Busted: Bankers and The Global Economy

February 5, 2009

Obama Warns of Irreversible Recession

“By now, it’s clear to everyone that we have inherited an economic crisis as deep and dire as any since the days of the Great Depression.”
—————————– President Barack Obama

i-obama-inaugural-signingObama has painted a bleak picture of the future of the economy without stimulus, predicting an additional 5 million jobs lost and unemployment approaching 10 percent.

The Media is spotlighting a irreversible recession per the words of President Obama. President Obama warned today that the United States is facing a recession so deep that, without action, it could turn into one that “we may not be able to reverse.” The idea of a recession cycle that will “linger for years” is nothing new to a few of us (certainly not at Digital Economy), but now President Obama is highlighting this idea in the effort to urge Congress to pass his economic recovery act.

“What Americans expect from Washington is action that matches the urgency they feel in their daily lives — action that’s swift, bold and wise enough for us to climb out of this crisis,” Obama added. What Americans actually expect is support that could actually help with the economic crisis for the average American, like job stimulus, not simply free giveaways and government bailout.

President Obama is selling his plan as “more than a prescription for short-term spending — it’s a strategy for America’s long-term growth and opportunity in areas such as renewable energy, health care and education,… it’s a strategy that will be implemented with unprecedented transparency and accountability, so Americans know where their tax dollars are going and how they are being spent.”

A recession is not usually seen as an ‘end time event’ or irreversible, but that is how politics is painting the scenario as panic sets in. The nation faces economic collapse, but the current ‘stimulus’ is simply the beginning of a list of government action that will be required to keep the economy from collapse. The real problem remains the toxic banking derivatives that threaten the banking system. There is no resolution to that problem while the rest of the economy sinks into the mire. Meanwhile the President of the United States publicly entertains the idea the our recession is possibly irreversible, which accurately put, places the United States at an untimely demise. What do you think? ~ E. Manning

November 24, 2008

Monetary Deflation a Current Danger

banking-gamble-2Concerns about inflation have changed to deflation, considering the sudden drops in many prices, mostly energy, and the radical increase in joblessness. Interestingly, this economic downturn has bad company in the Great Depression, with the Consumer Price Index plunging by 1 percent last month, the largest single fall since 1938. However the extent and breadth is still nowhere near the Great Depression with years of falling prices. The core economic index has declined for six months, the only time since the Second World War.
Most economists aren’t forecasting that 2009 will present persistent price declines that made the Great Depression what it was, but the fact remains that any recovery is largely determined by consumer spending which accounts for two-thirds of the U.S. economy. Barack Obama is preparing to arm his economic arsenal with a major economic stimulus that includes job creation in the expectation of overcoming recent heavy job losses this year. Gordon Brown is already doing similar things in Britain to spice up the economy there.
Meanwhile, a global slump is in process which could easily hold the world in its clutches despite attempts at stimulus. Central bankers and ministers of finance are up nights massaging interest rates, shoring up banking and creating new stimulus programs.
The worse the economy gets, the more banks are battered by loan defaults and the falling value of collateral. Credit becomes less available which further restrains consumer and business activity, grinding the economic action down more. What we have now is classic debt deflation. Debtors across the board are reducing or eliminating debt. When everyone acts at once, prices for capital assets fall precipitously, even below what concerned pundits call market value as consumers wait for better pricing.
The current risk of deflation is compounded and amplified by the global nature of the current crisis. Commodities have fallen hard and fast as investors have bailed out, comeuppance for years of abusive futures investing, albeit legalalized gambling, through investing on the global scene that many believed would never end. ~ E. Manning

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

October 15, 2008

Bernanke Pessimistic About U.S. Political Plans

Ben Bernanke is no longer being vague about his opinions. Bernanke indicated that the U.S. economy is certain to worsen. He suggested the possibility of further interest-rate cuts to lower rates while criticizing economic-rescue plans of both major presidential candidates.

At a question and answer session after his speech, Bernanke reflected on the handling of the Great Depression, saying that Franklin Roosevelt’s fiscal stimulus failed to end the economic troubles after Roosevelt took office. Stimulus spending suggested by Democratic presidential nominee Barack Obama and tax cuts proposed by Republican candidate John McCain are unlikely to end the crisis. Bernanke noted that World War II began to pull the nation from depression because it mobilized the nation.

Monetary policy including capitalizing banks has limits in his eyes. Bernanke is now promoting new regulations to avoid a repeat of problems that the nation is currently enduring. That undoubtedly means new powers for the Fed. ~ E. Manning

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…)

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