Busted: Bankers and The Global Economy

November 22, 2009

America and Sub-Optimal Solutions

Some economists and talking heads are finally figuring out that a national political paralysis is not a good thing. For generations the U.S. political system has been closely connected with money and a well-funded lobby. Gerrymandering on the part of politicians picks only the pockets of America. Americans have lost almost all control and China is cleaning the clocks of America. They own the U.S. national government through huge loans and in turn, the capital and power of the American people.

Now columnist Thomas Friedman is worried that America is producing “sub-optimal solutions” to big problems like an education system in decline and a weak economy. He also thinks cable news television distorts the truth and that the internet can be a terrible thing for the nation’s politics. He claims that American businesses have left the country, participating in America only when it suits their needs. Why? The corporate oligarchy is looking only after themselves. National concerns are not truly relevant to them.

Friedman talks about a crisis in self-governance but leaves out influence of the people. Strangely, Friedman doesn’t seem very concerned about the well-being of the American people or freedom of expression. He sees open viewpoints as a vehicle for extremists. He is concerned only with corporatism and how this is linked with government with the means of controlling the current power structure.

November 16, 2009

Why Job Cheerleading Won’t Save the Economy

Filed under: banking, corporatism, economy, government, recession — Tags: , , , , , , , , , — digitaleconomy @ 10:55 am

Unemployment is at a “26-year high” with 17.5 percent of formerly employed Americans that are no longer looking for work or underemployed.  The unemployment rate for workers aged 16 to 24 is at 19 percent. The unemployment rate for young African-Americans at 30 percent. The average length of unemployment is at a record high as the ratio of job seekers to open positions is currently 6 to 1. This is dismal news for Americans. As their “patriotic duty” many firms are now telling their employees that hours must be cut in order to save jobs. No less than 60 million American households are living at or below the poverty level. The nation is not seeing real ideas or action that even remotely resemble the urgency and aggressive action when banks and investment firms needed saving.

Behind the scenes, political powerhouses and their talking heads hope that cheerleading will do the trick. Surely the talent of the American people will save us says the court jester of economics, Warren Buffett. I cite the CNBC party show that is sure to insult your intelligence. The economy and the American people don’t need upbeat civic cheerleading about greatness. The nation needs serious action outside of more wars overseas. We need to realize that we have war going on right here.

The nation can expect weak recovery of consumption and economic growth coupled with larger budget deficits. The nation can expect greater delinquencies in real estate and the continued fall in real estate prices. The nation can expect greater losses for banks and financial institutions across the board in all sectors and a corresponding rate of bank failures.

Noriel Roubini’s Global Economonitor says: “we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.”

Mr. Roubini says “that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.” This will put the real unemployment rate soundly past 18%. Last year, I predicted a real unemployment rate of 25%. Either way, the nation has some suffering to go through since the political powers that be firmly refuse to bail out the American people. The land of politics continues to bail out the world with free handouts and political programs. We can bankroll and void toxic debt for freewheeling investment bankers and financial geniuses that abused the system, but we can’t risk lowering the debt or responsibility of the American people without making them homeless. Clearly, the American people are simply too talented. Politics still needs slaves to grist the mill. We need martyrs for the cause. The nation has them while China gains mastery over the national economy. What will politics sell next?

You can now appreciate why the world of U.S. politics doesn’t want to end the wars in the Middle East. With all the men and women in the armed forces coming home, we really would be a nation without work.

 

November 7, 2009

Wall Street Justice Obama Style

corrupt bankers prisonOver and over again, Americans see the same debacle unroll before their eyes, that is, if they are paying any attention. Earlier this year, billions in bonuses were paid to Merrill Lynch executives as the firm was failing. An agreement was made that Bank of America would pick up the pieces of Merrill Lynch with the support of the American taxpayer and later, BofA was bailed out as well. After a dance with the SEC, no wrongdoing was admitted.

After an investigation by the Securities and Exchange Commission, Banking wunderkind JPMorgan agreed to a $722 million settlement. Why? It all rises from a risky derivatives deal that drove Alabama politics to the brink of bankruptcy. As part of the settlement, JPMorgan neither admitted nor denied wrongdoing despite overwhelming evidence that the financial group did actually engage in acute wrongdoing.

What passes for justice on Wall Street? Regulators give a banking institution that they back a fine that taps the corporate bottom line for wrongdoing. The banks are eager to quickly forget the whole thing by paying a modest fine and getting on with business as usual. There is no admission to wrongdoing and business continues. The government gets a fine to pad their already overbloated budgets that the American taxpayer is already floating. We must be stupid because we keep doing the same thing over and over.

No one admits to corruption, much less to making a mistake. Meanwhile, nobody pays back the taxpayer, much less actually pays off a debt of any kind.  Reality is a round robin of funny money, usury and blatant dishonesty. Where is the outrage? Nowhere, because we are too wrapped in our small lives and/or afraid of reprisals or perhaps the boogeyman. Perhaps by our collective refusal to stand up against politicians and bankers, we are admitting that any American would do exactly the same thing; that not one American is any better. What do you say? Probably very little.

May 8, 2009

The New Brand of Corporatism: Unemployment

unemployedThe fruits of the ‘new brand’ of corporatism have squarely placed the nation and world where it is today. Corporate cheerleaders and government experts are now combining forces to create a new outlook that fully accepts policy of the last few decades. For many decades, government has quietly adjusted record keeping to massage public statistics.  Once again, corporatism and a fully complicit government is seeking to adjust the future of the United States by redefining full employment. This vanity seeks to install the idea that we don’t need economic health or reasonable employment to enjoy record profits or the ideal of prosperity. If we can’t have prosperity the way the leaders of corporatism want, they will simply redefine that definition of prosperity to fit their own mold while continuing to blow their own horns.

The experts want the nation to bite off on the notion that “post-recession America” will be stressed with high unemployment even after the good times return. Good times for who? Obviously, the outlook of good times without a sizable portion of the United States participating involves only the outlook of corporate bodies and the capability of maintaining or promoting profits for the structure of the current system in place. The economy of the whole of the nation isn’t being considered, at least not realistically.

unemployment4Millions of jobs have vanished forever. Most will find it harder than ever to get hired again. The idea is being promoted that we will be required to accept lower earnings and a diminished economic role in the country as the rich get richer and the poor and disenfranchised fall off the economic map and into government assistance. As it stands approximately 54% of America that is employed is paying for the rest of America’s unemployed, disabled, retired and imprisoned.

unemployed1The ‘new brand’ of corporatism considers that employment has nothing to do with economic prosperity. Politicians and ‘economic corporatists’ console themselves and hopefully the populace by stating that the natural rate of unemployment neither accelerates or decelerates inflation.  They want us to accept a markedly higher ‘natural rate’ of unemployment by disassociating employment from the economy.

All this is drizzled by the news media with the admission that there is no relief in sight for the unemployed. By the admission of many, like Laurence Ball, it will be a long time before the nation sees 5 percent unemployment rates.

Then the media fully deploys the most heinous part of the corporate plan. The more time that workers spend without a job, the less attractive they become. Why? Ostensibly because the unemployed are not keeping up with ‘new technology’. This skewed outlook of corporatism is expected to keep the unemployment rate elevated. In the same breath, the experts say that the unemployed become discouraged and change lifestyle. Corporatism has dealt America a very nasty blow indeed and isn’t finished yet. Should Americans continue to bite off on the same old political and social wisdom of the past? We have a right and the privilege to reinvent ourselves. I encourage you to get on the road to reinventing yourself and standing on your own two feet without being dependent on corporatism. Otherwise, you have very little to look forward to beyond spending endless amounts of cash on dubious college training to continue to tickle corporatism’s insane fancies. ~ E. Manning

May 3, 2009

Inflation and Devaluation Looms on Horizon

warren_buffettMany of you haven’t been willing to believe me. Inflation despite the current troubled economy is still a very real concern. Why? Continually pumping dollars into the failed financial system is spreading the dollar very thin indeed. The bailout is likely to have “unintended consequences”. So says the blue boy of the financial market and Berkshire Hathaway chief Warren Buffett.

Buffett says that officials should be judged leniently since the economy was facing “as close to a total meltdown as you can imagine.” If you read this blog, you know what the meltdown was caused by: unchecked banking innovation and greed.

In the eyes of Buffet, the runaway debt spending must be paid for sooner or later (no force majeure?). Political leaders show little inclination to raise taxes, at least in an upfront way. Buffett indicates that one sure way to pay for excess spending is to “inflate the value” of the currency. The biggest losers in a surge of inflation, he added, would include holders of bonds and other fixed-income assets. “I haven’t had my taxes raised. My guess is the ultimate price will be paid by a shrinkage of the value of the dollar.” Duh. ~ E. Manning

February 9, 2009

Mortgage Bailout on the Way?

obama-mortgage-fingerprintsRemember the mock outrage of so many politicians last year as the U.S. economic national debt ceiling approached $10 trillion? Last October, when we heard about a $700 billion bailout of the financial system, it seemed like all the money in the world as a manner of speaking. Never mind the debt ceiling since President Obama doesn’t recognize national debt as an issue. Since then, the collective “we” in this country have managed to spend another $10 trillion without accomplishing a thing beyond buying preferred shares in certain banks. The year isn’t over yet (it’s only February 9th) and more economic stimulus is probably on the plate as job losses continue.

How has the nation lost its’ way? A lack of common agreement regarding simple principles and a common vision for the future that makes sense reveals the true crisis. Deceptive flawed thinking among lawmakers portends a real problem for the future as far as the common American is concerned.  Disagreement and strife is the real standard that lawmakers hold to. There has been no presidential honeymoon that this writer can see. We have forgotten what stewardship really is. Hope isn’t on the plate where elected lawmakers are concerned. A divided house cannot stand indefinitely. Perhaps President Obama needs to campaign to the American people to grip some sort of vision….but I digress from this mental exercise.

Another couple of trillion dollars would pay off every residential mortgage in the country and Americans would be home free…literally. What foreclosure crisis? Every American with a home would have a piece of America to call their own without a bank involved. Think of the quick national stimulus  the nation would enjoy as everyone spent their house payment on disposable income and new vehicles, the current blight of lack in the current economy.

The fact remains that the national foreclosure crisis is always on the back burner, yet is blamed as the basis for the nation’s economic demise. Naturally, lawmakers can’t support any kind of quick national housing stimulus that I sarcastically penned because of the $40 trillion plus in potential interest  income that scandalous bankers would never receive because of early prepayment before the term. Any bailout like that won’t happen because it takes power away from the system. Taking money away from bankers would be far too simple while firing and imprisoning financial thieves is too difficult and embarrassing.  Real economic stimulus is far too simple when it comes down to rewarding honest income producing activities. Instead, politics simply gives bankers more money as if that will really solve the problem as they complain about esoteric banking derivatives that nobody knows how to fix. Let Timothy Geithner have a go at this bailout.  Based on what has been discussed, the nation is still looking at investment shell games that are no better than what bolstered the economic crisis to begin with on Wall Street. That is the financial literacy that the Federal Reserve and Wall Street know. ‘Democrats’ deserve a chance to repair the system and they will have that chance.

Can you imagine a retired economist presenting such ideas and speaking in such a way? Remember, it is always about money and authority, but then it always comes back to money and the status quo. That’s all about authority too. ~ E. Manning

August 26, 2008

Mortgage Twins Suffering Corporate Death

For many weeks, economists have been looking for the decline of Fannie and Freddie. It’s only been a matter of time and confidence. Central bankers unloading and refusing to buy the usual amounts of stock have put the the U.S. mortgage twins in a world of hurt.

Then, there is the nationalization theory, which would put all stockholders out in the cold; hence the concern of central bankers and now most investors, almost forcing the federal government to play the bailout hand for Fannie Mae and Freddie Mac.

A number of banks own large chunks of the $36 billion in invested preferred shares in the twins. J.P. Morgan is the largest, holding $1.3 billion currently. These banks have already lost about half the value in these shares and face losing the remainder, especially with the prospect of nationalization. Unhappily, some smaller banks could be wiped out or at least face capitalization issues.

The bottom line is that it is in the interest of the U.S. Government to bail out the preferred shareholders to avoid an enhanced banking crisis. This is a temptation, although not popular among many, especially those with bailout envy. The problem with bailouts is that once you commit to one, picking and choosing becomes a political issue. That is exactly what the government doesn’t want in an election year. Either way, bailouts are the watchword of this ailing economy because of overcommitment by the U.S. Federal Government. ~ E. Manning

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