Busted: Bankers and The Global Economy

September 25, 2008

U.S. Political Infighting Threatens Bailout

rushing to "secret meeting"

rushing to secret meeting

Tempers are aflair in Washington on the eve of what authorities hoped would be the salvation of Wall Street and the U.S. economy. What Democrats declared as a breakthrough Wednesday evening seems a bust. The nation was led to believe that agreement had been reached and the Federal Reserve and the U.S. Treasury could begin the work of applying the agreement. Negotiations toward a massive bailout for Wall Street has just fallen into disarray on after Democrats said they learned in a White House meeting that presidential candidate Senator John McCain is backing a new plan differing markedly from one that has been under discussion. So much for bipartisan political agreement and cooperation that McCain advertised in the U.S. bailout.

Now, the feeling is that a new plan could be another week in the making as Republicans retired to an unknown location to plow through their ideas for the bailout. The Republican plan may involve a mortgage insurance plan as an alternative to the Bush plan, which has encountered criticism on Capitol Hill. Republicans also argued that the Treasury Department should charge premiums to holders of securities to finance the insurance.

Until Thursday’s White House meeting, Republicans had not brought up an alternative plan for the Wall Street bailout, including during previous meetings and Senate hearings. Is this political grandstanding or a far better concept? What does this mean, if anything, for the nation? If a negative catastophic reaction occurs will U.S. citizens hold Republicans responsible for the result? This portends to be a big stakes gamble for McCain which could catapult him to great heights or destroy his chances at winning the presidency. Only time will tell whether what Republicans are doing is a boon or a bust as some U.S. politicians seem to have forgotten that global confidence is more important to sustain the ailing U.S. economy than the opinions of the U.S. taxpayer. This reality isn’t opinion, but fact.

Meanwhile, the global central bankers of the G8 continue to dump dollars to encourage global dollar liquidity, thus increasing the pitch of inflation and further devaluing the dollar between the dollar and other currencies as the U.S. becomes indebted to foreign central bankers through the Federal Reserve. The dollar has less buying power and increased pressure toward inflated pricing across the board. The dollar is overheating, which will easily evolve into hyperinflation along with pressures that would force the Fed to admit the truth of that inflation. Even though central bankers are essentially holding a gun to the head of the U.S. national economy, they can’t seem to stop themselves in the name of dollar liquidity. In the end, foreign central bankers don’t want to be stuck with devalued dollars anyway. The International Society of Bankers are looking at global monetary policy and their own corporate profits.

Global reaction to a bailout is not very positive overall as the U.S. economy remains on life support. The German Finance Minister reacted, “The United States will lose its superpower status in the world financial system.” How the world reacts as the morning and day wears on in Europe and Asia remains to be seen. Ultimately, outside global and sovereign financing is what the U.S. economy is dependent on. How the world reacts is of great importance.

~ E. Manning

September 13, 2008

Investment Bankers Fear Panic and Unrest

Paulson's Grand Staircase?

Paulson at the Grand Staircase?

With the shakeout of Fannie Mae and Freddie Mac, Lehman Brothers almost seems an afterthought these days. The firm is clearly looking for salvation, but Big Government doesn’t seem so eager for a Bear Stearns type bailout. The problem is that the panic on Wall Street doesn’t affect only the plight of Lehman Brothers, but has the ability to touch the entire scope of Wall Street resulting in economic ripples and collateral damage throughout the U.S. economy.

Are the U.S. Treasury and the Federal Reserve in such fear that no solution is evident or is the weakness of banking institutions creating a problem in an effort to support failing Lehman Brothers? It doesn’t take a rocket scientist to discern that the nation is in the midst of another economic crossroads. However, the national and investor confidence doesn’t ring true with the “optimism” suggested by the press last Monday with Fannie and Freddie in the stock market.

In the past, the god of confidence has been the mainstay of U.S. economic policy. Confidence can only be harmed by allowing failing Wall Street to collapse. Yet, if decline and collapse what were to happen, that is exactly what should happen. The federal government has put themselves in the business of shoring business up instead of allowing for the consequences of business risk or business failures as a result of banking abuse. The reluctance of U.S. authorities to shore up the perception of a crumbling system indicates other more severe economic issues at hand behind the scenes. Wall Street stress is just the tip of the iceberg.
~ E. Manning

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