Busted: Bankers and The Global Economy

June 21, 2011

A Chronicle of the Euro Crisis

Filed under: banking, economy, government, money — Tags: , , , , , — digitaleconomy @ 5:43 am

euroWhen the euro crisis started in Greece in October 2009, nobody had any idea how quickly or broadly it would spread — or how difficult it would be to solve. Below, some key dates in this still-unfolding saga.

October 2009 Greece revised its 2009 budget deficit to 12.5 percent of GDP from 3.7 percent. The dramatic news sparked a raft of downgrades by credit-rating agencies. By November, Greece’s budget deficit had ballooned to 15.4 percent of GDP.

February 2010 Greece is forced to put its budget under EU monitoring. Dramatic austerity measures are implemented in a bid to clean up the country’s finances in the coming years.

March 2010 The first Greek austerity package is passed: Value-added tax is raised by 2 percentage points, and salaries for civil servants are frozen. The size of annual savings is estimated to be roughly €4.8 billion ($6.8 billion).

May 2010 Euro-zone finance ministers and the International Monetary Fund (IMF) agree on an aid package for Greece worth €110 billion over three years. Officials plan to monitor Greece’s efforts to trim costs every three months.

A second austerity package is passed by the Greek parliament. Emergency measures aim to save €30 billion by 2013. Value-added tax is once again lifted by two percentage points, bringing it to 23 percent. Spending on defense, health and pensions is slashed.

May 2010 In a bid to prop up other financially ailing member states, the EU finance ministers and the IMF agree on a provisional safety net worth €750 billion to be in effect until 2013.

November 2010 Ireland asks for EU assistance. Under the safety net, the EU finance ministers agree on a bailout package with the IMF worth more than €85 billion over three years.

January 2011 The Irish parliament agrees to a drastic austerity plan.

March 2011 The European Council gives the green light to a permanent stability mechanism (ESM). Designed to take effect as of mid-2013, the fund will be worth €700 billion.

April 2011 Portugal asks the EU for financial assistance.

May 2011 The EU and the IMF sign off a bailout package for Portugal worth €78 billion. In return, Portugal pledges to enforce a program of cost-cutting measures and economic reforms.

June 2011 Greece plans a further raft of austerity and privatization measures. Meanwhile, the euro-zone countries, the ECB and the IMF argue about the structure and amount of future financial aid.

February 23, 2010

Strength of EU and Euro Threatened

Filed under: banking, corporatism, credit, economy, money, politics — Tags: , , , , , , , , — digitaleconomy @ 10:46 am

With the ongoing financial plight of Greece, the European Union is facing a growing threat of national bankruptcies. The consequences would be profound for the whole of the continent, especially German banks, which are highly exposed to risky debt. EU politicians are feeling increasingly panicky.

Europe is one of the hotter topics on the global financial circuit. The value of the battered euro has been falling since the Greek government confessed to the actual scope of its debt, cobbled together with shaky securities and kept secret for years by complicit bankers. Things are not looking significantly better and EU politicians are looking for a solution that will contain the financial fire.

April 14, 2009

Bernanke: It’s All About the System

monopoly moneyPresident Obama declares that the sun is coming out as the economic storm wanes. “The financial and economic risks posed by a collapse of AIG would have been at least as great as those created by the demise of Lehman. In the case of AIG, financial market participants were keenly aware that many major financial institutions around the world were insured by or had lent funds to the company. The company’s failure would thus likely have led to a further sharp decline in confidence in the global banking system and possibly to the collapse of other major financial institutions. At best, the consequences of AIG’s failure would have been a significant intensification of an already severe financial crisis and a further worsening of economic conditions. Conceivably, its failure could have triggered a 1930s-style global financial and economic meltdown, with catastrophic implications for production, incomes, and jobs. The Federal Reserve and the Treasury agreed that in the environment then prevailing, AIG’s failure would have posed unacceptable risks for the global financial system and for our economy.” – Ben Bernanke in speech to Morehouse College

Magic Money T-ShirtThe American taxpayers have been put on the hook to bail out Wall Street.  Success is still not guaranteed despite a recently sunny disposition. Meanwhile the European Union supports a new monetary system and retirement of the dollar as the prop of the global community that central bankers have long proffered. The general undercurrent in much of the EU underwrites “the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system.” This was predicted by some parties in the EU last year, but so far has not come to pass because of the creativity and financial manipulation of the International Society of Central Bankers.

February 23, 2009

PM Brown: New Global Economy

pm-brown-berlusconi-romeBritish Prime Minister Gordon Brown has stressed the importance of April’s G20 ‘Economic Recovery Summit’ in London in the bid to strike a “global deal” that will “speed up the recovery of the world economy”. He and other European Union members are advocating a new global financial system, but have backed off somewhat due to the reluctance of U.S. support. His recent statement in Rome revealed that all nations need to inject resources into their own economies as well as agree on ways to reform international institutions.

Currently, he is recommending new policies that he calls ‘fairness principles’ against “old excesses” in the banking community, a standard of stewardship instead of speculation. In the meantime, Brown and other European Union members are advocating unity in opposing moves towards protectionist trade policies. They see the U.S. as a major opponent where such policies are concerned.

Back in the United States, international bank holding company, Citigroup continues its precipitous decline. The U.S. government is looking at boosting its’ controlling interest in the banking firm to boost confidence and maintain solvency from toxic debt, part of the speculation that PM Gordon Brown was referring to.  Britain is dealing with similar issues relating to the Royal Bank of Scotland. ~ E. Manning

February 3, 2009

EU Complains about US Protectionism

made-in-usaAt a time when global job loss in 2009 is expected to top 51 million, the European Union is complaining about the protectionist policy exhibited in the recent stimulus plan heralded by President Obama. U.S. economic output has further contracted by 3.8% in the last quarter of 2008. President Obama has announced a new task force to look after ‘middle-class American families’, to be headed by Vice President Joe Biden. This task force is designed to work on creating well-paid jobs for middle-class working families in America. In line with that thinking, the current stimulus legislation contains a clause seeks to ensure that only U.S. iron, steel or manufactured goods are used in projects.

The reality remains that most of the stimulus money in the current plan is designed to support the government and state safety net for government activities, benefits and the disadvantaged over actual economic business stimulus. Still globalist politicians consider that the precedent set in the stimulus bill is policy that encourages nothing less than more protectionistic policies in future at a time when the global economy is in tailspin.

Many would reason that at times like this, any domestic government should encourage the consumption of home produced goods. Globalist leaning politicians and lobbyists don’t color their world in such a way.

The EU is threatening to file a complaint with World Trade Organization about the protectionist policy and are considering other retalitory moves against the U.S. The reality is that the brain trust at the EU realizes that their options are quite limited as far as dealing with the new trade direction that the U.S. seems to be taking, but see their only option as taking it up with the watchdog WTO. Many foreign trade partners are fearful of President Obama dismantling the NAFTA agreement which gives them preferential treatment in trading while continuing to put the economy of the United States at a disadvantage during a time of record economic heartbreak in the U.S. For decades, the United States has quietly supported a global expansionist policy. Now the support is in question during dark economic times. Where the Obama administration really stands regarding ‘free trade’ is in question as concern and fear rises among foreign powers and authority. ~ E. Manning

For those wondering about the health of the U.S. economy, the Federal Reserve has extended the date of all expiring liquidity programs through October 30, 2009 in an effort to improve the ailing economy. They will have the privilege of extending the programs again when October comes around barring better ideas.

October 24, 2008

The Fear of EU Leaders

U.S. quietly key player

U.S. quietly key player

President Nicolas Sarkozy of France, the current placeholder of the rotating EU presidency, is spearheading the planned global summit in New York City. He expects concrete decisions to come out of the economic summit next month, which must address the underlying causes of the crisis rather reciting world crisis effects. “We have all understood that it will not be possible to simply meet and have a discussion. We need to turn it into a decision-making forum.”

Most of the world economies seem keenly interested in creating a new global solution to save the global economy and themselves from much economic pain. EU leaders and some other world leaders have voiced a certain amount of fear regarding the cooperation of the United States, who has remained very much on the back burner of the global summit considering its usual role. The election is undoubtedly playing a role in U.S. hesitation and resistance. 

Even Japan and China have become very interested in global economic solutions. Sarkozy told Chinese President Hu Jintao that he fears the United States, which is wary of excessive regulation, would be content if the summit produced “principles and generalities.” That is the real fear of EU leaders since they seem to be looking for radical global change and protection rather than placation and stop gap measures. ~ E. Manning

Global Financial Overhaul Recommended

October 21, 2008

Global Financial Overhaul Recommended

A new form of capitalism is needed, based on values which put finance at the service of business and citizens, and not vice versa,” Nicolaus Sarkozy told leaders at an EU economic summit today. “The system must be completely overhauled, an overhaul that must be global.”

Now the Great Depression of America is being used as the classic example of economic failure, even though that crisis was focused in the United States. That is not the case this time. Toxic banking instruments have turned the world on its collective ear. This articulated radical overhaul undoubtedly will involve the relatively new digital economy with all kinds of security and financial protections in the name serving global citizens. In fact, the digital economy has become the de facto global economy, connecting the world as a singular body of people for information, global data sharing and ecommerce. Authorities just haven’t arrived at the global genesis of the New World Order of Finance and Government.

Authorities want global stability as well as financial security. Finance Ministers and Government leaders are looking for a new way to bring that possibility into reality. You should watch the financial accord overseas very closely, especially as the United States is brought increasingly into the picture. Central bankers as the main recipients of the ultimate solution have everything to gain and nothing to lose, creating a new global empire of power and wealth, even if it does take some time. ~ E. Manning

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