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.

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January 29, 2009

Unemployment Chills U.S. Economy

Filed under: banking — Tags: , , , , , , , , , — digitaleconomy @ 10:06 pm

unemployedInitial claims for state unemployment insurance benefits increased to a seasonally adjusted 588,000. That number is actually larger and growing by the day. For example, an assortment of companies across various industries announced more than 100,000 job cuts. Media publicity is calling the job losses the worst since 1945. Last year, the U.S. lost more than 2.6 million jobs. This year, Digital Economy is projecting at least 4 million in U.S. job losses based on current evaluation of the economic crisis and the inability to stem the tide of the recession.

More and more Americans are continuing to draw unemployment instead of finding employment. The curtailing of basic economic activity has great repercussions as the swath of unemployment grows. “If people aren’t coming to work, then they aren’t buying gas, they’re not stopping by the store or the pharmacy and they aren’t going to local eateries,” stated Tennessee Chamber of Commerce board member Susan Meece.

Wall Street firms like Standard and Poors long for the appearance of economic healing so that Wall Street can get on with the business of continuing to loot the economy and reaping corporate and investor profits. You always hear a mindlessly optimistic edge from their economists, who are little more than profiteering cheerleaders that hope to ignite a flurry of economic activity and profitaking on Wall Street in the name of business expedience. Right now, the reality is otherwise.

unemployment3What is worse, many are settling for underemployment or part-time work in an effort to make ends meet. This doesn’t account for fixed expenses like house payments, auto payments and child support. To make matters worse, many states are far behind on processing the unemployment payments, resulting in additional risk of the recipients losing what assets they have including housing. Some states are reported to be experiencing a backlog of more than 3 weeks waiting time before the first check is received. This reality place heavy stress on an already stressful situation, especially where other family members like children are concerned.

Because of record energy costs last year, energy rates in most states are at record levels without hope of reprieve for the average citizen. Electric companies have been granted record rate increases and are now enjoying a bonanza during a time when other energy costs have dropped and stabilized. Still, no effort is being made to adjust electric rates. Instead, federal grants are being made to municipalities to help citizens keep their electricity on.

unemployment4The recent government stimulus is designed to cover the intensive needs of federal and state government now. Jobs and promotion of economic activity is not the priority of recent legislation. A band-aid approach is preferred. Apparently, economic stimulus is now considered to be government giveaways and federal programs. While covering those in need is commendable, it does little to directly assist the ailing economy beyond supporting the current safety net for displaced workers and the disadvantaged. ~ E. Manning

May 29, 2008

More Funding Auctions in June

Filed under: banking, credit, federal reserve, money — Tags: , , , , , — digitaleconomy @ 9:30 pm

The Federal Reserve announced the continuation of its bank funding auctions as it continues to make a fresh batch of short-term cash loans available to still-squeezed bankers as part of an ongoing effort to ease stressed credit markets.

The Fed said it will conduct three auctions in June, with each one making $75 billion available in short-term cash loans, to help banks overcome credit problems so they will keep lending to customers. The magnitude of the problem continues unabated as the Federal Reserve increases the credit available. How much progress that banks are actually making with capital funding to wean themselves from Fed credit is a large question. The banking situation appears to be stagnated as the banking umbilical remains firmly in place. Will the Federal Reserve continue to uphold $75 billion auctions or will bankers see a decrease in funding in the near future?

February 28, 2008

Energy Prices Creating Inflationary Stress

Filed under: federal reserve, government, money — Tags: , , , , , , , , — digitaleconomy @ 12:34 am

High energy prices are creating “inflationary stress,” Bernanke said today before Congress. And, that is “complicating” the Fed’s work in terms of shoring up the economy, the Fed chief said.

President George W. Bush, at a news conference today, noted the slow economic growth but said the nation isn’t headed into a recession.

The article is very interesting as long as you can look past the lies, like the fact that the United States is not in a recession. That is wishful thinking.

September 6, 2007

Fed Governor Voices Economy Concerns

“I would like to reinforce remarks made last week by Chairman Bernanke on the recent turbulence in financial markets. In the United States we have seen a fairly sharp downturn in housing markets, and in recent weeks there have been growing investor concerns about mortgage credit performance, particularly with subprime mortgages. If current conditions persist in mortgage markets, the demand for homes could weaken further, with possible implications for the broader economy. And financial stress has not been limited just to mortgage markets, but has spread to other markets.”
~ Except from Fed Governor Randall Krozner at the Federal Reserve Bank of San Francisco, Conference on the Asian Financial Crisis Revisited, San Francisco, California

Krozner Speech Link (9/6/2007)

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