Busted: Bankers and The Global Economy

September 2, 2008

Influence: Conventional Banking vs. Islamic

beating factionalized corporate banking

beating factionalized corporate banking

Conventional banking is struggling with its own destructive baggage and increasing loss of jobs while the Islamic banking market has seen expansion of 35% this year with more on the way.

Especially in America and Britain, conventional commercial banking and investment bankers are seeing continued pressures and contraction of demand for services along with a declining market. Islamic sources see nothing but promise for the future in an area that is vastly under-served. Conventional bankers are looking to expand continually into emerging markets in an effort to save themselves and spread the risk. Some are even attempting to break into the Islamic banking market with new thinking based on sharia law.

Commercial conventional bankers in the U.S. and Britain are firmly addicted to the liquidity of auctions from central bankers in those countries. International bankers and bank holding companies are not so fortunate in terms of easy cash. Instead, they are forced to seek investment from global sovereign powers in an effort to save their skin from an untimely demise, as they seek to prop up their failing bonds and investments. The dilemma stems from the excessive use of securitized bonds across the board as a means to boost profits. The cancer of these failing and often outright fraudulent bonds threatens to tumble the global commercial banking economy.

Global central bankers, often referred to on this website as the International Society of Bankers, have taken a step back from investing using the same parameters of the past. Instead they are either holding on to their money or finding new sources of investment like insurance and hedge funds.  Like the precarious global situation, this too will change. Meanwhile, central bankers hold on to the majority of gold and precious metals as they seek more of the same, viewed as the only truly secure means of monetary commerce. As they seek to increase their wealth and hold of power using paper money, most Muslim bankers seek to keep themselves free from the hold of global central bankers.

What the world has in the immediate future is a battle between the two for supremacy: the Middle East and Muslim sovereignty groups and the American, British, Swiss alliance with Roman Banking. The trickery and deceit of global central bankers has recently worked against the immediate power they hold as renegade Middle Eastern nations seek to carve out their own niche of prosperity. The ensuing battle should prove to be of great interest. ~ E. Manning

August 18, 2008

Will Global Confidence Cause a Chain Reaction?

Just a few weeks ago, U.S. Treasury Secretary Henry Paulson held that a bailout of Fannie Mae and Freddie Mac to be highly improbable, if not impossible. Now there is talk that an extraordinary Treasury capital infusion may be needed to restore faltering foreign demand for debt issued by Fannie Mae and Freddie Mac. The mortgage twins are the nation’s two top home funding sources that the government is willing to rescue to save the U.S. housing market.

Foreign central banks have dumped nearly $11 billion from the holdings of the “mortgage twins” in the last four weeks. They don’t plan to reinvest in force until the U.S. government is clear when it will back Fannie Mae and Freddie Mac.

Investors and foreign central banks may be concerned, but the reality of a bailout is academic. The entire fabric of the U.S. housing industry depends on the continued functioning of the mortgage twins. Unless foreign bankers and the Fed expect to pull out on their support of the U.S. economy, such paranoia is largely unwarranted. Obviously, the real concern for central banks is the value of the securities that the foreign bankers hold. Devalued securities diminish their investments; hence, their power. Monetary value has really come to be all about appearance and confidence. Central bankers won’t be caught holding any empty sacks in the name of tacit support. They are part of a chain reaction.

Mortgage bonds are trading poorly while investors wait for good news on Fannie and Freddie capital. Meanwhile, U.S. mortgage rates have climbed to their highest levels in a year in reaction to the contracting housing market. Both are part of a chain reaction.

Investors are momentarily in a mood of increasing nervousness about the global economy, with deteriorating growth in the United States, Europe and Japan now beginning to bite into “emerging markets.” There is a growing belief among investors that the world economy in general is at risk, and with it the emerging markets that have been a powerhouse of growth and investment gain over the past few years. The emerging markets cannot and do not stand on their own. At this stage of development, they are step-children of larger marketplace that isn’t all that sound to begin with. Investors are always ready to be nervous, especially in a time of volatility. They can be and usually are part a wild card in the chain reaction.

Oil commodities, which were up and making the world nervous are now down, making the world nervous. It would seem that the world is simply nervous and using oil as an excuse. Previously, oil was a great profit hedge. When the U.S. started openly discussing releasing a large portion of the Strategic Petroleum Reserve on the open market, investors backed off from the heady world of oil commodities. Naturally, they are taking it slow. Nobody wants to rock the boat too hard. This is part of the chain reaction.

Inflation is up, which has been blamed on Big Oil or at least on commodity futures through investment banks. Which came first, the chicken or the egg? While this topic is open for debate, global inflation is up after inflationary pressures shot up in the U.S. and the Middle East from overheated greenbacks. That doesn’t look to get better anytime soon, especially as long as the U.S. keeps stealing money from the taxpayers vis a vis the Federal Reserve. This is part of the chain reaction.

Global banker’s incessant worrying over their central bank interest rate is nonsense. Rates are so low as to have little effect in the real world. Commercial bankers are profiteering from borrowed central banking money as well as keeping their leaky banks afloat during this rough period. This is part of the chain reaction.

The single bright sector in banking remains in Islamic banking with a very different set of rules that bankers have yet to learn to exploit to full potential. In their worry, investors will look at this new hot market in hopes of developing new means of prosperity, which will likely mean a rise in power in Muslim nations. That is enough to worry many political persuasions worldwide as politics feeds into the monetary system. That is part of the chain reaction.

As economists, politicians, bankers, analysts and writers, we are always looking for an excuse, rationalization or explanation to meet a mindset. While most economists would tell you otherwise, it is not science, but rather a facet of human behavior. As such, economics enjoys the same ups and downs as human life does. That is part of the chain reaction.

July 12, 2008

Regulators Grumble; Hacking Continues

Given a crush of other business, Congress is unlikely to give financial regulators new powers this year. Appearances are that the next president and the next Congress will have the privilege of grappling with new laws and power over the U.S. financial community.

This is despite pleas from Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson as they made Congressional requests for more power and authority in the face of fresh worries about the failure of government mortgage giants and investment banks. We have a strange duplicity present in the market. The reaction of economic officials Bernanke and Paulson demonstrates that the U.S. economy is still in a very precarious position despite perceived improvements in Federal Reserve funding. The lack of confidence here as well as abroad seems to be a self-fulfilling prophecy.

Enhanced power and control is being voiced as the way to save taxpayers money in bailing out troubled and failing institutions. “Right now, we’re going through a period (more…)

May 30, 2008

Bankers Creating New Stock Exchange

Filed under: banking, investment, money — Tags: , , , , , , , — digitaleconomy @ 12:04 am

Amidst concerns about rising trading costs in the London Stock Exchange and other European exchanges, investment banks are coming together to create a new system for trading in shares. The new system is to be owned by Citigroup, Morgan Stanley, Goldman Sachs, Merrill Lynch, UBS, Credit Suisse and Deutsche Bank.

Big investment banks are not one to rest on their laurels when it comes to formulating new ways to make money in today’s financial marketplace. The consortium of investment banks have joined hands to create a new European system for trading shares that they expect to rival Europe’s top stock exchanges. The bankers may bring the system online before a new European Union directive on trading in financial products comes into force next month. The new investment banking enterprise is expected to prosper in part because the cost of trading in the US is said to be 80 percent lower than in Europe.

April 14, 2008

Investment Banks Continue Borrowing from Fed

A central bank report said Wall Street Investment Bankers averaged $32.6 billion in daily borrowing over the past week. That compares with $38.1 billion in the previous week and $32.9 billion before that. The Fed said it would make as much as $200 billion worth of Treasuries available through weekly auctions. In the three auctions so far, the Fed has provided $133.95 billion worth of Treasury securities.

The CNN Media engine suggested that the central bank auctioned only $33.95B of the $50B in securities made available to investment banks, suggesting demand for super-safe government Treasury Bonds could be easing. You can see that very little change has occurred and that average levels are still in the $30 billions. The reality is that investment banks have not soaked up all the funds that they could have received. Whether this reality is a strength or weakness can be debated. The fact that investment banks are not using all the funds allowed could be considered as a strength. The fact that investment banks are using the Fed at all could be considered as a weakness. (more…)

April 8, 2008

The Fed: A New Mood Stabilizer

U.S. Treasury Secretary Henry M. Paulson Jr. proposes to overhaul the U.S. financial system by transforming the Federal Reserve into a “market stability regulator” instead of the nation’s banking and money source. Mr. Paulson feels secure putting the International Society of Bankers in direct control of the U.S. economy.

Behind the scenes, a strong possibility exists that because the United States faces a 10 trillion dollar national debt soon, giving the global banking system economic control of this country is required to keep full monetary support. Deep dark rumors say that the International Bankers are tired of American excess and have been considering pulling the plug unless they get a bigger piece of the pie and more control. The price of greedy bankers and governmental unwillingness to use restraint in promoting raw profiteering has effectively put the United States economy up for sale. The new plans of the U.S. Treasury Department play right (more…)

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