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?

November 7, 2009

Wall Street Justice Obama Style

corrupt bankers prisonOver and over again, Americans see the same debacle unroll before their eyes, that is, if they are paying any attention. Earlier this year, billions in bonuses were paid to Merrill Lynch executives as the firm was failing. An agreement was made that Bank of America would pick up the pieces of Merrill Lynch with the support of the American taxpayer and later, BofA was bailed out as well. After a dance with the SEC, no wrongdoing was admitted.

After an investigation by the Securities and Exchange Commission, Banking wunderkind JPMorgan agreed to a $722 million settlement. Why? It all rises from a risky derivatives deal that drove Alabama politics to the brink of bankruptcy. As part of the settlement, JPMorgan neither admitted nor denied wrongdoing despite overwhelming evidence that the financial group did actually engage in acute wrongdoing.

What passes for justice on Wall Street? Regulators give a banking institution that they back a fine that taps the corporate bottom line for wrongdoing. The banks are eager to quickly forget the whole thing by paying a modest fine and getting on with business as usual. There is no admission to wrongdoing and business continues. The government gets a fine to pad their already overbloated budgets that the American taxpayer is already floating. We must be stupid because we keep doing the same thing over and over.

No one admits to corruption, much less to making a mistake. Meanwhile, nobody pays back the taxpayer, much less actually pays off a debt of any kind.  Reality is a round robin of funny money, usury and blatant dishonesty. Where is the outrage? Nowhere, because we are too wrapped in our small lives and/or afraid of reprisals or perhaps the boogeyman. Perhaps by our collective refusal to stand up against politicians and bankers, we are admitting that any American would do exactly the same thing; that not one American is any better. What do you say? Probably very little.

July 7, 2008

Wall Street, Stocks and the Great Depression

Soaring gas and food prices and a stock market that just endured its worst June performance since the Great Depression are draining consumers’ wallets as well as their confidence. That’s what RBC Cash Index says.

Confidence is down, down, down. Fear is up, up, up. Apparently, Americans are lining up with the latest news of economists. Bleak economic times appear to have become self-reinforcing. 18 per cent think their local economy will strengthen in the next six months. Who they polled is certainly a question. Regardless, if you listen to the latest round of economic predictions (more…)

March 5, 2008

The Fed: Helping Distressed Borrowers

On March 4, the affable Fed Chairman, Ben Bernanke spoke to a large group. As usual, what he wanted to say wasn’t as important as what he said along the way. For the first time publicly, he admitted that “mortgage delinquencies began to rise in mid-2005”. This is news coming from conservative Bernanke. It has taken a pounding to get government officials or the Fed to admit to any downturn up until December of 2007. Today, the Fed is facing the music with the banking and mortgage crisis and now has the power to buy and sell securities to protect the economy with the full authority and power of the federal government. With all that heady power, the beginnings of the banking and mortgage crisis can be polite conversation at Fed speeches.

Weak underwriting might not have produced widespread payment problems had house prices continued to rise at the rapid pace seen earlier in the decade.” Bernanke is ignoring the fact the lax lending practices and the inability of borrowers to pay is what created the entire situation, including the markets ability to sustain rising prices. He ignores the banking practices including the honesty of borrowers. Everyone wanted something for nothing. Renters wanted their piece of the “American Dream”. Clearly, the Federal Reserve does not try to hold moral or ethical territory.

fed-numbers.jpgBorrowers are hampered not only by their lack of equity but also by the tighter credit conditions in mortgage markets.” Refinancing is not an option. However, the reality is that refinancing was never the answer. The whole idea of continually refinancing loans to make housing affordable and to artificially sustain and enhance housing pricing is a classic idea of false economy as well as predatory business that could never be sustained indefinitely. Bernanke calls for a vigorous response now. He cleverly calls for care in designing solutions stressing prudence consistent with the soundness of the lender. “Concerns about fairness and the need to minimize moral hazard add to the complexity…” Bernanke, bankers and the administration need a reality check in a big way. Fairness and moral hazard were breached long ago. Encouraging prudent behavior now is like encouraging a late-term pregnant woman to practice birth control. The fruit of the act is already in place and the end result of that act is ready for birth. Clearly, Bernanke and others in the Federal Reserve know this, but are not going to pass moral judgment on anyone. In fact, if you consider that the Federal Reserve receives $406 billion a year on interest-only payments from the U.S. government, you know that the Fed has no moral compass outside of money. There will be no moralizing today, thank you. They are here to clean up the mess and profit from it in any way possible. Using “Hope Now Alliance” standards makes the clean up sound very nice indeed. It’s all about hope now.

E. Manning

“The budget should be balanced; the treasury should be refilled; public debt should be reduced; and the arrogance of public officials should be controlled.” -Cicero. 106-43 B.C.

Each year since 1969, Congress has spent more money than income. The Treasury Department must borrow money to meet the appropriations of Congress. The total borrowed is $9.3 trillion and counting. Even when government officials claim to have a surplus, they still spend more than they receive. The U.S. government using the American taxpayer pays for interest on the debt.

February 5, 2008

Feeling the Silence

bernankenigelparry.jpgThe silence is noticeable. The U.S. Federal Reserve has been very quiet except for making measured changes. There is no effort to apply publicity. You could almost hear a pin drop if it were not for the din of the press. “The Reserve Bank of Australia, the Bank of England and the European Central Bank are all due to meet and dealers will be focusing on whether they are concerned about the severity of the U.S. slowdown and whether (more…)

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