Busted: Bankers and The Global Economy

October 8, 2008

Nationalizing U.S. Banks; Globalizing Banks

global bailout fever

global bailout fever

If there was ever a question about the nationalization of U.S. commercial banking, that question may be at an end. Treasury Secretary Henry Paulson signaled the government may invest in banks as the next step in trying to resolve the deepening credit crisis. What does investing in banks mean?

The bailout legislation that Congress passed last week to rescue financial institutions gave Henry Paulson broad authority that he intends to use beyond buying mortgage-related assets on bank balance sheets. Paulsen intends on using the initial $700 billion for a far grander notion. He intends to boost the capital of firms with cash infusions with idea of making the nation’s financial system stronger.

The International Monetary Fund has published that banks worldwide are not raising enough capital to offset losses to the tune of a $150 billion deficit. Henry Paulson and the U.S. Federal Government have arrived on their white horse to save the day.

There has been some discussion within the ranks of international central bankers and the G-7 finance ministers of a global banking bailout using identical policies. Britain has questioned this idea. Still, the turmoil is a global phenomenon that central bankers see advantage in addressing to secure their control. Undoubtedly, this will involve an enhanced system of controls and tools to manage the global economy. The real question remains: Are banks globalizing under a single economic control structure?

In Paulson’s mind, regulators will take measures to limit the systemic risk from any single bank failure. The reality is that the systemic risk has already been introduced due to the same lack of regulation. Allowing the same watchdogs to monitor the system is a questionable move that is apparently unavoidable. ~ E. Manning

May 4, 2008

The Federal Reserve Panic Button

With so little wiggle room in the interest rate, we’ve mused about what the Fed intends to do to encourage the market and to free up liquidity. The Fed has come up with another quick fix. It’s called expanding the Term Auction Facility to $75 billion per auction. Now, the Fed is allowing an expansion of what it will receive as collateral for the TAF. The Fed will now accept securitized “junk” bonds based on the subprime and alt-a mortgage loans in exchange for bank credit to expand banking liquidity. This action is hoped to take additional pressures from the liquidity-pressed commercial bankers in the U.S.

Interestingly, similar measures are being adopted at other international “fellow central banks”. (more…)

April 27, 2008

U.S.: Bailout Debt Grows Larger

The Federal Reserve recently issued their miracle chart showing very little of real meaning. The gray areas are times of documented recession. You will notice that even though the United States is in a recession, the recession is not noted except by the huge pileup of bank debt. I would suppose that the Federal Reserve and the U.S. Treasury are still debating when they want official recession to begin. (more…)

Create a free website or blog at WordPress.com.