Busted: Bankers and The Global Economy

August 29, 2008

GDP Up: Why the Panic?

Bernanke and a much needed visit.

Bernanke and a much needed visit...

The economy performed far better than expected in the Spring (second quarter), reportedly led by exports and increased government spending, notably the stimulus program. Still, many economists like Wachovia’s Mark Vitner are talking up recession. Figures are continually revised up and down as more information comes in. “To many, it still feels like a recession.” Indeed it does!

Because of the weak dollar, nations have been buying more U.S. goods resulting in a foreign trade bonanza for the U.S. despite economic weakness on the home front. Consumer spending was up as well, reportedly sponsored by the $91 billion federal government fiscal stimulus program. Uncle Sam is still sitting on the remaining third of money allocated for the stimulus. What Congress will do with the surplus is anyone’s guess. That stimulus is now part of the burgeoning national debt that is approaching $10 trillion. The presidential candidates report that they are unconcerned with national debt as they propose new fiscal budget-busters.



The reality is still pessimistic as everyone realizes that all isn’t well. In fact, if you read enough news, you might get confused over the sundry viewpoints expressed. Still, nothing has changed except that when quarterly figures are updated, sometimes the nation comes out ahead in the statistics department. In the meantime, a weak dollar will help multinationals to consume more U.S. products or purchase from more U.S. suppliers. The world of business simply isn’t sharing that monetary goodness with their employees as they prepare for the reportedly bleak future ahead, continuing to fulfill the prophecy of recession. The labor market is still in decline, perpetuated in part by the continued offshoring of U.S. jobs to foreign markets. ~ E. Manning

June 24, 2008

Fed Interest Rate Responsible for Inflation?

The joke of the day is CNN money’s recent article ruminating about the effect of the Federal Reserve’s low-interest rates and the creation of inflation. Low-interest rates for bank have helped the bottom lines of financial institutions. Consumers and investors have experienced little, if any, benefit.

According to the article, some think that low interest rates are at least partly responsible for some of the serious drags on the U.S. economy today, such as soaring prices of food and gas and the weak dollar. The interest rate of the Fed have nothing to do with such things at this low level of interest!

The country is fighting on two war fronts in Iraq and Afghanistan. Credit and monetary funding has been issued by the Federal Reserve on record levels. The national debt has grown exponentially since President Bush took office, which is probably his greatest legacy. The constant creation of monetary credit has thoroughly devalued the dollar in relation to the rest of the world. As a result, costs are higher. Capital value in the real estate market and economic pressure on the cost of goods continues to drive values down. This results in a contraction of the marketplace.

Wall Street and the media need to grow up. Sour grapes during tough times among people with most of the power and influence is ridiculous. Wall Street continues to find ways to make money. Scapegoating for their own benefit is exactly the situation. If you have read the information on this website, you know why the economy is in the dumper: financial and banking greed.

Most economists think inflation is here to stay. It’s likely to get worse.

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