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">Wall Street Roars Back Again</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 Sept. 4, 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"> D</span>efying all the experts, Wall Street started September on the right foot, with all major averages posting massive gains.<span style="mso-spacerun: yes">&nbsp; </span> With the Dow Jones Industrial Average rocketing up 255 points or 2.5 %, stunning otherwise pessimistic bears, whose predictions of a double-dip recession continue to dog the market.<span style="mso-spacerun: yes">&nbsp; </span>Recent weak real estate and consumer spending ostensibly sent the market into a tailspin in late August.<span style="mso-spacerun: yes">&nbsp; </span>There s nothing accounting for any change in the economic outlook in September other that Wall Street s biggest mutual, hedge and private equity funds deciding to buy back into the market.<span style="mso-spacerun: yes">&nbsp; </span>When the funds sell off, like they did in late August, there s always a point where they buy back in.<span style="mso-spacerun: yes">&nbsp; </span>Today was the day.<span style="mso-spacerun: yes">&nbsp; </span>While everyone wants an excuse, Wall Street s market makers like Goldman Sachs don t pay attention to economic news:<span style="mso-spacerun: yes">&nbsp; </span>They focus purely on profit-and-loss.</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>Justifications for market movements typically originate from publicists working inside the industry, using various news evemts to justify buying and selling opportunities.<span style="mso-spacerun: yes">&nbsp; </span>Today s excuse came from the Institute for Supply Management showing manufacturing activity rising.<span style="mso-spacerun: yes">&nbsp; </span>Rises in manufacturing signal possible improvement in the employment situation while companies add jobs to accommodate growing demand.<span style="mso-spacerun: yes">&nbsp; </span>What isn t said is that rising stock markets fuel the cash reserves needed by publicly traded companies for hiring, not expected changes in manufacturing trends.<span style="mso-spacerun: yes">&nbsp; </span>When stock markets rise, cash accounts swell, enabling companies to begin expanding payrolls.<span style="mso-spacerun: yes">&nbsp; </span>More hiring helps the consumer economy by putting more cash into the ranks of the previously unemployed, giving workers resources to fuel the economy.<span style="mso-spacerun: yes">&nbsp; </span>Consumer spending accounts for about two-thirds of Gross Domestic Product.</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 Q-3 GDP report in August showed the nation slowing down from Q-2 s 2.6% to 1.4%, Wall Street began short-selling, accelerating the latest market decline.<span style="mso-spacerun: yes">&nbsp; </span>President Barack Obama s recent economic reform bill did nothing to reign in short sellers like hedge and private equity funds, currently not regulated by the Security and Exchange Commission.<span style="mso-spacerun: yes">&nbsp; </span>When hedge and private equity funds go short, they accelerate profit selling among mutual funds, causing the market to nosedive.<span style="mso-spacerun: yes">&nbsp; </span>Obama and his Treasury Secretary Tim Geither, a former Goldman Sachs employee, have more work to do to stop the current runaway short-selling that keeps markets rising.<span style="mso-spacerun: yes">&nbsp; </span>Without rising markets, publicly traded companies can t count on enough cash to expand payrolls, finally reducing the unemployment rate.<span style="mso-spacerun: yes">&nbsp; </span>Growing the stock market is the key to lowering today s high unemployment rate.</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>Manufacturing can only rise when enough consumer demand requires factories to ramp up production and personnel.<span style="mso-spacerun: yes">&nbsp; </span> If manufacturers ramp up . . . it s going to require hiring, said Daniel Penrod, senior analyst at the California Credit Union League.<span style="mso-spacerun: yes">&nbsp; </span> Getting closer to that threshold (of hiring) is vital to the economy, underscoring the necessity of job creation to economic recovery.<span style="mso-spacerun: yes">&nbsp; </span>No amount of government stimulus or bailout can substitute for private sector job creation, heavily dependent on rising stock markets.<span style="mso-spacerun: yes">&nbsp; </span>While Penrod attributes the market rally to manufacturing growth, Wall Street know when to buy and when to sell.<span style="mso-spacerun: yes">&nbsp; </span>Market-makers like Goldman Sachs coordinate the buying and selling opportunities for the nation s biggest funds.<span style="mso-spacerun: yes">&nbsp; </span>It s simply not possible for everyone to be on the same buying or selling page without guidance from some organizing source.</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>Looking at the big picture, today s weak economy can begin to grow only if Wall Street, the nation s wealth generating machine, continues to cooperate.<span style="mso-spacerun: yes">&nbsp; </span>Sustained rallies or bull markets require control over short-sellers who look to lock-in profits at the expense of the overall market.<span style="mso-spacerun: yes">&nbsp; </span>Europe s Stuttgart-based Central Bank has begun to reign in short-sellers especially in financial stocks, where banks require the cash to make loans to consumers and businesses.<span style="mso-spacerun: yes">&nbsp; </span>When the U.S. banking system ran out of cash in 2008, Wall Street blamed the problem on defaulting mortgages.<span style="mso-spacerun: yes">&nbsp; </span>While mortgage defaults and foreclosures no doubt played a part, the banks refused to accept responsibility for risky derivative trading, placing depositors cash at risk.<span style="mso-spacerun: yes">&nbsp; </span>Newly enacted reforms do very little to prevent another banking crisis by restricting bank from engaging in high risk stock market investing.</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>To help cement the current buying trend on Wall Street, the Federal Reserve Board and Treasury must sit down with the nation s biggest mutual, private equity and hedge funds to get voluntary restraint on short-selling.<span style="mso-spacerun: yes">&nbsp; </span>Economic growth depends on rising stock markets, requiring the nation s biggest funds to earn profits on long-term growth, not short-selling.<span style="mso-spacerun: yes">&nbsp; </span> Manufacturing can only improve when there s pent-up demand from consumers.<span style="mso-spacerun: yes">&nbsp; </span>Consumers can only fuel the economy by having stable employment.<span style="mso-spacerun: yes">&nbsp; </span>Stable employment, in turn, steps up consumer demand, keeping manufacturers in the production mode.<span style="mso-spacerun: yes">&nbsp; </span>Manufacturing reports hint at future employment trends and economic growth but must be supported by a rising stock market.<span style="mso-spacerun: yes">&nbsp; </span> Keeping the shorts at bay and growing the stock market is the best way to assure publicly traded companies have enough cash to keep adding jobs.</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>