Where has all the money gone?

The current banking crisis is destroying a lot of “virtual money” – values which have been created by the banking industry and were not backed by real value. However, also a lot of “real money” of customers and shareholders disappeard during the crisis. In reality this money did not disappear but was transferred to other people. A great portion of this money was just handed out to the people in the banking industry. In 2006  compensation in the finance sector industry in New York city hit a record of 23.9 billion $. This is e.g. more than the US drug industry’s annual spending on research and development. No wonder banking executives, managers and employees did not stop the rally.    

Break of financial system is caused by corrupt bank managers

In the ongoing discussion about the causes of the collapse of the financial system there is no discussion about the behavior of thousands of banking managers at all levels. For sure people knew that the schemes they came up with would not work in the long range. Much like the management of General Motors knew that their company was really not doing well. However, billions of dollars have been handed out to the bankers to keep quiet. The Fed should think about getting back some of the salaries and bonusses to make up for the losses caused by greedy banking managers.

Is your pension safe?

In good old days pensions had to be secured with risk-free government bonds or blue chips of companies like Ford, General Motors, IBM – not all blue chips are blue anymore. In addition modern, smart pension fund and life insurance managers have moved major parts of the pension funds into more risky, “high yield” investments. Guess who will finally be hit by the finance system crisis? It’s your money which has been distributed to the managers and employees in the finance industry. The money which government is handing out to the banks will increase inflation and must be finally payed by the US people too.  Saving money for retirement will become more difficult in the future.