Modern Banking

My main Sampler in Florida writes that I am missing the boat, as it is getting so bad that Mexicans are emigrating back to Mexico. I doubt that it is quite so bad, but think the Justice Dept. might consider prosecution of private equity moguls for the perpetuation of the newest and most expensive form of a Chain Letter. I must have been asleep when $2 billion deals became small potatoes; maybe the Bankers were equally slumbering. The major component of these deals has always seemed to borrow to buy these companies, then again remortgage to pay off the Purchase deal, borrowing excessively to gather Cash to negotiate the next deal. The only result seems to pack the purchased companies with debt, with the deal-makers getting their billionaire cut of the Profits. Would one trust and an Investment broker who engaged in such activity? Why is the leadership of our major banking systems in hock because of these activities, and why should Depositors be committed to covering this garbage?

The Fed attempts to keep our new banking format afloat through provision of liquidity will assuredly be directed to the fuel tanks of this nation. The liquidity does save Bankers for a while, but is it worth it; remember We have a slight glut in current Oil supplies. We even have a measurably smaller supply of Heating Oil, with less need of it than two months ago. Farmers are going to return to the fields shortly, and they must run, else Food Prices will only have begun to skyrocket. We have to hold a stable Dollar far more than We need enhanced economic performance, which will not come as long as Fuel and Food is consuming discretionary funds of the Consuming Public. I know that the Fed wants to save their fellow Bankers, but We need at least 100 Points added to the Fed rates.

The exact problem with the banking system can be found in this article. Citigroup is shoving good money after bad, trying to save wealthy investors who took Citigroup’s word that the new instrument investments were good. Citigroup’s previous fund acquisition practice may have been fraudulent, but it is an even greater fraud to endanger Depositor accounts in hopes of saving bad investments. The wealthy investors should be made to understand that the prior commitments were high risk investments, with a high level of potential loss. Their recourse may be Civil Suit, but it is not demanding ensured Deposits to cover their losses. The Fed and the FDIC should place a crimp upon such adverse money accounting. lgl