Busted: Bankers and The Global Economy

March 1, 2009

U.S. Budget Goes Bust

obama-camp-lejeuneThe economy is in a tailspin, contracting at a 6.2 percent pace in the last three months of 2008: the worst performance in decades. The White House announced that it will take a 36-percent stake in Citigroup in the hope of keeping it afloat amid huge toxic debt and a continuing crisis of confidence. These are ominous reminders that the nation has critical decisions to make in order to turn things around. President Obama appears to have ditched the Bush administration’s Washington-style budget sleight-of-hand with the attempt to honestly portray what the government will actually spend. In the mind of President Obama, his truth in budgeting approach is designed to help Americans make informed choices. That is exactly what Americans have been doing without government so far. We react to the failures of government, business and even ourselves. Even so, President Obama reveals that $3.6 trillion is to be spent in 2010, with almost $1.2 trillion of it borrowed.

What is President Obama’s message to taxpayers and Capitol Hill? We need to quit magical thinking. All the thing the nation’s needs will not pay for themselves. Laying the groundwork for a strong economy in the future isn’t without cost. Does America want to kick fossil fuels out for a greener future? How will America reform how we pay for health care, so that the nation can get more for our dollars and reduce the ranks of the uninsured? How do we keep Medicare solvent with the swelling rank of the disabled and a steadily growing retirement community? The nation needs a larger federal contribution for our schools. How will the nation repair and maintain roads, bridges, airports and mass transit? Now there is talk of building a modern energy grid. The president is counting on the economy to be growing by 2011. He plans on halving the deficit by 2013 through taxation of the upper class and perhaps through restricting corporate taxes loopholes and offshore banking. Keeping a deficit in the same place is difficult enough with the proposed spending required to save the nation and its’ current power and financial structure. That deficit reduction remains to be seen. Along the way, the nation must discontinue the practice of borrowing, spending and passing the bill to our kids to deal with. We just haven’t figured out how to do that yet.

You can argue that money isn’t everything, but you can’t argue that fact when you are in government and money is everything. ~ E. Manning

October 30, 2008

Economic Hurricane Ravages Globe

U.S. economic contraction is in the news again as quarterly statistics pour in. Central bankers in economies across the world are cutting interest rates in the vain hope of sustaining banking rates for lending. While the United States is reporting the sharpest economic contraction in seven years, this statement is likely quoted to throw you off the economic trail that this is the worst economic fallout in a century. Why? It makes no sense to quote such a fact when the rest of the world is reeling with fear and trepidation with a full factual account. We are still on the front side of the hurricane as it comes into shore.

U.S. business collateral damage is being reported as U.S. citizen bail out of making major purchases and cut back on spending in an effort to avoid the plight of shrinking prosperity. Business have been hit hard by consumer cutbacks and lack of credit. Huge job losses have the nation staggering as confidence wanes. The talk of fiscal stimulus is in the air, now a constant topic in U.S. Congressional hearings. Strangely, many bankers, notably on Wall Street are still trying to issue bonuses to commissioned employees despite record losses and major taxpayer bailouts.

One bright light in the eyes of many is huge cash infusion and enlargement of central banking swap lines. This is seen as relieving the stress of frozen interbank lending even though this has not been thoroughly proved. U.S. bankers of any size have been notoriously resistant to anything but their own interests as they seek government guarantees for every aspect of their businesses. The other down side is the deflationary havoc that this will ultimately play on the dollar in the long term. However, short-term stability is main concern of most parties across the globe.

The International Monetary Fund has become the latest scorekeeping organization for tracking the plight of foreign and emerging economies in crisis. In any event, the news is overwhelmingly bad. While the news is mostly bad, it isn’t bad for everyone. Economic damage from the recession has slowed global growth, but has strengthened the dollar, allowing for a temporary export blitz for many capital goods like in the aviation industry. This temporary bonus can’t last, but is the lone bright spot in business on the U.S. horizon. The United States has once again become a global store house for many investors that need the feeling of safety.

The world certainly isn’t over, but Americans and other economies are going to have to reduce their expectations and living standards for some time while everyone waits for the cyclical upturn. Unfortunately, we are still seeing downturns in most markets, notably in the housing industry as nearly 2700 homes are day are foreclosed by U.S. bankers. This is putting a huge strain on the housing market and the U.S. economy. For the first time in history, the U.S. government has seen fit to bail out everyone but the American people. In the past, the American people were the ONLY recipients of U.S. economic bailouts.

The banking criminals that brought this debacle about are hanging in the dark shadows, hoping that the massive crisis will render them bulletproof as far as criminal prosecution is concerned. Unfortunately, ignorance continues to rear its ugly head. Government, business and the people are so overwhelmed, they really can’t see the forest for the trees. Whether the nation has the will to punish for past conduct as well as protect against future conduct of abusive practices remains to be seen. It is clear that the world cannot afford another financial debacle like this again. Politicians are looking to the upcoming Summit for answers and ideas. Have no doubt that security is on the minds of most politicians and global citizens. Decisions will be made with that in mind.
~ E. Manning

September 18, 2008

Inflation: Economic Global 911 in Process

In the last few months, Busted Bankers has discussed the distinct and strongly lingering likelihood of a larger global downturn or collapse in global financial markets. In the past, you didn’t hear any of that in the States except among a smallist number of bloggers and from a few Scot and British financial specialists. These bankers approximately timed and named the general events that would transpire. Those general events have come home.

bankers

busted: bankers

In the United States, we are chiefly concerned with covering up and dealing with public embarassment on virtually all levels. The inability to admit weakness is a larger flaw than the weakness itself. The confidence crisis here is based in that embarassment along with the truth that investors are spinning in circles looking for a “safe place” to shelter their money. Investors and consumers alike are discovering that there is little safety: that all the gains that have been made over the last decade or more could easily be swallowed whole.

Politician John McCain heralded the idea that “economic fundamentals” are strong. Unfortunately for politicians that long for a rosy picture, the global financial crisis was not created by healthy economic fundamentals, but through misappropriation, greed and fraud in the mortgage and finance industry as well as through creative banking instruments. That cold reality is beyond the realm of economic fundamentals, although even the Federal Reserve system in the U.S. wants to make these corrupted banking standards part of economic fundamentals. This global crisis may make that desire and tendency unpopular, if not impossible. (more…)

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