Busted: Bankers and The Global Economy

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

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August 5, 2008

Federal Reserve Betting on Banking Mojo

shell game banking

shell game banking

Kevin Warsh laid out much of the bad economic news as a result of the banking, finance and mortgage failure of the last year at the U.S. Department of the Treasury Press Conference. The Fed Governor spoke to Henry Paulson and bank supers, as poetic as a banker could be where innovation was concerned. It was what could be described as a banking innovation pep talk, an effort to drive inspiration for the latest money making banking creations while establishing a new securitized banking pool concept.

“the path to a new financial market architecture, however uneven and improvised, will not only be marked by the forces of retrenchment. The path should equally…be distinguished by the creative impulses that drive product and market innovation. It is perhaps too convenient to denigrate the attributes of …ingenuity…when the forces of innovation can disappoint and weaken the real economy. Policymakers and market participants alike should recognize that innovation–in our product markets, labor markets, and yes, our financial markets–is likely to prove a necessary net contributor to economic growth in the coming period. We should also be reminded that financial innovation need not be equated with product complexity.”

Creative impulses…market innovation…ingenuity…not…product complexity. Bankers just went through a peak period of massive banking innovation and have paid dearly…or rather some have paid dearly. On balance, the world has paid dearly with the exception of central bankers. Since the credit money isn’t real in their eyes anyway, nobody was really hurt. The insanity failed, apparently only because bankers weren’t financially literate enough. Warsh is ready to try a new kind of insanity again, fully recommending it as he pats his banker buds on the back and fully expecting a different result…or does the current Federal Reserve really care about the long-term results aside from their own corporate profits?

Warsh is suggesting research and testing for new banking innovation that can be exported to other economies to (gosh) profit bankers for rebuilding banking. This is a public admission that the morally bankrupt aren’t even hesitant to admit. They just cover it with big words and long sentences while the public ignore their public plans for profit at the expense of whole economies. But this time, the current crack Fed team is involved from the beginning and they are going to get it right.

The reality is that the Fed wants more of the same mortgage and bond medicine. They want a guaranteed bond framework to attract investors. They want greater access to mortgage credit created by “high quality assets” in a pool that banks will manage. These pools would rotate active mortgage securities. If a security were to become delinquent, it would be conveniently removed from the investment banking pool in a magic mojo shell game. “Newly issued covered bonds backed by high quality mortgage loans and issued by strong financial institutions may find a growing investor base in the United States.” Imagine that. Guarantee securitized bonds to make them desirable and they (the investors) will come in droves.

As if the United States and the world haven’t had enough banking innovation straight to economic disaster after years of abuse, the Federal Reserve is looking for new magic mojo banking prowess to bail out the world. They are thoroughly “unrepentant” of the past because there are no longer any ethics or morals in finance and banking. Bankers say, if we’d just done it a little differently, we would have succeeded.

This is all okay with Kevin and the Fed team because of “high quality” and properly understood financial innovation. The Federal Reserve seeks to encourage new and innovative sources of funding to secure its latest big mojo idea. Get ready for a brave new world of investment using a ball and golden shells on a table. You are sure to win the game over the bank, especially since they print the money anyway.

Who is going to guarantee the casino madness? Do you think the Fed is going to stand up as the guarantor on this one? ~ E. Manning

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