Busted: Bankers and The Global Economy

July 16, 2008

Recovery Slow in U.S., Inflation Out of Control

For some time, the Fed has remained hopeful of a quick recovery, despite lingering signs of trouble. The Fed is lining up with the current reality. Ben Bernanke is fighting hard to keep the economy growing with fighting inflation as his top priority per his testimony before the Senate Banking Committee. He still refuses to admit that the U.S. economy is in a recession. His goal is to strengthen the economy over the strength of the dollar. He is uncertain about the value of a second economic stimulus move.

Because of the turmoil in the economy and banking industry, Bernanke has flagged his optimism somewhat, announcing that growth will eventually pick up over the next two years.

Years ago, no one would have expected oil futures to be running the economy, yet (more…)

June 9, 2008

Banks Take Profit on Interest

The Federal Reserve has aggressively cut interest rates. The economy is largely stagnant and jobs are disappearing into the mist. On the mortgage front, large quantities of homes remain unsold. Under normal circumstances, one would assume that mortgage rates would already be on floor to attract qualified home buyers. That is simply not the case.

One reason is that many large mortgage brokers went out of business. They could no longer find investors to buy their loans and fund business operations. The number of mortgage lenders is much smaller than it has been in recent years, compounded by the fact that billions of dollars in liquidity have vanished into thin air.

Foreclosures and delinquencies are held to be quite high in the financial market and lenders are frightened by the prospect. The general belief is that inflation is the demon that the U.S. economy faces, which will cause the Fed to raise interest rates. The real problem that this economy has is deflation of the national currency, the dollar. The Federal Reserve has issued so much credit and printed so many dollars that the global market is awash with them.

A dollar doesn’t go as far as it did a year ago and the lack of buying power shows across the board in higher fuel costs, food expenses and falling capital investment prices. Instead of learning new investment techniques, investors are going overseas to invest. Even investment bankers are opening up a new stock exchange in Europe, since the euro is solid right now. The opportunity for money making overseas borders on legendary.

U.S. banks have been in such a bad way that they are not passing on any savings to customers in an effort to hold the bottom line. As a result, favorable rates from the Fed or lower costs are being absorbed by the banks and not passed on with lower consumer costs. In fact, the specter of substantial inflation is more real than is recognized, which in reality is holding up bank lending rates. However, this ‘possibility’ is readily ignored. The U.S. government and the Federal Reserve still maintain to the public that the U.S. inflation rate is holding steady at 3%. The media goes along with the charade even though the evidence is clear. The appearance is that the nation’s economists have forgotten what inflation really is or how it is measured. That is how America keeps its national confidence: through lies and deceit.

May 17, 2008

The Truth About Interest Rates

Most economists, like most Americans, have cheered the rate cuts as medicine that hopefully will work and a reaction that might not do much harm. Interest-rate cuts do have a dark side.

It’s generally assumed that all things being equal, lower short-term interest rates are better. But this view is simplistic and arguably wrong. Lower rates are a help to people with credit card and margin debt, as long as the savings are passed along and don’t end up in banker’s pockets to help fund their adventurous position. Thanks to Mr. Bernanke and a reasonably cooperative Congress, many people facing resets on adjustable-rate mortgages will see less severe rate hikes. Lower rates are not an blessing for everyone. People with money in the bank or investments in Treasury bills and other short-term securities will see incomes reduced. Retirees and others on fixed incomes, such as pensions, lose out every day. (more…)

May 7, 2008

Central Bankers Sound Alarm Over Food Prices

Soaring food prices are helping to push up inflation all around the world, say central bankers. They urge more market competition and free trade to even out prices.

Which came first: the chicken or the egg? In this case, central bankers are not admitting that high food prices are not only caused by tighter supplies but higher inflation is caused by the central bankers themselves. Central bankers, by nature are quiet animals that never point at themselves. In this instance, global inflation has been boosted by the excessive printing of money and overextension of bank credit coupled with the inflation and devaluation of the dollar, which still operates as the tour de force of the global economy.

Global rises in food, energy and other commodity prices (more…)

April 28, 2008

U.S. Mortgage Economic Analysis

It’s different in the United States. This time in history is different. The Federal Reserve won’t let deflation happen. Belief in the Federal Reserve and the avoidance of economic pain is nearly universal. The Fed is a legend in their time. The Federal Reserve won’t suffer. The U.S. economy and citizens will.

There are a handful of realistic economist-type people that see deflation coming. The sophisticates laugh aloud: “For almost thirty years people like you have predicted that our economy will collapse and it hasn’t happened.” (more…)

April 15, 2008

The Fed: Part of a New World Order

World Bankers don’t usually have the gift of great visionary prose. They haven’t yet revealed the man to field those ideas to the world, but the ideas of world revolution are in place right now. Federal Reserve Governor Kevin Warsh has expressed the kernel of sweeping global change in a new world vision! Does he know what he has? Yes. A new voice is needed, a new translation of vision. Global banking needs a global talking head. This new figurehead will be on the scene soon to express the beautiful truth of international visionary profiteering that will solve the problems of the world! The world has the makings of a new global structure, even religion. The saviors of the world are here at last! ~ E.M.

The sleepy complacency of the past has been rudely interrupted by a liquidity shock of colossal proportions. The skies of finance are dark and stormy. The drama within the banking and financial industries is unprecedented. The old financial system has not kept pace with the creativity of the minds in banking. New structured products designed to create profit and a new generation of wealth has frozen the core and means of banking and monetary finance. Fear rises like a giant bird of prey.

The old engineers of the new world in financing created only financial turmoil and calamity. The lack of understanding and foresight in their own system is fully birthed. The authority of the Federal Reserve and the world of central bankers stepped as a White Knight to supply the golden nectar of liquidity, the support of national confidence in the financial community. The golden nectar has laid the appearance of a new foundation and a new measure of confidence. (more…)

March 18, 2008

Fear and Lack of Confidence

With Wall Street hit by a crisis of confidence, many cast their hope on the nation’s central bank. The Federal Reserve’s typical weapon of interest rates cuts will do only so much so fast and often has an inflationary side effect. Most economists expect a big slash of three-quarters of a percentage point today. The same economists in favor of such a move concede an interest rate reduction will do little to calm investor fears. Concerns that another institution will follow the collapse of Bear Stearns is one reason that the Fed is expected to deliver another big rate cut.

The Fed’s emergency move on Sunday is likely feeding more fears than hopes. Some even believe that shoring up the economy by saving Wall Street firms is not the thing to do. So far, the extent of the bailout for Wall Street has not gone to the country’s bottom line: the American taxpayer and the national deficit. Part of the bailout is temporarily financed and is making the Fed a little interest money for the short-term.

In the meantime, the interest rate cuts are fueling further inflation and creating devaluation pressures, which will in turn fuel higher prices, especially for food and fuel. Economic critics say that a full percentage point cut would send the dollar into a potential collapse. “We’re in a free fall now, wait till you see what a collapse looks like,” says Rich Yamarone, director of economic research at Argus Research.

update:

In news this afternoon, the Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent. This is a total reduction of a full point this week.

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