a nation or a global economy in consternation than the infamous “I” word that economists, writers and politicians cannot fail to utter in quiet undertones of fear. What make the “I” word so dangerous is the lack of power against it. Inflation isn’t just a cycle. Inflation is a symptom of unbridled lack of discipline and theft by the Federal Reserve and central bankers themselves. The fact is that authorities have decided that if we mention inflation enough, the public will actually stop taking it seriously.

Inflation has been described as “creeping.” Inflation may well be creepy and may well be advancing, but inflation has showed its ugliness rather dramatically. The nation faces higher inflation than in more than 20 years. Even worse, the nation flutters on the brink of truly nasty stagflation.

The officials in charge won’t readily admit such a thing. First, we have invented hard and fast rules about such topics. Economics is a science say many experts. We have strict definitions for these kinds of things say leaders. That depends on what school of thought you choose to believe. Still, you may be right if you consider economics to be on the same level of science as evolution. The best and the brightest are still unresolved about both except where it fits an agenda for power as they constantly update the facts in an effort to make their case.

In the meantime, prognosticaters are expecting a “rough patch” to come up soon. This patch could happen at any time. Christmas is going to be very bad, business pundits say in prophecy. Bad depends on the level of expectations. If consumers continue to retrench by only buying what they need, the economy is doomed in the eyes business retailers and tax collectors.

American consumers may be in a “slump”, but business and government is in the midst of a crisis. Government has grown to depend on more consumption and rosy projections to raise operating funds by taxation. Business has grown to depend on cheap foreign labor to slash expenses while raising prices. Inflation comes as much from greed and usury of the little guy on both sides as it does from devaluation of American currency and weakness in the dollar.

Food and fuel prices have knocked inflationary values out of the park recently. The Fed says that fuel prices have moderated somewhat, but are still elevated. Considering that the average barrel of oil averaged about $37.00 in 2004, the word elevated is an understatement.

Then the Fed blithely states that wage gains are modest. This is an obscene statement considering that wages have been flat for years, even when adjusted continually for “nominal 3 percent inflation.” No danger for inflationary pressure here because employers are laying off workers in droves in an effort to save the bottom line of business. Employers haven’t been known to be “overly generous” in at least 3 decades.

Manufacturing is weak or declining as corporations close down facilities and offshore jobs to foreign nations with significantly lower wage rates and taxation. The things that America still manufactures like steel, heavy machinery and aircraft are cheaper for foreign buyers because of the weakness of the devalued dollar. This possibility combined with stimulus payments are being given credit for growth figures in the second quarter of 2008.

The largest problem with concepts like recession and inflation is that like every other economic idea, there isn’t much agreement on much of anything. Now that is science. ~ E. Manning

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