Busted: Bankers and The Global Economy

May 7, 2009

Finance Experts Double-Minded and Fearful

Fed ever hopeful

Fed ever hopeful

Desperate to be a financial cheerleader during the recession, Ben Bernanke insistently paints an economic picture of future light and in almost the same breath debate about the biggest “what if” about the so far dubious recovery. It isn’t that the American public doesn’t long for good news, but we aren’t going to be conned either. Records numbers of jobless Americans point to a real problem where recovery is concerned.

Experts continue to be fearful about government banking stress tests, as if banks are the only importance for a future recovery. Certainly, that is where the bulk of taxpayer money has been placed to keep the system operational and the American power structure in place.

The media easily reports both sides of the economic story, but mostly focuses on the negative and no wonder. The greatest reality is that an economic recovery is mostly in the minds of a few visionaries at this point. If the economy worsens, “big lenders” do not have enough money to survive. The media points the inevitable need to raise cash as a precaution. Now that is confidence in a recovery.

Government stress tests for finance put banks through two appraisals. One appraisal reflects expectations about the recession as it is and the other forecasts a recession deeper than what experts predict. The reality of the current recovery isn’t strong enough to be called that, but any glimmer of economic light has corporate promoters banging their gongs and playing the marching band in the hopes of stirring sentiment for a recovery.

Experts just can’t wait for the recovery as they now invent ways that the nation will recover and prosper while record numbers of Americans remain unemployed and homeless. The idea of home sales being on the increase has moneychangers truly excited for an abbreviated recovery and future corporate good times.

Investors and the public have been quite realistic about corporate finance. Stock prices, especially for banking institutions, have taken a beating. This has spurred the requirement for more capital to keep banks operational as investor sentiment continues to ruin them. The government has been there all along to prop up the system. As a result, there would seem to be little immediate fear for the system. The bottom line for investors and the public-at-large is the main concern and truly the main force behind ‘recovery’. The new brand of corporatism can’t stand the thought of needing the little guy for anything. They have a philosophical quandary on their hands.

What is truly sad is that economic cheerleaders want to convince us that the United States can have a recovery and enjoy good times again with record numbers of permanently unemployed Americans. The reality has set in that we are enjoying the fruits of our corporate policy of job exportation over the last two decades. Cheerleaders don’t want to acknowledge this reality.  The new brand of corporatism and government wants to redefine unemployment and prosperity to fit a new mold that belies any logic. I’ll post more about this tomorrow.

August 14, 2008

American Households Face Financial Headwinds

Americans survived the attack of Hurricane Katrina and much of the nation felt the effects for years. What Americans are going now is not a hurricane or strong storm winds, but headwinds of a financial nature brought about by a number of converging factors. If you pick up the paper or look at the internet, you can hardly avoid the headlines and the details of economic carnage.

financing prosperity
financing prosperity

Aside from the banking and mortgage crisis, automakers are on top of the economic worry list, facing a continual onslaught of sliding auto sales as Americans can no longer afford to finance overpriced vehicles. Instead, many Americans out of necessity are keeping what they already drive. That is life in America today in the current economic cycle of life.

Gasoline prices have brought about hardship and fueled inflationary pressures for the nation and the world. Complaining sources indicate that retail sales have fallen again after downward pressure from lack of taxpayer stimulus payments. All of that bad news is presented with the auto industry, which is pulling down retail sales figures. Indications were that stimulus payments received by Americans did what they were designed to do, but never enough for the longing imaginations of business. Were it not for autos, retail sales would be up .4 percent, comparable to the month before. The nation has seen gains in retail since February for small ticket items, a bright spot despite the bleak outlook. The majority of Americans are buying smaller purchases for disposable items. Devalued money only goes so far and consumers are stretching it to the max.

retailer desperation
retailer desperation

Retailers are once again grousing about less than perfect sales as back-to-school shopping hits the retail scales. This reality reflects the desperate nature of retailers. Business inventories are overstocked, even despite negative forecasts, business chose to invest in stock for sales in the hope for a better holiday. They choose to talk about the cautious consumer, further enforcing a negative business mindset by downplaying the prosperity they have. The reality is that business is counting on the Holiday Season to somehow pull them through into a pinnacle of victory that rarely comes. They talk the same games every year. Talking business down even when business is up is not the way to foster prosperity.

Enough with the auto industry and consumer financing schemes! Americans don’t need all that now. This writer has made certain that he is on a spending vacation. Many others are in the same reality, whether out of necessity or self-imposed discipline. Americans need to regroup and explore the economic world they live in for any advantage that they can find to keep them moving forward. The nation is catching its collective breath after a financial burnout. The nation cannot continue to finance away the future for the moment nor continue to give money away. Money is our blood, sweat and tears: the building blocks of life. Bankers and Americans alike must face the facts. We are at a new place in the business cycle and in life.

If we stop grousing about how bad things are when they are not Mr. Retailer, we can actually enjoy what we have. Prosperity is relative. Unfortunately, Retail America has outrageous expectations and government statisticians are ever hopeful of a tax windfall, yet eternally unsatisfied that they can’t fleece their victims more effectively to bolster government agendas with more give-away programs.

big ticket greed

big ticket greed

Hope springs eternal in government to squirm away from the worst slump in housing in many decades and a severe credit crunch from pushing the country into a deep recession, ignoring the fact that we didn’t get here as a nation simply as part of an economic cycle or downturn. Bankers and financiers brought us here, fare and square to this place in the road and aside from a few unscrupulous home buyers, Americans are victims from lack of banking regulation and integrity, endless profiteering through investment vehicles combined with government inattention, always hoping for better on the gravy train of tomorrow. The nation has been firmly addicted to credit and keeping up with the Joneses. This part of the cycle is payment for that.

It time for a new chapter in America including rethinking what we do for a better future, inflation aside. Todays sales figures will ultimately take care of themselves as the nation rebalances from a huge economic and worldwide debacle perpetrated through boundless greed and financed through predatory lending across the board by winners like GMC, Capital One and Countrywide. Financial predators have abounded.

What the nation does will either slow down the cycle of recovery or get it over with faster. The decision is up to America, partly grounded in our own attitudes. As a retired financial analyst and economist, I know the difference between economic theory and reality. I’ve lived it in the trenches. This writer is for getting the economic pain over with instead of prolonging the pain through more addictive medication. ~ E. Manning

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