ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist®.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style3 { height: 68px; } .MsoNormal {} h1 {margin-bottom:.0001pt; page-break-after:avoid; font-size:12.0pt; font-family:"Times New Roman"; font-weight:normal; text-decoration:underline; text-underline:single; margin-left: 0in; margin-right: 0in; margin-top: 0in; } .style4 { font-size: large; font-weight: bold; font-family: Arial; } .style6 { height: 69px; } h2 {margin-bottom:.0001pt; text-align:center; page-break-after:avoid; font-size:12.0pt; font-family:Arial; margin-left: 0in; margin-right: 0in; margin-top: 0in; } .style7 { width: 285px; } .style8 { font-size: x-large; font-weight: bold; } .style9 { font-size: small; font-weight: bold; text-decoration: underline; } </style> </head> <body bgcolor="white" vlink="black"> <center> &nbsp;<table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr> <td height="118" rowspan="2" valign="top" align="left" xpos="0" class="style7"> <a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" colspan="2" valign="top" align="left" xpos="140" class="style6"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" class="style6"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr> <td width="624" colspan="6" valign="top" align="left" xpos="0" class="style3"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#8226; <a href="articlesindex.html">ARTICLES</a> &#8226; <a href="books.html">BOOKS</a> &#8226; <a href="teflon.html"> THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#8226; <a href="mailto:letters@onlinecolumnist.com"> REACTIONS</a> &#8226; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td height="2" class="style7"></td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style4">Barack&#39;s Economic Woes Tied to Stock Market</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curt</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b>is<a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright August 2, 2010<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<span class="style8">P</span>resident Barack Obama finds himself trading places with former President Bill Clinton before the disastrous 1994 midterm elections where a Democratic House lost 54 seats and handed former House Speaker Newt Gingrich (R-Georgia) control of Congress.<span style="mso-spacerun: yes">&nbsp; </span>Two years before, Clinton swept into office largely from a stubborn recession that dogged former President George H.W. Bush s chances of a second term.<span style="mso-spacerun: yes">&nbsp; </span>While there are parallels today, some economists worry that the outlook could be bleak when the next presidential election returns in 2012.<span style="mso-spacerun: yes">&nbsp; </span>Democrats like to point out that Barack inherited the mess from former President George W. Bush, who s been a missing person since leaving office Jan. 20, 2009.<span style="mso-spacerun: yes">&nbsp; </span>With much of Obama s $787 billion stimulus spent, the specter of a double-dip recession looms.<span style="mso-spacerun: yes">&nbsp; </span>Only one thing stands in the way:<span style="mso-spacerun: yes">&nbsp; </span>The mighty U.S. stock market.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>When Bush left office, Wall Street was in a tailspin, dropping from a November 17, 2007 high of 14,000 to a low of 7,450 Feb. 19, 2009, a 47% drop.<span style="mso-spacerun: yes">&nbsp; </span>Right wing pundits blasted the young president one month into office, insisting stocks couldn t grow under a Democratic regime.<span style="mso-spacerun: yes">&nbsp; </span>Proving his critics wrong, the Dow made a stunning turn around, climbing back to 11,000 April 12, 2011, a whopping 43% rebound in less than 14 months.<span style="mso-spacerun: yes">&nbsp; </span>Economic progress looks better when the stock market rallies, giving publicly traded corporations the needed cash to expand payrolls.<span style="mso-spacerun: yes">&nbsp; </span>Prospects of robust economic growth dimmed when the Commerce Dept. reported a sluggish Q-2 growth rate of 2.4 %.<span style="mso-spacerun: yes">&nbsp; </span>While disappointing, it s better than contraction.<span style="mso-spacerun: yes">&nbsp; </span>Today s anemic growth directly relates to a sideways stock market, requiring Wall Street to take more responsibility in economic recovery.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Contrary of popular belief, Wall Street isn t driven by aliens but predictable mutual, hedge and private equity funds.<span style="mso-spacerun: yes">&nbsp; </span>When the funds sell off at the same time, markets plummet, causing share prices to drop.<span style="mso-spacerun: yes">&nbsp; </span>While market ups-and-downs seem driven by earnings and economic trends, today s unregulated hedge and private equity funds play both sides of the market.<span style="mso-spacerun: yes">&nbsp; </span>Profits are typically driven by sell-offs, dumping shares once they reach certain price-points.<span style="mso-spacerun: yes">&nbsp; </span>Profit-taking is a fact of life on Wall Street.<span style="mso-spacerun: yes">&nbsp; </span> Hedge and private equity funds, on the other hand, typically bet against the market during sell-offs, namely, short-selling.<span style="mso-spacerun: yes">&nbsp; </span>European central bankers strongly urged U.S. central bankers to follow suit and regulate short-selling.<span style="mso-spacerun: yes">&nbsp; </span> Regulating short-selling was not part of the historic July 21 financial overhaul.<span style="mso-spacerun: yes">&nbsp; </span>Fed Chairman Ben S. Bernanke knows there s more work needed.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Market-makers like Goldman Sachs needs to work with the Treasury Department and Federal Reserve Board to craft better controls on currently unregulated hedge funds.<span style="mso-spacerun: yes">&nbsp; </span>Barack s most recent financial overhaul focused on restricting banks from risky derivative investing to help prevent future catastrophic losses.<span style="mso-spacerun: yes">&nbsp; </span>When major U.S. financial institutions ran out of cash in 2008, the Federal Reserve had to re-supply banks with trillions in cash to save depositors.<span style="mso-spacerun: yes">&nbsp; </span>Bush and Obama s economic bailout account from less that $1.5 trillion, a drop in the bucket. Bernanke had to print nearly $15 trillion to bailout bankrupt banks and other financial institutions.<span style="mso-spacerun: yes">&nbsp; </span>Barack s financial overhaul focuses more on unscrupulous lending practices that left banks holding trillions in toxic debt.<span style="mso-spacerun: yes">&nbsp; </span>Restricting bank loans and tightening credit is only one small step in beefing up regulatory reform.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Barack can t expect to grow the economy until he and his Treasury Secretary Tim Geithner figure out how to stop short-selling.<span style="mso-spacerun: yes">&nbsp; </span>As long as hedge and private equity funds continue to profit from short-selling, the markets will stay sideways and mutual funds won t reclaim past losses from market downturns.<span style="mso-spacerun: yes">&nbsp; </span>Short-selling has turned profit-taking into a kind of freefall, where market losses amplify many fold.<span style="mso-spacerun: yes">&nbsp; </span>Fed and Treasury officials must now go back to the drawing board to regulate short-selling, especially in the financials.<span style="mso-spacerun: yes">&nbsp; </span>Short-selling bank stock nearly bankrupted Bank America in Feb.  09, driving blue-chips, like Wells Fargo Bank, to near insolvency.<span style="mso-spacerun: yes">&nbsp; </span> Short-selling decimates pension funds and long-term investors, creating unfounded liabilities for the nation s biggest investment funds and endowments.<span style="mso-spacerun: yes">&nbsp; </span>White House and Fed officials must revisit the short-selling issue.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Barack s July 21 financial overhaul was a necessary first step in preventing another financial collapse.<span style="mso-spacerun: yes">&nbsp; </span>More work is needed to prevent hedge and private equity funds from wrecking the markets long-term growth.<span style="mso-spacerun: yes">&nbsp; </span>Only long-term growth can supply publicly traded corporations and the nation s biggest pension and mutual funds the cash needed for gains in long-term investments.<span style="mso-spacerun: yes">&nbsp; </span>No individual, family or corporation can tolerate the pernicious effect of short-selling, robbing corporations and pension funds of the cash needed to eventually add jobs.<span style="mso-spacerun: yes">&nbsp; </span>Public works jobs can only go so far.<span style="mso-spacerun: yes">&nbsp; </span>Private sector jobs are essential to ending the recession, job creation and eventual economic recovery.<span style="mso-spacerun: yes">&nbsp; </span>More bailouts and makeshift government jobs won t lead to the private sector cash needed to add jobs.<span style="mso-spacerun: yes">&nbsp; </span>Restricting short-selling and promoting long-term stock market growth is the only way forward.</p> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <bAbout the Author</u> <p class="MsoNormal"> <span class="style9">About the Author</span><span style="mso-spacerun: yes"><span class="style8">&nbsp; </span>&nbsp;&nbsp; </span> </p> <p class="MsoNormal"> <b>John M. Curtis </b>writes politically neutral commentary analyzing spin in national and global news. He&#x2019;s editor of OnlineColumnist.com and author of <a href="books.html">Dodging The Bullet</a> and <a href="books.html">Operation Charisma</a>.</p> <p class="MsoNormal"> &nbsp;</p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td height="2574" valign="top" align="left" xpos="0" class="style7"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td height="1" class="style7"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Homecobolos> p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>