Busted: Bankers and The Global Economy

July 24, 2010

U.S. Worries Over Deflation

The nation has a nasty case of stagnation, fueled by significant employment issues and rising defaults. Prices are falling while most consumers resist buying. When deflation begins and prices fall, it seems like a good thing. Then, lower prices cut into business profits which results in trimming payrolls. This further undermines buying power, which leads to lower profits, fewer jobs and lower wages. All this results in economic contraction.

With all the cutbacks, buyers that have the funds wait for better deals through even lower prices, which magnifies deflation. As a result, the nation plunges into a downward economic spiral that is hard to escape. This is exactly what the United States faces.

The nation’s capital is feeling the guilt as they look at other in dismay about the rising deficit and inflation, even though they advertise to the world that inflation doesn’t exist here. Economists around the world see great potential for deflation of the dollar, which already would be the case, were it not for declining currencies across the globe.

The statistics say it all. Consumer prices have declined each month for the last three months, putting inflation above last year. They claim that the core inflation rate is at a 44 year low at less than one percent. So why are they worried? The Federal Reserve likes to see an inflation rate of 3% because this puts more money in their corporate pockets.

Private economists and financial experts are more concerned. Some of them see the possibility of deflation at more than fifty percent. This is compounded by unemployment, lack of production and lower spending.

Should deflation occur, the central bank has the tools to reverse it according to Ben Bernanke, even though the Federal Reserve has interest rates at historical lows and has pumped trillions into the financial system. The books have been cooked baby, to the loss of the United States. Bernanke claims the U.S. economy is more vibrant and productive than Japan’s was in the 90s. The difference is supposed to be that Japan’s labor face was actually declining, while the States has plenty of labor.

In my words, there are plenty of financially-broken and impoverished Americans to take advantage of, with the hope of restoring the economy on their collective backs. Wall Street and multinationals aren’t suffering beyond the losses of jobs they incurred during the recession. Let’s face facts, they didn’t suffer much at all. Their employees did. That’s the way it is.

The little guy at the bottom, so far, is the one that has truly paid for the recession and the remainder of its fallout. They are ones that will continue to pay.

January 11, 2009

Unemployment: Is Obama’s Stimulus Enough?

unemployment-officeBarack Obama has projected that his future economic stimulus plan will create nearly 3.7 million jobs by the end of 2010, mainly in construction, leisure services and manufacturing. His plan is supposed to lower the unemployment rate by 1.8% by 2010. Yet, most intelligent Americans and experts alike see plenty of hard times ahead.
read complete article at TNTalk!

Unemployment: Jiggering with Accounting

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

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