Busted: Bankers and The Global Economy

April 14, 2009

Bernanke: It’s All About the System

monopoly moneyPresident Obama declares that the sun is coming out as the economic storm wanes. “The financial and economic risks posed by a collapse of AIG would have been at least as great as those created by the demise of Lehman. In the case of AIG, financial market participants were keenly aware that many major financial institutions around the world were insured by or had lent funds to the company. The company’s failure would thus likely have led to a further sharp decline in confidence in the global banking system and possibly to the collapse of other major financial institutions. At best, the consequences of AIG’s failure would have been a significant intensification of an already severe financial crisis and a further worsening of economic conditions. Conceivably, its failure could have triggered a 1930s-style global financial and economic meltdown, with catastrophic implications for production, incomes, and jobs. The Federal Reserve and the Treasury agreed that in the environment then prevailing, AIG’s failure would have posed unacceptable risks for the global financial system and for our economy.” – Ben Bernanke in speech to Morehouse College

Magic Money T-ShirtThe American taxpayers have been put on the hook to bail out Wall Street.  Success is still not guaranteed despite a recently sunny disposition. Meanwhile the European Union supports a new monetary system and retirement of the dollar as the prop of the global community that central bankers have long proffered. The general undercurrent in much of the EU underwrites “the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system.” This was predicted by some parties in the EU last year, but so far has not come to pass because of the creativity and financial manipulation of the International Society of Central Bankers.

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September 12, 2008

Lehman: The Prophecy of Failure

Lehman Brothers paints themselves as an innovator in global finance as they serve the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. They “maintain leadership positions in equity and fixed income sales, trading and research, investment banking and investment management.

In advance of the collapse of investment banker Bear Stearns in March of this year, rumors have been circulating continually about the demise of Lehman. Those have hardly quelled since then. As a result, the value of the stock holdings has steadily evaporated and the value of the investment bank plummeted.

Employees are now worried and expecting pink slips. The New York Times is pointing out that the Lehman decline is much like Bear Stearns. However, while the failure and decline is similar, the circumstances that brought those about is very much different.

The demise of Bear Stearns was brought about by bungling, bad financial moves within the banking system and an ensuing panic. The collapse was quick and decisive. The decline of Lehman has been created by the prophecy of pessimism, the fear of weakness which has been mostly unrelenting. This undercurrent of perceived weakness has evolved over time despite the efforts to prop up the firm.

The Times reports an employee as saying, “Everyone is walking around like they have just been Tasered. Everyone was always hoping we would pull through. Now, that is not really an option.” The undercurrent involving a lack of confidence has been pernicious, even on the inside.

The media has talked up the demise and is now talking up the sale of the company. “The cold prospect of losing a life savings in Lehman stock has become more of a reality, many employees have grown resentful.” While that is true, the idea of investing is usually based on a sound investment. It is sad that employees have chosen to sink with the ship instead of divesting themselves if that were possible. What is more sad is that a wealthy corporation like Lehman hasn’t bothered to secure even a small portion of interest in their employees. That is, in fact, the dilemma that threatens the very fabric of American society. It’s all about “me.” This eighties born attitude rises to the top of the corporate ladder. The backlash has been and will be substantial except for the corporate leaders.

It is true that business is not about charity. However, this writer is not discussing charity. The problem is that life in America has become so self-centered that the prospect of tomorrow is rarely if ever addressed. There is lack of planning and little care for tomorrow or for anyone else on any level. That attitude is as prevalent at the top of business as it is at the bottom. The nation has thoroughly corrupted itself and the corporate environment that it originally built. There is not even the illusion of responsibility. Live for today for tomorrow is its own.

Sooner or later, that attitude along with the prophecy of failure comes home to roost. ~ E. Manning

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…)

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…)

March 21, 2008

Wall Street Investment Bankers Use Fed

wall-street.jpgBig Wall Street investment companies have been taking advantage of the Federal Reserve’s unprecedented recent offer to secure emergency loans. The new lending measures are part of a major effort by the Fed and the Bush Administration to guarantee the free flow of liquidity to keep order in the financial markets (see video for March 20). The Bush Administration is not taking any chances on any possibility of future failures. The likes of Goldman Sachs and Lehman are using the the funding. Wall Street banking firms have averaged $13.4 billion in daily borrowing since Monday from the Fed. In emergency meetings on Sunday with Treasury Secretary Henry Paulson, the Fed agreed to allow Wall Street investment houses to secure emergency loans directly from the central bank (see March 16 post). This new measure created a way for “financially strapped” investment firms to have regular access to a source of short-term cash at standard Fed interest rates. Investment bankers can also bid at Fed auctions in the immediate future. The Fed will allow investment firms to borrow up to $200 billion in Treasury securities by using risky investments on hand as collateral. This move could cost U.S. taxpayers if care is not exercised. However, it is clear that the Federal Reserve and the Bush Administration do not expect to fail in any measure regardless of the cost.

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