Busted: Bankers and The Global Economy

January 20, 2009

Economy: Unemployment & Opportunity

recessionTimes are not good for the United States right now, but this recession has not made a decisive turn for worse just yet this year. The unemployment rate, (see poll) 7.2 percent in December, remains below the average peak unemployment of 7.6 percent during the previous 10 post-World War II recessions. The nation has been in similar straits before, but has a measure of hope in focus today with the inauguration of a new president (see poll).

What has been so menacing is the real feeling coupled with the likelihood that the nation is headed for far worse. Indicators are that an enduring recession or depression is likely. The published government unemployment rate is expected to climb to 9% this year and is likely to eclipse that figure, even though the reality is that unemployment is much higher. Incomes are stagnant or declining. Jobs are scarce, with a decline of full-time employment that will actually pay the bills. Getting enough part-time jobs to get through this crisis isn’t an option. Business is down with little hope of any improvement for some time. The business economy is looking at lean times with capital goods purchases almost non-existent compared to the norm. Economic contraction is the only news that America has to look forward to for the next 2 years. Politicians say that Americans are now confronted with the fact that sacrifice is essential as Congress spends more taxpayer money than ever before. (more…)

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January 8, 2009

How Will Obama Create a Wall Street Miracle?

obama-discusses-stimulus-2009Throughout America’s history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation – the kind that mark a clean break from a troubled past, and set a new course for our nation. So started Barack Obama’s “stimulus speech” today. Perhaps Obama’s opening statement is somewhat understated, but certainly well placed in the realm of psychology.

The emphasis of his speech was largely inspirational in nature, but held a few small pearls where ideas are concerned. One area is of special concern:

“…it means reforming a weak and outdated regulatory system so that we can better withstand financial shocks and better protect consumers, investors, and businesses from the reckless greed and risk-taking that must never endanger our prosperity again. No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.”

obama-big-brotherSafety in America is rarely a hard sell for a people obsessed with their own security. How is President Obama going to accomplish this miracle of financial national health that not a single man in existence has dared to attempt to act on? How will America create the miracle of coveted and elusive financial transparency without creating a “big brother” situation in the realm of business, privacy and the American Dream? How can a system be created that doesn’t limit freedom while making runaway theft and abuse a topic of the past on Wall Street and in financial circles. Much like Bush’s “war on terror” seemed like a good idea when the twin towers fell, a dramatic change in course including an invasion of privacy where Corporate America and Wall Street are concerned could be a slippery slope.

Unfortunately, the U.S. Federal Government is not a bastion of transparency in any regard, which leaves many Americans pausing to consider: “What will I have to give up to keep America safe from reckless greed and risk-taking that must never endanger prosperity again.” Is America preparing itself for another “war on terror” in the name of financial literacy? What new technology and control system will we use to create this mandated financial transparency or is this a resolution that will fall neatly into the hands of global finance ministers?

Nancy Pelosi and the elected lawmakers are about to make more bailout history in the hope of abating the tide of recession with the intention of avoiding economic depression. There will be no Congressional vacation without a legislative solution for bettering the economy. So far, throwing money and liquidity a la Milton Friedman has done little to help the situation. In desperation, the Feds are looking to avoid the specter of an 25% American unemployment rate and the resulting unpopularity, misery and perhaps rebellion against established authority as millions bite the economic dust in a nation ill equipped to deal with any blight. What America has now is nothing less than political panic.

July 20, 2008

EU: RFID Reduces Fraud or Promotes Fraud?

RFID technology is being promoted as the final solution to security problems. Business, ranging from security to law enforcement to banking is researching the latest and greatest new ideas and creating newer and less expensive ways to employ RFID tracking. Mostly, the process is a waiting game with wary citizens as the idea of RFID becomes accepted over time.

In the past, the government authorities in the EU have told citizens that a nationwide identification card could reduce fraud, prevent illegal immigration and combat global terrorism.

The government in Britain has admitted that it had oversold (more…)

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…)

April 14, 2008

Investment Banks Continue Borrowing from Fed

A central bank report said Wall Street Investment Bankers averaged $32.6 billion in daily borrowing over the past week. That compares with $38.1 billion in the previous week and $32.9 billion before that. The Fed said it would make as much as $200 billion worth of Treasuries available through weekly auctions. In the three auctions so far, the Fed has provided $133.95 billion worth of Treasury securities.

The CNN Media engine suggested that the central bank auctioned only $33.95B of the $50B in securities made available to investment banks, suggesting demand for super-safe government Treasury Bonds could be easing. You can see that very little change has occurred and that average levels are still in the $30 billions. The reality is that investment banks have not soaked up all the funds that they could have received. Whether this reality is a strength or weakness can be debated. The fact that investment banks are not using all the funds allowed could be considered as a strength. The fact that investment banks are using the Fed at all could be considered as a weakness. (more…)

April 8, 2008

The Fed: A New Mood Stabilizer

U.S. Treasury Secretary Henry M. Paulson Jr. proposes to overhaul the U.S. financial system by transforming the Federal Reserve into a “market stability regulator” instead of the nation’s banking and money source. Mr. Paulson feels secure putting the International Society of Bankers in direct control of the U.S. economy.

Behind the scenes, a strong possibility exists that because the United States faces a 10 trillion dollar national debt soon, giving the global banking system economic control of this country is required to keep full monetary support. Deep dark rumors say that the International Bankers are tired of American excess and have been considering pulling the plug unless they get a bigger piece of the pie and more control. The price of greedy bankers and governmental unwillingness to use restraint in promoting raw profiteering has effectively put the United States economy up for sale. The new plans of the U.S. Treasury Department play right (more…)

April 3, 2008

Bernanke’s Optimism Flags

Filed under: banking, federal reserve, government, money — Tags: , , , , , , , , , , — digitaleconomy @ 12:04 am

bernanke-defends-fed.jpgBernanke appeared less amiable and quietly confident as he spoke is more tense tones. He admitted that “recent actions appear to have helped stabilize the situation somewhat”, but that markets remained strained. Clearly Chairman Bernanke put a new floor under the U.S. economy. The economy would be rife would failure if the Fed had not gradually opened the floodgates of the market credit and proceeded to make an emergency infusion upon the failure of Bear Stearns. Last month alone, the Fed credited more than $300 billion in economic support to keep the banking economy in functional condition.

Bernanke recited that bankers were unwilling to loan to each other because of the large amount of securitized banking instruments on hand. Banks have been unwilling to take any changes holding bad debt or collateral. Since the Federal Reserve has been dealing with the securities (more…)

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