Busted: Bankers and The Global Economy

July 11, 2010

Recession: The Ol’ Double Dip?

What is happening in the U.S. economy? The  newborn atmosphere of a slow recovery has plummeted since the start of the year when financial agencies were debating when to announce an interest rate increase. That is no longer the case.

The tax credit for first-time home buyers for up to $8,000 was over in April. Since then, housing transactions have nearly vanished. The mortgage loan interest rate has fallen to historic lows. The economic upturn that authorities claimed earlier this year simply the result of economic stimulus measures by the United States government.

Events are just as somber outside of the United States. From all appearances, a $1 trillion relief package ended the financial crisis that hit Europe. Still there is not a sign of recovery. Germany provided the needed stimulus funds, but is no longer providing capital to keep failed economies that have squandered credit with bankers solvent. Efforts to revive the economy have resulted only in more loss as bankers continue to plunder with their derivative cons. The U.S. has been fearful of making changes for the banking and finance community. Central bankers are still in charge, printing dollars as if there were no tomorrow.

Job are gone in the United States, likely forever. This is the admission of VP Joe Biden a little more than a week ago. States are looking at emergency measures to see what they can do to avoid the bleeding of jobs to other lands and to other peoples. Arizona is due to begin enforcement of a controversial immigration policy that is designed to return employment back to Arizona residents since measures by the federal government have been lackluster to non-existent in many places. The nation is full of illegals, the exact number unknown.

The price of a global economy is likely to be high. Every economy is subject to bring another one down. No one has discovered a way to move out of the doldrums. $787 billion in the U.S. was designed to boost domestic consumption, but the market is still cold. Congress has moved to bolster the economy through The Buy American Act, a ancient law passed in 1933 that requires the suppliers of the government to use American made products. Lawmakers are afraid to close tax loopholes that have remained open for corporations since 1991. As a result, nothing changes.

This has cooled temporary benefits of trade by corporations in the U.S.  known as the trade deficit. Corporations don’t care about this public denuding of wealth. They simply look to their own profits, not a sustainable relationship over time. Politicians outside of the U.S. want to promote free trade, as if the United States has more to offer in this regard. Even during the recession, the States were the primary agent of consumption for the world. Reckless spending, careless law and the rise of the corporate oligarchy has resulted in a new world, with a more level playing field. That is, after all, what globalists have wanted. This means that the big players that the globe depended on for economic sustenance are no longer the powerhouses they once were.

The nation is in an economic quagmire because it has ceded its wealth to corporations, a.k.a. multinationals and central bankers. The common opinion is that nations should not try to survive at the expense of other nations. Even so, the reality is that this has always been the case. The homogenized sameness of global balance supports only those that are in place to take advantage of it. The majority of the world will suffer at the hand those few that won’t. What’s new about that? It’s simply more political pandering that benefits a few.

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May 28, 2009

Investors Afraid of Bailout Involvement

Filed under: banking, economy, government, money — Tags: , , , , , , , , , , , , , — digitaleconomy @ 10:41 am

toxic debtTo cleanse bank balance sheets of distressed loans, other unwanted assets and “reduce the associated market overhang”, the FDIC and Treasury launched the Legacy Loans Program. Now the plan has stalled and is likely to put be on hold, terminated or modified again as stifled feds puzzle over their dilemma.

The Legacy Loans Program as crafted by the Federal Deposit Insurance Corp is part of a $1 trillion Public Private Investment Program announced back in March. This program was theoretically designed to encourage banks to sell securities and loans weighing down balance sheets to willing investors. Many banks, flush with bailout cash, have gained a feeling of stability with previous government bailout and have become less eager to be involved in the Legacy program.

Prospective buyers and sellers are reluctant to be involved in such an endeavor and have voiced their concerns to the FDIC about participating. The majority are fearful that the federal government will change program rules in the ‘middle of the game’. Investors are also fearful of financial backlash from an overall hostile attitude against Wall Street.

Bailout ideas simply don’t seem to be working in the realm of public opinion and scrutiny. Even investors don’t want to be attached to the crooked banking mess that the bankers have created. ~ E. Manning

legacy-loans

June 16, 2008

The U.S. Housing Market Turnaround

As home and real estate prices fall, home buyers will lose a primary motivation for paying high prices for homes: making money on home price appreciation. If you don’t fall into that category and money is not an object (probably about 1/2 of a percent of home buyers), then you aren’t affected by the market. When money is not an object, your home is your pride and a merely a symbol of your wealth for the world to see.

In today’s economy, it is wise to realize that falling home prices are a symptom of a problem. Lots of people want to live in and buy homes in America. However, there is a difference between paying loads of cash for a home and spending as little as possible. Right now, this economy is “somewhere in-between”.

The housing market will, in fact, turnaround. Prices must drop a substantial amount for the possibility of a market turnaround. This is known by pundits as the dreaded “market correction”.

For years, banks and finance companies have depended on the rising value of real estate to bring home the bacon. Creative financing and the dream that housing value would never drop fueled the fire of the great mortgage bubble.

Now, the value of homes and requirement of financing in order to afford a home has come back to bite the world of banking and finance in the boo-boo. When the market value of homes drop en masse because of a market correction, demand will ultimately decrease because people are worried they will lose money when they buy a home. Given the miracle of modern financing, this is a sure bet. Given that the equity may be only 10% of the value of the home, Mr.and Mrs. Homebuyer could easily lose all of their money. This is not a wise investment. The typical home buyer has become afraid to buy. They simply cannot afford the high stakes.

Seller panic ensues as home sellers find it harder and harder to sell their homes. Buyer panic comes about when prices drop rapidly. Buyers don’t buy even with drastically lower prices.

The lack of easy financing in banking puts a home beyond the ability of many home buyers. This factor puts additional downward pressure on the housing market. With the advent of banking problems, the zero down-payment is likely a thing of the past for most home buyers as well.

The down-payment was actually designed to protect the banker in the event of default. Considering that bankers create money out of thin air with the fractional reserve power they possess, this is a straw dog argument that old bankers used to make. In the midst of their pain, bankers will be screaming for down-payments again, thus negatively impacting the market they seek to bolster.

Job security is also a major factor in the housing market. For years, wages have not rose appropriately to keep up with expenses. Jobs are being exported overseas. All the while, bankers have been there to convince Americans that they can afford a piece of the dream. As a result of financing and creative sales, the finance industry created a boom based solely on credit, ultimately generated by commercial bankers and the Federal Reserve.

Because of the failure of job market wages to appreciate over the past thirty years combined with the idea of financing every purchase and whim, Americans have impoverished themselves as a whole. The ponzi system of finance has played out the limits of its endurance for now.

For now, the home buyer alone will determine economically sustainable levels of housing prices. Only the best homes will be able to command the best market prices. The buyers market is the reality. Everyone else will have to make due until a balance is established. In the meantime, millions of nondescript tract homes sit empty while the economy tries to decide what to do with them. Hang on. A new bubble is around the corner.

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