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; } </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">U.S. Economy Continues to Run Downhill</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 26, 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; &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> <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;&nbsp;&nbsp;<span class="style8"> G</span>reat expectations about President Barack Obama s $787 billion bailout plan haven t panned out with unemployment continuing to rise and the private sector unable to create jobs.<span style="mso-spacerun: yes">&nbsp; </span>Without significant job gains in the private sector, there s little hope for homeowners facing defaults and foreclosures, nearing the levels before Obama implemented his bailout program in early 2009.<span style="mso-spacerun: yes">&nbsp; </span>Over 2.3 million homes have been repossessed by financial institutions since the start of the Dec. 2007 recession. About 9.9% of homeowners have missed at least one payment, signaling a new trend of mortgage defaults and foreclosures, according to data from the Mortgage Banking Association.<span style="mso-spacerun: yes">&nbsp; </span>Without some improvement in the job market, defaults and foreclosures are expected to rise, further depressing the economy.<span style="mso-spacerun: yes">&nbsp; </span>Economic growth requires a stable private sector job 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><span style="mso-spacerun: yes">&nbsp; </span>Recent expiration of a special government first-time buyer credit caused nationwide year-over-year real estate sales to drop by 27%, causing the recent sell off in the stock market.<span style="mso-spacerun: yes">&nbsp; </span>Like a dog chasing its tail, if the stock market drops, employers don t have the cash needed to expand payrolls and make a dent in the current 9.4% national unemployment rate which, in turn, hurts the real estate market.<span style="mso-spacerun: yes">&nbsp; </span>High unemployment means less cash to make mortgage payments and, what s left over, consumer purchases.<span style="mso-spacerun: yes">&nbsp; </span>Since the nation s Gross Domestic Product is driven 70% by consumer spending, GDP is expected to remain flat or decline, hurting the nation s consumer economy.<span style="mso-spacerun: yes">&nbsp; </span>Without a strong consumer economy, economists expect domestic and foreign manufacturing to drop, causing a global economic downturn, especially in India, China, Europe and South America.</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 the housing market crashed in 2007, the nation s biggest financial institutions ran out of cash, prompting the Treasury and Federal Reserve Board to bail out cash-strapped banks.<span style="mso-spacerun: yes">&nbsp; </span> Since the financial meltdown, banks blamed unqualified borrowers and lax lending standards for the real estate crash.<span style="mso-spacerun: yes">&nbsp; </span>Truth be known, the cash-crunch had more to do with risky investments in derivatives or collateralized debt obligations with depositors money, more than mortgage defaults.<span style="mso-spacerun: yes">&nbsp; </span>Whatever the causes, today s overly severe lending standards, punishing borrowers not financial institutions, makes it nearly impossible for homebuyers to qualify for mortgages or refinances.<span style="mso-spacerun: yes">&nbsp; </span>If consumers don t qualify under today s standards for commercial and real estate loans, it s difficult to expand real estate and consumer markets.<span style="mso-spacerun: yes">&nbsp; </span>Today s high levels of unemployment make qualifying for loans more difficult.</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>Missing mortgage or installment debt payments directly relates to high levels of unemployment.<span style="mso-spacerun: yes">&nbsp; </span>  Ultimately, the housing story, whether it is delinquencies, home sales or hosing starts, is an employment story, said Mortgage Bankers Assn. spokesman Jay Brinkmann.<span style="mso-spacerun: yes">&nbsp; </span> Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in delinquency numbers, begging the $64,000 question about private sector job creation.<span style="mso-spacerun: yes">&nbsp; </span>Most economists don t see an expansion of private sector jobs unless publicly traded corporations generate enough cash in the stock market.<span style="mso-spacerun: yes">&nbsp; </span>Today s unregulated private equity and hedge funds play both sides of the market, typically short-selling during sell-offs, causing markets to slide further in red.<span style="mso-spacerun: yes">&nbsp; </span>If short-selling persists, publicly traded corporations don t have the cash to expand payrolls.</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 President Barack Obama signed his financial reform bill into law July 22, it didn t restrict short-selling by private equity and hedge funds.<span style="mso-spacerun: yes">&nbsp; </span>Nor did it stop banks from risky derivative investment that caused the financial collapse in 2008.<span style="mso-spacerun: yes">&nbsp; </span>House Minority Leader John Boehner (R-Ohio), slated to replace House Speaker Nancy Pelosi (D-Calif.) if the GOP takes over the House Nov. 4, called for Barack s economic team to resign.<span style="mso-spacerun: yes">&nbsp; </span>While Boehner makes political hay before the midterm elections, there s plenty of blame to go along.<span style="mso-spacerun: yes">&nbsp; </span>Obama and Treasury Secretary Tim Geithner should do more to prevent short-selling, especially in financial stocks, to allow stock markets more consistent long-term growth.<span style="mso-spacerun: yes">&nbsp; </span>With less short-selling, markets would recover more quickly from cyclical profit-taking.<span style="mso-spacerun: yes">&nbsp; </span>Publicly traded corporations would retain more cash to begin adding jobs and expanding payrolls.</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>So far, government efforts to halt mortgage foreclosures haven t done enough, leaving many too many former homeowners heading for bankruptcy.<span style="mso-spacerun: yes">&nbsp; </span>Treasury officials must work closely with federal mortgage agencies Fannie Mae and Freddie Mac to retool lending standards to fit today s deteriorated economy.<span style="mso-spacerun: yes">&nbsp; </span>Current lending benchmarks prevent average borrowers from qualifying for loans, leaving too many consumers cash-strapped, unable to grow the consumer economy.<span style="mso-spacerun: yes">&nbsp; </span>Treasury officials should work with Congress to continue Bush s tax cuts and reinstate the deductibility of interest on all consumer loans, not just home mortgages.<span style="mso-spacerun: yes">&nbsp; </span>Keeping the stock market rising and growing the consumer economy are the only sure ways of adding private sector jobs.<span style="mso-spacerun: yes">&nbsp; </span>Reducing unemployment and adding more private sector jobs can only happen by growing the stock market and easing consumer borrowing.</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>