Busted: Bankers and The Global Economy

July 17, 2008

U.S. Fed Discusses the Real Economy

Recently, the Fed discussed the housing market and economic slump in its’ latest open meeting. Currently, the housing market is one of the single largest factors in the U.S. economic decline. According to the Fed, the outlook for the housing market remained bleak, with falling prices, slow sales, high inventories of unsold homes, and further declines in construction activity over coming months.

Despite level borrowing from the Fed, mortgage rates have been increased and foreclosures continue to rise in the United States. Falling wealth and real income, tightening credit conditions, rising energy prices, and sharply declining consumer sentiment were seen as likely to restrain consumer spending later this year, particularly after the effects of the fiscal stimulus trail off.

The economic stimulus as dispensed (more…)

July 13, 2008

EU: Investment Banking Exposed

The European Union is working on what banks fear the most: transparency to investors. Investors will soon find life easier by having the ability to compare financial statements from banks in the European Union, thus helping to avoid more surprise writedowns and installing confidence.

Governments want to improve transparency in the global financial market that is gripped by the credit crisis. About a year has passed as banks continue write-off huge sums invested in securitized products hit by defaulting U.S. home loans. The European Union sees this as a winning idea that protects investors and the government. Apparently, bankers in trouble will be sacrificed on the altar of “bad luck”.

Beginning in August, EU banks “will be able” to publish their accounts, government sources eagerly announced. Ministers said full disclosure by banks and other financial institutions of their exposures to such distressed assets and off balance-sheet vehicles was essential to bring back confidence in the market. Has the EU considered the possibility of economic backlash? Perhaps, this move is an indicator of the health of EU banks in general. Clearly, government officials in the EU are thinking very differently from the hush-hush economic atmosphere in the United States.

June 22, 2008

A Tough Message for Wall Street

Wall Street enters the summer season with investors in a sour mood because they don’t want to face reality, a reality that banking profit-pushers and investors created. For months, every qualified economic expert has pointed to an eventual rise in interest rates by the Federal Reserve. Economic policy makers have been looking at this summer as a prime time for change. Reality was predicted long ago. Wall Street crooks are educated trash that need a real education in economics called reality.

It isn’t that low interest rates have done much good. Mainly, these low interest rates have supported the bankers’ bottom (more…)

May 19, 2008

Mortgage Vultures and Congress

In a recent hearing on mortgage servicing, Senators probed Countrywide Mortgage on exactly how mortgage servicers make their profits. Servicers earn revenue through a fee that is a percentage of the mortgage, float income from interest on temporarily-held funds, and through retained fees like late charges and other fees paid by borrowers.

Senator Charles Schumer described the addition of these fees as “piling on”. Mr. Schumer is convinced that a “vulture mentality” is developing among mortgage servicers as defaults rise. Senator Schumer called Steve Bailey of Countrywide to task for attempting to deny that mortgage servicers profit everyday from delinquent homeowners, even when borrowers and loan holders might benefit if the family retained its home, rather than struggle to pay an avalanche of default costs. (more…)

April 30, 2008

U.S. Economy: Bad News Rolls In

Filed under: banking, credit, money — Tags: , , , , , , , — digitaleconomy @ 8:32 am

Standard & Poor’s wrote that prices in 20 major markets dropped an average of almost 13% from a year ago in February. “There is no sign of a bottom in the numbers,” said David M. Blitzer, chairman of the Index Committee at S&P. “Prices of single family homes continue to drop across the nation.” This market correction is very real and not a short-term adjustment. This indicates the level of intense inflation promoted by predatory and negligent lending.

One of the large problems with easy credit is that prices for whatever items are being financed are continually inflated over time. You should also see a major correction in the new car market as most car makers take large hits for lack of sales. Corrections are part of a normal business cycle fostered in large measure by the inability of consumers to buy larger ticket items on their own. As a result, financing has for years propelled an artificial boom resulting in inflated prices that can no longer be maintained in the real market.

The business results for the lack of buying power (more…)

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