Busted: Bankers and The Global Economy

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

September 18, 2008

Inflation: Economic Global 911 in Process

In the last few months, Busted Bankers has discussed the distinct and strongly lingering likelihood of a larger global downturn or collapse in global financial markets. In the past, you didn’t hear any of that in the States except among a smallist number of bloggers and from a few Scot and British financial specialists. These bankers approximately timed and named the general events that would transpire. Those general events have come home.

bankers

busted: bankers

In the United States, we are chiefly concerned with covering up and dealing with public embarassment on virtually all levels. The inability to admit weakness is a larger flaw than the weakness itself. The confidence crisis here is based in that embarassment along with the truth that investors are spinning in circles looking for a “safe place” to shelter their money. Investors and consumers alike are discovering that there is little safety: that all the gains that have been made over the last decade or more could easily be swallowed whole.

Politician John McCain heralded the idea that “economic fundamentals” are strong. Unfortunately for politicians that long for a rosy picture, the global financial crisis was not created by healthy economic fundamentals, but through misappropriation, greed and fraud in the mortgage and finance industry as well as through creative banking instruments. That cold reality is beyond the realm of economic fundamentals, although even the Federal Reserve system in the U.S. wants to make these corrupted banking standards part of economic fundamentals. This global crisis may make that desire and tendency unpopular, if not impossible. (more…)

September 7, 2008

Freddie & Fannie: The American Dream

For years, Freddie Mac and Fannie Mae have bragged that they are in the “American Dream Business.” If that is the case, the American Dream has just gone bust. In many respects, it is the beginning of the end although the U.S. Treasury wants to paint the idea of a new beginning.

The process ends a 70-year experiment that began as an attempt to get a struggling nation back on its feet after World War II, ending in arguably the largest nationalization in global history. Fannie Mae and Freddie Mac have been forever tainted by the mortgage meltdown and securitized loans.

Essentially, the mortgage twins are a colossal fraud full of failed policy decisions and misplaced trust. Banks loan the “creditworthy” money for mortgages. Fannie and Fannie bought the loans as-is and packaged them into bundles to create bonds that external investors could purchase. All the while, the government and taxpayers are on the hook for the entire spectacle as the entire scheme for profits unraveled with the introduction of the mortgage meltdown.

For decades, the perception of these bonds has been the same as the safety of the U.S. government bonds. The mortgage twins were established with the complete backing of the federal government. What could be safer? Whether such a guarantee ever actually existed is the subject of much financial debate now. The “government-sponsored enterprises”, now failed is the result of twelve months of slow painful devaluation in the mortgage market combined with the idea of government guarantees that couldn’t solve the problem of worthless securitized bonds and suffering confidence.

mad lady liberty

mad lady liberty

The disingeniunity of the government and the mortgage twins was so large and the undercapitalization so pronounced, that investors bailed out in large quantities. That reality is also a reflection of the deceptive state of mind of the U.S. federal government. The federal government is no longer based in any kind of true reality where policy or money is concerned. They have lost their way and their collective minds, hopelessly addicted to wishful thinking and the addiction to monetary power without the ability to back it.

The Feds were limited as to how much they could borrow to cover the mortgage twins. Now that Fannie and Freddie are nationalized, the federal government vainly hopes that full confidence will be restored so that investors can be coaxed back into the fold of business. The burden on the U.S. taxpayer is huge and the moral hazard brought about by carelessness is no smaller.

How can anyone trust an agency or body of people so corrupt or hopelessly addicted to wishful thinking. Politicians and bureaucrats are addicted to notions that have permanently altered and depressed the perception of the American Dream of owning a home.

will lawmakers wake up?

will lawmakers wake up?

Barack Obama mentioned that the bailout must somehow protect taxpayers. Republicans have made no such statement to date. Still, the truth is that taxpayer protection as a result of government oversight and abuse of regulation shows the moral and financial bankruptcy of the federal government is the worst way. They are incapable of any measure of trust or faith.

To make matter worse for Republicans, they have touted smaller government and lower taxes while promoting and acting out the opposite. The takeover of the mortgage twins implies that anything the current government order says is implicitely flawed, a mere placation of the public. John McCain and Sarah Palin are tied into that reality directly by the Bush Administration and Republican policy.

The Congress is not free from blame either and Democrats are guilty by implication as well. The struggle for power and the adoption of ideas that clearly don’t work are rarely corrected. Instead, the steamroller of Congressional law makes constant adjustments in failed policies that will somehow become miraculously repaired if lawmakers just care enough and spend more money that the nation doesn’t have from international bankers and foreign sovereign nations.

The bottom line is that American taxpayers have been greatly wounded and no placation offered by the current administration or long-term politicians have the respect of true patriots. We see the lies, the seduction and the abandonment. Government and lady liberty has become hopelessly addicted to vain thinking where money and endless promises are concerned. The nation is a laughingstock of pathetic liars, made worse by bumbling incompetence and mismanagement. The American people are muddied by corruption and slavery through ineffective and misguided leadership. ~ E. Manning

July 10, 2008

Foreclosures Threaten to Consume Economy

Lately, it has been a cruel world for home buyers and banker types alike. The grim cloud of foreclosure hangs in the air like a dark panic. Today, politicians, Wall Street and media pundits spoke about what would happen if Fannie Mae and Freddie Mac were to collapse, revealing the fact that they are already effectively bankrupt. The fact that the president is openly discussing the plight shows the seriousness of the matter, even though he suggests that the potential of such a collapse is remote at best. The administration suggested that avoiding a collapse through the necessity of bailing out the government mortgage houses would create a U.S. (more…)

June 17, 2008

Boosting the Economy Best for the Dollar

Some folks get it and others don’t. We might have a keeper in Barack Obama. The Democratic presidential candidate said today that the best way to lift the sagging dollar is to improve economic fundamentals, rather than manipulating the currency.

He acknowledged that the devalued dollar is a symptom of underlying problems rather than a cause by itself. “I’m not somebody who thinks that we should spend a lot of time manipulating our monetary or fiscal policy simply to strengthen the dollar. What I want to do, though, is strengthen the economic fundamentals in such a way that the dollar, of its own accord, ends up being strong.”

That is the kind of “nuts and bolts” thinking needed. You have to look after yourself. The country could use more of that instead of focusing on the entire globe.

John McCain is proposing strengthening the dollar by reining in government spending and pushing free trade agreements to bolster investor confidence. This sounds like the same road that the United States is on now: a road to oblivion. Life is more than the idea of investor confidence without real economic promotion or change.

The economy is about the whole country, not a few investors.

Blog at WordPress.com.