Busted: Bankers and The Global Economy

July 19, 2009

Economic Depression: American Resentment Flickers Against Corporate Wealth

money green with envyThe recession and the rising gulf between the haves and have nots; investment bankers versus newly impoverished and unemployed Americans is changing viewpoints. At one time, any company reporting record profits was certain to earn applause for this was seen as the American way. Americans were firmly invested in what they believed was the trickle-down theory of economics. The scam that investment bankers have pulled on the world with their highly staked leveraging games has changed much of this sentiment. Now that institutions that formerly made up the investment banking capital of the world are recovering with the intent of paying back taxpayer-backed Federal Reserve bailout money, Americans are leering at the possibilities that nothing has been learned from the crisis of financial literacy that prevails itself upon the world.

Writer David Segal has introduced the idea that class resentment is to blame as investment bankers continue to rake in the speculation-based financial dough based on the same numbers games that brought the nation to the edge of financial oblivion. The reality runs much deeper. In the eyes of Americans, the reality isn’t about making money, but how money is earned. Americans feel that they are being scammed because the nation operates by multiple sets of rules depending on how much money and influence you can peddle. Even members of Congress like Charles Schumer have demonstrated that they believe Americans are simply brutes to be used by the system to bolster corporate along with government wealth and influence.

Now that the likes JP Morgan Chase and Goldman Sachs are reporting fantastic encouraging numbers after having enjoyed bailout at the expense of Americans and the system at large, Americans see that the victory is very hollow. Recent financial victories in American are without benefit to anyone that doesn’t directly play the insider financial games on Wall Street. Multinational corporations continue to rule the roost behind the scenes, taking more out of America than they put in. Profit without personal responsibility is king. Most of America continues to be in great pain and America already knows that recent financial victory on Wall Street is a result of the same deluded thinking and policy that still threatens to destroy the financial system. It is not a system based on honesty and real numbers, but simply a gambling game of manipulation and opportunity.

The fact is that the Federal Government likes the control and authority that it wields in the banking community as a result of the bailout. The same can be said for the money that government has invested in the corporate structure. Uncle Sam holds the cards as the government maintains a front row seat at AIG. This is the only means that government now has to rein in the continued greed and avarice of Wall Street and corporate investors. The system hasn’t been reinvented as promised nor have sufficient reforms taken place to insure the safety of financial system on any level. We are still living in the last century. Nothing has changed. That is why government is so quiet about what is a hollow victory on Wall Street. ~ E. Manning

April 14, 2009

Bernanke: It’s All About the System

monopoly moneyPresident Obama declares that the sun is coming out as the economic storm wanes. “The financial and economic risks posed by a collapse of AIG would have been at least as great as those created by the demise of Lehman. In the case of AIG, financial market participants were keenly aware that many major financial institutions around the world were insured by or had lent funds to the company. The company’s failure would thus likely have led to a further sharp decline in confidence in the global banking system and possibly to the collapse of other major financial institutions. At best, the consequences of AIG’s failure would have been a significant intensification of an already severe financial crisis and a further worsening of economic conditions. Conceivably, its failure could have triggered a 1930s-style global financial and economic meltdown, with catastrophic implications for production, incomes, and jobs. The Federal Reserve and the Treasury agreed that in the environment then prevailing, AIG’s failure would have posed unacceptable risks for the global financial system and for our economy.” – Ben Bernanke in speech to Morehouse College

Magic Money T-ShirtThe American taxpayers have been put on the hook to bail out Wall Street.  Success is still not guaranteed despite a recently sunny disposition. Meanwhile the European Union supports a new monetary system and retirement of the dollar as the prop of the global community that central bankers have long proffered. The general undercurrent in much of the EU underwrites “the collapse of the Bretton Woods system based on the US Dollar as sole pillar of the global monetary system.” This was predicted by some parties in the EU last year, but so far has not come to pass because of the creativity and financial manipulation of the International Society of Central Bankers.

March 18, 2009

The Corollary of Banking Greed

greed-is-good-2“Greed is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.” Michael Douglas was privileged to echo those memorable words in a timeless Hollywood movie that resounds the philosophy of much of the financial world without apology. Those words now cut into the souls of mainstream Americans.

The corollary of banking greed dictates that financial greed is opportunity and entitlement magnified by lack of authority. Wall Street has reveled in this truth for decades and the results of this unpleasant law have come to roost. AIG, once held to be the bastion of risk management, has proved the effect of this corollary as they continue to mandate runaway bonuses for what amounts to the summary destruction of everything that America holds dear where money is concerned. Americans are taking their authority back.

Government is apparently into the payoff. We now have a mystery amendment in the recent stimulus package. Senate Banking Committee Chairman Chris Dodd added a compensation restriction to the bill. The Dodd Amendment provides an exception for contractually obligated bonuses agreed on before Feb. 11, 2009.

The Senate Chairman has egg on his face. He claims that the original amendment did not include that exemption and he denied inserting the provision. “I can’t point a finger at someone who was responsible for putting those dates in. I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.” One of AIG’s key offices resides in Connecticut. Connecticut Senator Dodd was AIG’s largest single recipient of campaign donations during the 2008 election year totaling more than $100K.  Heck, it’s just more convoluted behind-the-scenes favoritism and payola in the highest ranks of federal government.

The good news is that this writer does not need to rail about the entitlement attitude of AIG, Wall Street or Senator Dodd. The good people of America have this issue firmly in hand. The uproar of the public has brought threat of injury and permanent demise to what used to be seen as harmless financial types. America isn’t waiting on Senators and Representatives to utter their glib proclamations about how they are preparing to tax the bonuses to get your money back. How is that for ‘in the box’ thinking? We are now taxing our own money back?

Heck, America isn’t waiting on government reaction or platitudes. Americans are ready to take this matter into their own hands. A few choice folks are willing to go into AIG gun’s-a-blazing to stop the abuse of trust in a company that is now 80 per cent owned by the American taxpayer, while millions sit idled at home with recent job losses. AIG employees now fear to go to work. Extra guards are posted at the door. Chaos is in the ranks as the corrupt corporation structure reels at the public reaction. Americans are prepared to take matters into their own hands. The federal government isn’t prepared for a lynching. Congress is exploring the possibilities in hearings. ~ E. Manning

March 13, 2009

Can the Economic Crisis Be Resolved?

nauseating crisis

nauseating crisis

Bankers have been treated like bad rich kids with every need met so that Daddy Government isn’t so embarrassed. This was the public relations idea that hasn’t worked. As a result of this public relations nightmare, the federal government has continued to overextend itself in the name of security and confidence as the instrument of last choice. Oh really?

As a result of this mindset, the Treasury has run amok in a virtual panic through the system looking for toxic debts and tried to figure out the crisis using the best brainpower that is available with banking debt so complex as to make you give up. That is what Hank Paulson did. Banks continue to snivel about their needs within the broken system that they created.

What’s worse, the world of top-notch education and best brainpower available coupled with self interest has brought the nation, albeit, the world to its’ knees with only excuses for any hope of redemption. Paulson couldn’t find all the debt or deal with the tentacles of the impossible situation.  Timothy Geithner still isn’t thinking outside the box of rules he is used to. Paulson’s terminal frustration and Geithner’s government-man thinking don’t have to be. They have been beholden to the system. There is a solution.

This solution is much the same as the raw deal handed out to homeowners in do-it-yourself mortgage crisis that continues to beleaguer the nation of taxpaying American citizens. The nation is threatened, say those of superior intellect,  because ‘undereducated Americans’ can’t seem to get it together. Bankers and servicers have done little or nothing to stem the tide of foreclosures because there is little self-interest in doing so in the short-term. The short-term is the measuring stick of capitalism today.

Since bankers and their ilk are so highly educated with plenty of basic internal resources, the Federal Government needs to install a new idea that involves do-it-yourself capitalism. This do-it-yourself system takes the burden from Daddy Government’s hands and puts the responsibility squarely on the shoulders of those that spawned the crisis. Daddy Government isn’t going to be involved any more beyond the cleaning up by the FDIC, but Daddy is going to supply the credit tools necessary to do the job.

banking-hourglassUncle Hank couldn’t find all the toxic debt which ultimately ended the bailout that the nation had intended. However, in the world of banking capitalism,  rest assured that if you have toxic debt, you know it. Banks are hiding toxic debt based on their own fear and trepidation, the ultimate public relations nightmare.

Enter Ben Bernanke’s Federal Reserve, the answer to all liquidity. Set up yet another credit window, this time wholly financed by the Federal Government. This doesn’t mean that the other tools used by the Fed aren’t financed by the taxpayer and the federal government, but I digress.

In this case, the suffering banker knows of his liquidity issues and always has. This time, instead of expecting the Treasury Secretary to come to the rescue, the bankers are to cash out their toxic debt at a preassigned value as presented to the Fed. Think cheap. Think bargain basement. The Fed, using credit guaranteed by the American taxpayer (of course) will issue monetary credits to the bank in exchange for ownership of the toxic debts in a nationwide fire sale of sorts. The toxic debts are and most likely, forever will, be worth virtually nothing.  They will be removed from the system and these flawed toxic debts will never be sold again. We will plan to eat the cost. The responsibility is on the bankers which is exactly where it should be. To make life good, everything will be publicly anonymous to save the possibility of embarassment.

In exchange for this generosity and real bailout by government, these banks will guarantee in blood that all monies received for such bailout will be used to fund loans to taxpayers and small businesses with relaxed terms that generally creditworthy citizens and business in today’s economic climate can meet. In other words, stable income is required, but no more endless profiteering and nitpicking that banks love to keep their credit out of the system. For large bank holding companies that hold toxic debt and cannot directly assist in rebuilding the economy and improving liquidity to the economy, there will be no further bailout.

The first part of the plan would be enough, but the second part of this plan is sheer genius, but not for greedy capitalist bankers.

In the second phase of the plan, bankers will be required from a certain date in the immediate future to update cash holdings for their fractional reserve. Instead of being able to loan out 90% of cash holdings, they will be required to hold on to 20% their holdings without loaning them out. This will allow an extra margin of security since the traditional 10% hasn’t worked to keep banks solvent. The reality is this, like it or not: the fractional reserve of 10% is part of what got bankers into this mess with toxic debt. The idea of easy money is what fueled the crisis. Money is no longer going to be so free and easy for bankers. They will be living on less and making more loans or cease operation and sell off their accounts. An uncooperative greedy banker is the worst sort of animal. It is time to remedy that problem with a little less manufacturing of money. 80% of new loans out of thin air fueled from deposits and downpayments will be enough. Bankers will now be keeping 20% on reserve instead of the traditional 10% moving forward. Of course, this will involve keeping two set of books, one for old loans at the traditional old rate and another for continued business, but bankers are good at keeping books. Will bankers buy the idea? There won’t be any choice if they want to survive. What is best is that no nationalization will be required, an action that renders zero benefit to the taxpayer. ~ E. Manning

January 26, 2009

Economy and U.S. Treasury: A Dilemna of Principle?

geithner-for-treasury-secretaryThis afternoon the United States Senate will vote on Tim Geithner’s nomination for U.S. Treasury Secretary. He has been hand-picked by the Obama administration from the Federal Reserve. In a poll by American Solutions for Winning the Future, those participating in the poll thought of his nomination in light of his tax mistakes. With more than 83,000 people responding, an overwhelming 98% of those polled voted to oppose Geithner.

geithners-furrowed-brow2Is it wrong for someone who failed to pay $34,023 in taxes to become Treasury Secretary in charge of taxation and economic policy application? As U.S. Treasury Secretary, he will be in charge of administering any future bailouts with government funding through the taxpayer. American Solutions says that this is about principle. If Geithner is approved, will he will be a symbol of ‘favoritism’ and ‘rich politicians’ getting a different deal than the rest of us? Or perhaps Tim Geithner is someone just like you. He makes mistakes. Should Tim Geithner have a higher level of accountability than the average American citizen? Do we really want a crossover from the Federal Reserve in government administering your money? Is this a government buyoff to give the Federal Reserve more power in exchange for continuing support and funding from central bankers? What do you think? ~ E. Manning

January 18, 2009

Economic Panic: Frying Pan to the Fire

As the economy risks spinning out of control and banks continue to run up multi-billion dollar losses, the Obama administration will face tough choices with the $350 billion remaining in the bailout plan. With the bailout of General Motors by converting it to a bank holding company, some boundaries were set where corporate welfare is concerned. This has stopped most of big corporate Main Street from expecting direct government bailouts so far. There are many institutions that still want a piece of the bailout pie. The result is likely to be a shortage of bailout money.

The rumor is that the Troubled Asset Relief Program (TARP) will be used to build a “bank” that holds the toxic debt, a repository of toxicity that moves those debts firmly into government hands. The government is hoping beyond hope that at some time in the future, those debts will increase in value once the recession is in hand and the economy has returned to health. (more…)

January 13, 2009

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