Busted: Bankers and The Global Economy

August 1, 2010

Digital Privacy Once Again in the Air

Did you know that a proposed amendment to U.S. surveillance law leaves even lawmakers guessing on privacy implications for internet users? Now why would this be? Invasion of privacy in the United States has been ongoing since Bush and 911. With this amendment, many fear the unlimited reach of the FBI where email and internet surfing are concerned. The royal question is being credited against the Obama administration over the responsibility of the lawmakers in the Senate and House. Last I heard, the Senate and House had little to do with the President. Since the Senate and House have more to say with the construction and final wording of this amendment, clearly a visit to your local lawmakers is in order if you care about such things.

Anyone that has been keeping track of digital privacy and security knows that A.T.&T. is already working in collaboration with the federal government to store and rake through all the data that comes into and leaves the States. Suddenly, fear is rampant about the FBI having free access to all that data without a court order, judge approval or oversight. Suspicion or wrongdoing doesn’t enter the picture, just being relevant to an intelligence or terrorism investigation. This amounts to a free season on personal information, as well as all that spam that you get in your email daily. In effect, little has changed in technical terms.

The FBI has already engaged in widespread and serious misuse of its privilege so far. They illegally collect data from both  Americans and foreigners, based on a report by the Justice Department’s inspector general that was concluded in 2007. FBI officials issued 192,499 national security letter requests from 2003 to 2006.

The FBI and other internal agencies like the NSA, have come to rely on free access to your personal email and the like. They have free access to information from telephone providers, banks, credit bureau and business, already holding wide powers where personal information is concerned.

The law already requires Internet service providers to produce the records. The want the power to get whatever details they need from internet sources without litigation or preview by judges. A few lawmakers like Patrick Leahy of Vermont have suddenly become concerned about privacy issues and civil liberties, as if these have not already been violated. It’s all about having the necessary tools to “keep Americans safe.”

If you are wondering why anyone should be concerned, all you to do is to examine the vagueness that “law” is written with. The interpretation is often left to the user or implementing agency to decide. Proponents of this amendment say that it is merely clarifying what Congress intended back in 1993. Oh really?

Since a 2008 justice department opinion, some providers have refused access to internet records and web surfing histories. What do you think? If you aren’t watching what you say in your emails and where you browse, you might think twice.

May 7, 2009

Finance Experts Double-Minded and Fearful

Fed ever hopeful

Fed ever hopeful

Desperate to be a financial cheerleader during the recession, Ben Bernanke insistently paints an economic picture of future light and in almost the same breath debate about the biggest “what if” about the so far dubious recovery. It isn’t that the American public doesn’t long for good news, but we aren’t going to be conned either. Records numbers of jobless Americans point to a real problem where recovery is concerned.

Experts continue to be fearful about government banking stress tests, as if banks are the only importance for a future recovery. Certainly, that is where the bulk of taxpayer money has been placed to keep the system operational and the American power structure in place.

The media easily reports both sides of the economic story, but mostly focuses on the negative and no wonder. The greatest reality is that an economic recovery is mostly in the minds of a few visionaries at this point. If the economy worsens, “big lenders” do not have enough money to survive. The media points the inevitable need to raise cash as a precaution. Now that is confidence in a recovery.

Government stress tests for finance put banks through two appraisals. One appraisal reflects expectations about the recession as it is and the other forecasts a recession deeper than what experts predict. The reality of the current recovery isn’t strong enough to be called that, but any glimmer of economic light has corporate promoters banging their gongs and playing the marching band in the hopes of stirring sentiment for a recovery.

Experts just can’t wait for the recovery as they now invent ways that the nation will recover and prosper while record numbers of Americans remain unemployed and homeless. The idea of home sales being on the increase has moneychangers truly excited for an abbreviated recovery and future corporate good times.

Investors and the public have been quite realistic about corporate finance. Stock prices, especially for banking institutions, have taken a beating. This has spurred the requirement for more capital to keep banks operational as investor sentiment continues to ruin them. The government has been there all along to prop up the system. As a result, there would seem to be little immediate fear for the system. The bottom line for investors and the public-at-large is the main concern and truly the main force behind ‘recovery’. The new brand of corporatism can’t stand the thought of needing the little guy for anything. They have a philosophical quandary on their hands.

What is truly sad is that economic cheerleaders want to convince us that the United States can have a recovery and enjoy good times again with record numbers of permanently unemployed Americans. The reality has set in that we are enjoying the fruits of our corporate policy of job exportation over the last two decades. Cheerleaders don’t want to acknowledge this reality.  The new brand of corporatism and government wants to redefine unemployment and prosperity to fit a new mold that belies any logic. I’ll post more about this tomorrow.

October 25, 2008

The Smell of Global Financial Fear

The world of finance doesn’t look pretty at all right now since the time has come to pay the piper. Through the smell of global panic and fear reigns the realization that like all economic cycles, eventually this one will change for the better. When that change happens depends on multiple factors, but sooner or later, the global plight will improve. However, that is not the immediate concern of world leaders. Their accountability and the fear of losing both their power and confidence of the people they lead seems to be at stake. The idea is that the all powerful and nameless investor must be placated at any cost. The reality in many cases is that the governments, central banks and large financial and insurance instituations, to name a few, are the investors. While the world is full of many small investors, the reality is that the parties involved in a global rush to solve the problem are servicing themselves.

Even stranger, the panicked U.S. government has been very quiet on the world scene dealing with their own issues internally in an effort to keep some stability before the Presidential election on November 4th. Instead, American citizens have a marvelous sideshow of Congressional hearings in which many charges and concerns have been made, most of them quite vague. Naturally, little blame has been assigned, but the finger-pointing is legendary. There have been charges by certain lawmakers that information is being withheld in hearings until after the election.

The United States seems no closer to arresting the criminals that have instrumental in bringing the nation and the world to its knees than when they started back in March 2007. The FBI has arrested mostly small-time operators and con men intent on harvesting relatively small deals earlier this summer. The U.S. government has been very hesitant to go beyond the scope of the easy pickings of the small guy. Capital is now so constrained that government intervention seems to be the requirement to save many banking corporations and Corporate Multinationals, notably in the auto industry. Authorities are trying to mask the fear that they feel as they seek to manage the fallout of the entire financial debacle.

Europe already admits to recession. Fear is that cooperation in shoring up banking systems could be threatened as governments begin to turn their attention to reviving domestic demand. What is worse is that shoring up the U.S. financial system through the latest bailout largely depended on a healthy global economy and copious amounts of foreign capital from investors. The global recession makes that old promise seem unlikely at best, furthering coloring negative results. German Finance Minister Peer Steinbrueck holds that “The danger of a collapse is far from over.”

The Middle East economies, unaquainted with working together, have began to consider doing so, recently showing more interest in working through Europe and Asia or perhaps the global summit in New York City next month. George Bush is keeping most ideas about the economic summit next month to himself. However, he stated that agreeing on common principles to reform regulators would be essential to preventing another disaster. The idea of unity is nice, but the reality is that unity in the system is what has brought the system to the brink of collapse. Clearly, more innovative ideas will be required beyond unity and placation of the masses. ~ E. Manning

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

July 7, 2008

Wall Street, Stocks and the Great Depression

Soaring gas and food prices and a stock market that just endured its worst June performance since the Great Depression are draining consumers’ wallets as well as their confidence. That’s what RBC Cash Index says.

Confidence is down, down, down. Fear is up, up, up. Apparently, Americans are lining up with the latest news of economists. Bleak economic times appear to have become self-reinforcing. 18 per cent think their local economy will strengthen in the next six months. Who they polled is certainly a question. Regardless, if you listen to the latest round of economic predictions (more…)

February 16, 2008

The House of Half-Truths

bushwackedinternet.jpgListen closely and you often hear a difference between what people say and what they actually mean. Listen to Ben Bernanke speak. If you understand what is being said and weigh the words used, you begin to see his truth presented against the real evidence of truth. You can’t effectively deny the psychology of insecurity. The subtext is present in almost every line spoken and presented in human life. What is going on behind the scenes and in the mind of any person speaking reflects in what is said. Faking confidence is often what life is about and no less so in the world of finance right now. Sometimes, there comes a time when you can no longer fake that confidence. (more…)

January 10, 2008

Credit Crunch: Is World Banking in Trouble?

creditcrunch.jpgIn the eyes of many financial experts, the recent weakness in the world banking system is a regional symptom in that market and not a systemic problem. Right now financial firms that have exposed themselves to “subprime” mortgages face much larger losses on the surface than other banking and finance firms. On a regional basis, the value of homes in the U.S. market as well as other assets like stocks and bonds, have been adversely affected. As a result, bank losses have multiplied and lending has been sharply curbed as a result of defaults on loans and the devaluation of bonds. These loans and bonds are the profitable mainstay of banking. These banking declines continue to be revealed in the United States and worldwide. The news is now reporting job losses and continuing expected job losses as a result of the economic slump in the United States.

Economic analysts have been quick to lay blame on policymakers. The trend of “deregulation” has created a climate with little oversight by bankers and regulators. It is natural that “the industry” would want to spread the risk and increase profits by seeking bond investors throughout the world. When the crisis hit from relentless profiteering and the crumbling base of the “subprime” mortgage bonds, the investment world was sent into a tail spin. Naturally, the goal of the industry is to detract attention from the crisis along with any responsibility, while shifting as much of any catastrophic loss as possible. The history of the banking and finance industry shows that the Federal Reserve and other central banks will ultimately take care of everything, acting much like a large safety net to bolster the system. Any financial instability dramatically risks increasing the national debt for the region along with devaluation of regional monetary value. The Federal Reserve and other central banks will play a reassuring role by trimming short-term interest rates and creating new channels of commercial credit.

Jean-Claude Trichet, president of the European Central Bank disclosed the need to watch continued uncertainty in the money markets to ensure smooth functioning. The theory of the Federal Reserve is to reduce interest rates more aggressively to prevent the current credit crisis from evolving into a recession that would deepen the credit crisis currently underway. The weakness in the banking industry lies in the size of the U.S. market as well as the fact that hundreds of billions in U.S. mortgage debt have been invested in by overseas investors.

The banking system does have systemic problems. Banks have bet heavily on the continued boon of their market through the use of creative internal loan schemes. They are being forced to absorb losses and lower the value of their banking assets. As credit ratings on bonds are lowered, asset values continue to deflate. Contracts called credit default swaps were designed to insure against loan losses, but are in reality untested theory. As a result, banks are now very fearful to lend to one another. The reality is that interbank lending is a routine part of the world economy and is required for status quo operations to continue. The irony is that what bankers fear most is exactly what they must face on a daily basis.

On the surface, most bankers and their mouthpieces are optimistic. They say that the global economy will escape major damage. Behind the scenes, they are shaking in their boots from enacting new profit-generating policies that threaten to swallow banking reputations and liquidity whole.

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