Federal Program Evaluation on Mortgage Refinance and Foreclosures

By Padmini Arhant

Please refer to the details laid out in the preceding articles from other news organizations published on this website under the title ‘Mortgage Refinance and Foreclosures.’

Information is also available in the article, @www.mercurynews.com

“By Sue McAllister – San Jose Mercury News, Saturday, March 27, 2010 – Thank you.

“Titled – Debt Relief – Mortgage program: Who will benefit?

Answers to how the federal plan will work and whom it will help”
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Program Evaluation – By Padmini Arhant

Making Home Affordable program targets the vulnerable homeowners on the verge of losing their homes.

Mortgagees who are unemployed, underwater and delinquent in their payments could seek assistance upon they meet the criteria.

Aligning mortgage debt with the asset value in order to help people retain ownership is a prudent measure to stabilize the struggling housing market.

It’s evident from these news reports that the program is well intended but the burden rests on the taxpayers through,

Federal Housing Administration insured loans absorbing the entire risk on potential loan default,

And,

Incentives to lenders to reduce principal value for the underwater and unemployed customers provided from the TARP funds…

The finance sector responsible for the subprime mortgage crisis is exempt from any liability.

On the contrary, they are being coerced with the federal funding that appears to be inadequate to rescue the vast majority from foreclosures and loan qualifications.

Federal programs or reform requires oversight to ensure the rules adherence by the industry.

Again, an independent / non-profit consumer rights agency is appropriate to avoid the conflict of interest.

As stated by the consumer advocates, the bankruptcy procedure for loan modifications is more reliable than the service offered by the federal partnership with lenders.

When a particular method is not yielding the desirable results, it is best to choose the option with a positive outcome.

Since the rules are ignored by the industry, setting consequences for non-compliance is an effective approach to limit the program failure.

If the borrowers are subject to terms and conditions then it should be applicable to the lenders as well.

Finally, the program would be beneficial with the banks accepting a fair share of monetary obligations in the principal reduction and the refinancing structure, having been the beneficiary of taxpayer bailout.

Thank you.

Padmini Arhant

Mortgage Refinance and Foreclosures

By Padmini Arhant

In the current economy, two major issues deserve urgent attention.

They are – unemployment and home ownership.

This topic will focus on the homeowners and the federal program under consideration to address the foreclosures arising from high mortgages.

Meanwhile, the following news report and editorial from other news organizations are presented for reference.

According to the –

1. New York Times report By David Streitfeld – Friday, March 26, 2010 – Thank you.

New help for homeowners – Revising Loan Modification

The Obama administration will announce today a broad new initiative to help troubled homeowners, potentially refinancing several million of them into fresh government-backed mortgages with lower payments.

The escalation in aid comes as the administration is under rising pressure from Congress to resolve the foreclosure crisis, which has put millions of Americans at risk of losing their homes.

A major element of the new program, according to several sources who spoke on the condition of anonymity, will be to encourage lenders to write down the value of loans for borrowers in modification programs. Until now, modification programs have focused on lowering interest rates.

Another major element will involve the government, through the Federal Housing Administration, refinancing loans from borrowers whose home value has sunk below what they owe on it.

More than 11 million homeowners are in this position, known as being underwater.

That aspect of the plan would apply even to borrowers who have not fallen behind in their mortgage payments.

Investors who own the loans would have to swallow losses but would probably be assured of getting more in the long run than if the borrowers went into foreclosure.

The FHA would insure the new loans against the risk of default.

Many details of the administration’s plan remained unclear Thursday night, including the precise scope of the new programs and the number of homeowners likely to qualify.

This much was clear, however:

The plan could put taxpayers at increased risk.

If many additional borrowers move into FHA loans, a new downturn in the housing market could send that government agency into the red.

The FHA has already expanded its mortgage-guarantee program substantially in the last three years as the housing crisis deepened, insuring more than 6 million borrowers.

Sources said the agency would receive $14 billion in funds from the Troubled Asset Relief Program, cash it could dangle in front of financial institutions as incentives to participate in the new program.

A third element of the White House’s housing program will require lenders to offer unemployed borrowers a reduction in their payments for a minimum of three months.

An administration official declined to speak on the record about the new programs but said they would “better assist responsible homeowners who have been affected by the economic crisis through no fault of their own.”

The plan would essentially supplant the government’s earlier mortgage modification plan, announced a year ago with great fanfare.

It has resulted in fewer than 200,000 people getting permanent new loans.

As many as 7 million borrowers are seriously delinquent on their loans and at risk of foreclosure.

The news was greeted with cautious enthusiasm by groups that have tracked the foreclosure crisis and tried to assist communities and underwater homebuyers.

“It sounds really good, and I’m not used to saying that,” said Kevin Stein of the California Reinvestment Coalition in San Francisco.

He said “the two main weaknesses” of the existing federal Home Affordable Modification Program were that,

It didn’t reduce the mortgages of underwater homeowners,

And, didn’t help borrowers who were underemployed or unemployed and would have difficulty qualifying for a loan modification.

“It seems they have taken these issues to heart,” Stein said.

“It’s unclear how many people will qualify – that’s the one hesitation. We’re not sure how broadly these initiatives will reach.”

Martin Eichner, with Project Sentinel in Sunnyvale, said the proposals sound good but he would like to see the details.

“It has to help significant numbers of people and there has to be enforcement,” Eichner said.

“These plans always look great in the first news release, but we’ve often been disappointed in the performance. To the extent that lenders write down principal balances, that would be a significant improvement,” he said.

Eichner said the home affordable effort also needs an enforcement mechanism.

“Without any real consequences, day to day we see lenders ignoring what we think are pretty clear rules under the current making home affordable program,”

While the number of foreclosure-related filings is beginning to flatten or decline, the number of borrowers who are seriously distressed is rising.

In the fourth quarter, the number of households at least 90 days past due on their mortgages swelled by 270,000, according to a report issued Thursday by the Office of the Comptroller of the Currency.

“The government is seeking to persuade people to stay in their homes by aligning the mortgage debt with the asset value, which is the only viable path to real housing stability,” said one person who was briefed on the government’s plans.

Several people who described the plans would speak only on condition of anonymity, since they had not been authorized to disclose details ahead of a White House briefing scheduled for this morning.”

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2. Editorial in the Bay Area News Group – March 29, 2010 – Thank you.

www.mercurynews.com/opinion:

Titled – Foreclosure plan has carrots but needs sticks –

“Eight million households are behind in their payments or in foreclosure. But the Making Home Affordable programs has modified just 200,000 loans.

Forgive us for not jumping up and down with delight over the Obama administration’s latest plan, announced Friday, to help stem the tide of foreclosures.

The changes will help those who are unemployed, underwater or both.

But they have come so late that it’s difficult to muster much enthusiasm.

Banks participation in solving this problem has been optional for too long.

The government must require those who caused this debacle to do more to end it.

Since the foreclosure crisis began three years ago, 6.6 million families have lost their homes, according to the Center for Responsible Lending.

The problem is not getting better.

Eight million households are behind in their payments or foreclosure, and

One in five are underwater – they owe more on their mortgages than their homes are worth.

The administration’s primary tool against foreclosures, the year-old Making Home Affordable partnership with lenders, has so far modified the terms of just 200,000 loans. It is not up to this enormous task.

But the changes announced Friday have the potential to improve that record.

The program will now be open to the unemployed, who previously couldn’t qualify but are a primary victim of foreclosures.

They’ll be eligible to get up to six months’ forbearance and to have their payments lowered to reflect their reduced income, at least for a short time.

Those who owe more than their homes are worth – in California, that’s more than a third of borrowers – may finally be able to get their loan principals reduced.

This much-needed shift in approach addresses another key driver of foreclosure.

Lenders will get incentives to reduce the amount owed.

Borrowers who are current on their payments but underwater – prime candidates to walk away from their mortgages and further weaken the housing market – could refinance into a cheaper government loan.

All of this will help. But the main problem with the government effort remains:

It’s all carrots, no sticks.

Consumer advocates have been pushing Congress for years to allow bankruptcy judges to modify loan terms for primary residences, which could reduce foreclosures up to 20 percent.

The financial industry’s army of lobbyists has managed to beat back that idea, known as “cramdown,” saying it can deal with the problem on its own and through Making Home Affordable.

That’s clearly not the case, because of malice or incompetence.

It would be wonderful if politicians gave the same consideration to desperate homeowners that they do to banks.

Most everyone facing foreclosure nowadays did nothing wrong – they’re simply caught in the cascading wave that began with the subprime mortgage crisis.

The same can’t be said of the banks that got us into this mess and then took billions of taxpayer bailouts.

Allowing judges to modify loans in bankruptcy would add structure to an overwhelmed system.

Reasonable compromises worked out in court would set precedents for lenders to follow.

If they didn’t, they could be forced to by a judge.

Judges have this power for second homes.

There’s no good reason they shouldn’t have it for every home.”
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Comment – Review and Analysis is in progress and will be presented shortly.

Thank you for your patience.

Padmini Arhant

Weekly Events Synopsis

By Padmini Arhant

This week, President Barack Obama and the Democratic Congress secured three major achievements of national and international significance.

Beginning with the latest event:

The world’s prolific nuclear nations, U.S and Russia signed a long overdue nuclear weapons treaty reportedly to reduce the warhead arsenals by one-third with the hope to lead the international community towards a complete nuclear disarmament.

Housing market revival through programs targeting foreclosure for millions of homeowners.

And

National Health Care Legislation – is a historic victory for the democrats and the Obama Presidency.

A review and analysis on these topics is in progress.

Your patience is much appreciated.

Thank you.

Padmini Arhant

Reflection on the World Economic Forum – Davos, Switzerland

By Padmini Arhant

The World Economic Forum on January 27 – 31, 2010, at Davos, Switzerland contemplated the global economic crises.

Speakers from the large consortium expressed their thoughts and hope or the lack thereof about the global economic prospects at the annual meeting.

Summarizing the summit issues:

The general focus has been:

The economic recession.

The financial crisis and the need for financial reform.

U.S economy, the dollar, the deficits and the gridlock in Washington due to Special Interests’ control of Congress.

Skepticism on the EURO currency strength and concerns regarding European market from the economic struggles in Greece, Spain, Iceland, Ireland, Portugal, Latvia to name a few further exacerbated by the majority euro members surpassing the 3percent budget deficit cap, a criteria for the euro currency usage.

ECB (European Central Bank) role in easing the liquidity crisis.

UK urging banks to assume responsibility – i.e. resume credit to the frail economy.

National Debt from bailouts – A common symptom shared by the major global economies.

Emerging Markets’ potential in stimulating economic growth through international mergers and acquisitions.

Corporate leadership in risk undertaking, growth sustainability and resisting or embracing reform.

Technological impact on business and adapting social networking concept to promote global agenda.

Google – China controversy on hackers and censorship.

Green Technology and consensus on the climate change policy.

Humanitarian issues related to natural resources such as water scarcity, inadequate food supply in fighting hunger, poverty and disease worldwide.

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Economic Synopsis – By Padmini Arhant

Global economic recession – The general agreement is:

The massive capital interjection with public money in the private sector particularly the finance and the auto industry in the United States was essential in the year 2008 and 2009 to avert a major catastrophe – a full blown depression.

Following that, the bailed out bankers have supporters and cynicists to defend or vilify the mega rewards via executive bonuses amid severe financial meltdown mostly attributed to the current economic crisis.

Another contentious issue related to the financial sector is:

Should governments continue to bailout banks under the banner?

“Too Big to Fail.”

Regardless, it’s clear from the recent experience that a serious financial reform is no longer an option but a necessity to counteract risk undertaking in the financial market.

Moreover, the finance industry being the vehicle for the economic growth, it cannot resist regulations due to the uninsured public funds management by the private sector.

Evidently, the real estate slump exacerbated the liquidity crisis in the global economies viz. Iceland (nicknamed as the “subprime economy”) Ireland, Spain and not sparing the once booming commercial real estate capital – Dubai, UAE,

Leaving the United States not unique in the burgeoning residential and commercial real estate decline.

In terms of stimulating the economic growth, industrialized nations and the emerging markets face a common dilemma – stimulus packages, bailouts and the rising national debt.

Government stimulus programs target specific industries in the domestic economy with the green technology touted as the promising field.

Unequivocally, the green technology should be promoted by all nations big and small besides infrastructure projects and reviving the manufacturing industry.

However, the stimulus activity is bound to create national debt from the budget deficit because of sluggish GDP and the negative current account balance for import-oriented economies like the United States.

U.S Economy:

Although, the multi-trillion dollar deficit has not drastically affected the U.S credit rating as the investor confidence in the U.S market is not lost,

The status quo cannot prolong with the persisting Republican members’ opposition against tax hikes to protect self-interest and special interest.

Notwithstanding their blockade in the financial, health care and energy sector reform.

Therefore, the American electorate must be careful prior to swinging their support to the Republican members in Congress.

The ideologues were responsible for bringing America on its knees under the disastrous Bush-Cheney administration.

Now, the same republican members are determined to stay on the course to debilitate the U.S economy with an utter disregard for the ‘average’ Americans.

While comparing the economies in the stimulus funding, it’s clear that the nations investing in the domestic economy like China, Japan, India, Brazil… have survived the worst crisis through quasi participation.

Private sector project with public capital infusion is seemingly a viable economic strategy to reduce unemployment and curb public outcry over increasing national debt.

It’s attention worthy that President Barack Obama has similarly approached the economic woes with the SBA loans to boost small businesses, tax credits to the corporations and the green sector only to be browbeaten by the “fiscal conservatives” in name only on both sides of the aisle.

Again, something to remember about the so-called “fiscal conservatives” successful derailment of economic progress.

So far, the opposition policy in every national issue is “Penny wise and Pound foolish.”

Not to mention their conduct exemplified in the tarnished U.S image at WEF with,

Communist China scorn democracy by citing the Special Interests’ dominance in American politics.

The statement is not far-fetched except for scapegoating democracy against totalitarianism.

United States should adopt big and bold economic actions to contain the high unemployment and that would be:

Job creation in the infrastructure projects, innovate the manufacturing sector with technology alongside revolutionizing industrial growth on eco-friendly foundation.

Energizing the small businesses and retail industry is equally important to enhance the per capita income, an appropriate inclusion in the economic progress measurement rather than reliance on GDP growth alone.

United States is rich in resources in every aspect with an advantage of being the pioneer across the economic spectrum.

The rumor about United States weak economic status and attempts to denigrate the U.S dollar as the international currency is nothing but smear tactics by the competitors vying for the leading role in the world economy.

What the investors should bear in mind is the U.S economy’s resilience to rebound in the face of worst economic and political crisis and history is testimony to that effect.

In addition, the democratic system is a positive factor in attracting investments within and offshore.

European Economy:

The EU and the ECB (European Central Bank) proposals are pragmatic in many ways.

ECB intervention to pull the European financial markets from the liquidity crisis would facilitate the anticipated credit flow in the union.

Economic setbacks in Greece, Spain, Portugal, Ireland, Latvia and last but certainly not the least Iceland are significant and cannot be abandoned for it might reach a crescendo irrespective of the trade volume.

Accordingly, the conditional offer from Germany and France to bailout Greece is vital to protect the EU economic interest with Greece being the union member.

The leadership in the Mediterranean nation under the Greek Prime Minister George Papandreou is capable of salvaging the dire economic situation.

When the reckless banking sector was bailed out for speculative trading, otherwise gambling of public investments,

The Greek economy with labor capital, entrepreneurial exuberance and political stability deserves EU / IMF /World Bank assistance to survive the economic turmoil.

It would be detrimental to hinder the borrowing opportunity for Greece and other ailing economies predominantly due to the regional impact.

At the same time, Greece and Iceland should be transparent with facts and display fiscal responsibility to the international monetary oversight for creditworthiness.

United Kingdom is right on target in demanding the financial sector to resume credit to the frail economy.

U.K has been forceful in urging the much-required global financial regulations even though not surprisingly, the conservative political faction is against it.

France – Recommendation on the long overdue closing of corporate tax havens is a step in the right direction.

In fact, the rule of thumb for the global economies dealing with budget deficits is to:

Eliminate redundant expenditure

Differ or limit discretionary spending

Scale back unaffordable commitments like wars, conventional stockpiles and nuclear proliferation not barring extravagant agenda like moon travel more for prominence than purpose.

Revision of tariffs and taxation laws to expand the revenue horizon.

It’s imperative to consider tax increases and close tax evasion loopholes through tax havens.

Spending freeze with tax cuts and synonymously tax increases with skyrocketing expenditure would be oxymoron at any given time.

Emerging Markets viz. BRIC countries (Brazil, Russia, India and China):

The salient feature in the group is their ability to focus and invest entirely on the domestic economy.

Unlike the United States and NATO, none of the four nations is currently engaged in active warfare though; cross border tension is permanent with contingent defense forces on the periphery.

Still, the four nations ‘combined defense spending falls short of the exponentially escalating U.S military expenditure appropriated for –

Two overt wars in Iraq and Afghanistan,

A proxy war in Yemen with drones and fighter planes provided to the Yemeni forces,

Over and above the U.S military base situated nationally and overseas.

Poignantly China more than Russia is engaged in the lucrative arms race to Iran, Syria, Lebanon, Pakistan, North Korea, war torn Africa – Darfur in Sudan, Congo, Somalia, Guinea, Rwanda…

Yet, not competitive enough to the United States in this respect and confirmed by:

The New York Times article By THOM SHANKER – Thank you.

Published: September 6, 2009

Despite Slump, U.S. Role as Top Arms Supplier Grows

“Despite a recession that knocked down global arms sales last year, the United States expanded its role as the world’s leading weapons supplier, increasing its share to more than two-thirds of all foreign armaments deals, according to a new Congressional study.”

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Economic Synopsis – By Padmini Arhant

BRIC countries impressive performance is expected to continue with the investor confidence higher in these regions than Europe.

Their view on the U.S domestic job creation as isolationism or protectionism do not bode well since the BRIC nations have adapted the domestic investment policy to expedite economic revival.

The irony is the characterization of the United States and Europe adhering to similar strategies as ‘protectionism.’

It’s noteworthy that Brazil, India and China have benefited from globalization with transnational ventures in their shores.

Such anomalies beckon paradigm shift in the globalization concept among the emerging markets.

Some U.S corporations as the global operators echo the sentiments much to the displaced domestic workforce anguish and disappointment.

They remain oblivious to the facts that the United States being the largest consumer base and a major importer is struggling to contain high unemployment, fragile housing market and credit crunch in the financial sector.

U.S economic recovery is paramount for the global economic stability.

Optimize Technological Applications:

World society is more digitalized than before and technology embedded industry maximize efficient output. Incorporating technology in every imaginable field is the cornerstone for the present and future generation.

Green Technology and Climate Change Policy:

Industrialized countries along with developing nations are grappling to arrive at a consensus on climate change policy.

Fortunately there is tremendous enthusiasm towards green technology and the economic powers are reluctant to make the swift transition by renouncing fossil fuel and nuclear power to natural sources like solar, wind and hydrothermal energy.

The main problem lies with the profit guiding politics by the energy behemoths obstructing the fossil fuel and nuclear technology abandonment against all natural elements for energy production.

Life survival and sustenance on the planet is dependent upon clean air, water and food chain maintenance, not achievable without an aggressive climate change policy.

Hybrid policy targeting carbon emissions through carbon tax and cap & trade is the viable solution from the economic and political standpoint, other than possibly winning bipartisanship in the climate bill legislation in the United States.

Humanitarian Issues:

Water scarcity and inadequate food supply is the global challenge confronting humanity.

Emerging markets favoring globalization have a primary responsibility in addressing the plight of the vast majority in their domain rather than exclusively focused on GDP growth.

The population in Africa, Latin America, Asia and the Middle East cannot be ignored by the affluent nations and their $100 billion commitment in economic aid during the G20 meeting reflects meagerness and not eagerness to alleviate suffering on the planet.

Poverty being the reality, the global community can provide to the needy by reining in on personal greed.

Communal development against concentrated growth guarantees a bright future for humanity.

Global progress and prosperity begins with economic equality, social justice and political freedom.

Thank you.

Padmini Arhant

President Obama’s $3.83 trillion Fiscal Budget

By Padmini Arhant

President Barack Obama unveiled his 10-year macro budget with various economic commitments.

2011 Fiscal Budget is projected with the total revenue $2.56 trillion and total spending @ $3.83 trillion leaving a deficit @$1.27trillion.

According to the impressive layout from the article:

Budget outlook: Budget deficits Published By Jackie Calmes – New York Times and,

Presented by San Jose Mercury News – February 2, 2010 – Thank you.

Targeted Revenues – $2.56 trillion

Individual Income Taxes – $1.12 trillion predominantly derived by ending the extravagant tax cuts allowed to wealthy individuals during the prior administration rule for e.g. the couples making over $250,000 and individuals earning above $200,000.

Corporate Income Taxes – Tax increase on wealthy corporations – Expected income – $270Billion

Social Security and Payroll taxes – $935 billion

Excise taxes – $74 billion

Custom duties – $27 billion

Estate and gift taxes – $25 billion

Other $87 billion
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Budget Spending – $3.83 trillion

Mandatory Spending:

Interest on debt $251 billion

Other – $ 648 billion

Medicaid – $297 billion

Medicare – $491 billion

Social Security – $730 billion

Discretionary Spending:

Defense – $895 billion

Other – $520 billion
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Views and Analysis: By Padmini Arhant

The budget’s focus on two most important factors unemployment and the lack luster consumer spending, responsible for slow economic recovery – is a major step in reviving the sluggish economy.

Unemployment addressed by providing $100 billion to boost the small businesses, medium corporations, middle class, social safety net programs, aid to state and local governments and expanding federal student loan program to enable the Pell grants for easy eligibility would remarkably tackle the national double-digit jobless figures.

Since President Obama pledged to reverse the trend by converting the U.S. market, presently a supersize importer to a profit-oriented exporter, the details on the manufacturing sector are missing.

Manufacturing being deeply hurt in the economy with jobs shipped to China, the blue-collar workers in this area require massive attention as the others in the construction industry. Unless there is a provision already made in the $100 billion fund.

The budget provides further economic stimulus through tax credits to average income families –
$400 for individuals and $800 on combined income including tax cuts for workers and other businesses through 2011 – An enormous supplement towards consumer spending and job creation.

Tax cuts to big businesses should be conditional upon preservation and creation of jobs in the national economy.

Federal aid to state and local governments should contribute to the national GDP considering the severe state budget crisis that has directly affected the public services such as education, health and environment suffering serious job losses from the state spending cuts.

Soaring annual deficit expected to be $1.6 trillion for 2010 due to burgeoning economic crisis dropping to $1.3 trillion in 2011 and, then onwards remaining high based on the rising health care costs and retirement programs for the baby-boom population.

The President’s effort in this regard should mitigate the deficit largely through proposed strategies
and they are –

Slashing funding for numerous redundant programs and freezing discretionary spending for three years.

Raising fees, taxes on banks and the wealthy.

According to the reports, the President approach towards a comprehensive deficit-reduction plan is to set up a bi-partisan commission represented by the lawmakers from both political parties and budget experts. Their task is to involve a package consisting tax increases and spending cuts to slash deficits as well as stabilize government borrowing by 2015.

Although, the Republican lawmakers had initially agreed to the measure, they later defeated the President’s bi-partisan commission plan and retracted from their position confirming the Republican members’ traditional partisanship towards the democrat President.

Despite the setback, the President’s decision to move forward in this regard is wise and the American electorate must remember the Republican members’ refusal to cooperate for the national interest, i.e. alleviating the national debt burden on their children, in the 2010 elections.

Criticisms against the President’s position on Medicare and Medicaid as the entitlement programs and tax revenues not adjusted against the annual deficit reduction by paying down an accumulated debt do not serve the economic viability, but only offer sound bites in the political discussion.

Again, deficit reduction is paramount and it should not happen at the cost of the vulnerable population – the senior citizens and the poorer families who are otherwise the consumer taxpayers.

In terms of paying down the national debt, it could be adjusted from the inevitable economic growth through vast investment in job creation and consumer spending.

Bi-partisan consensus on the economic revival as the immediate priority is oxymoron, if the administration is not allowed to expedite the process through aggressive policies combined with direct interjection of funds into the revenue sectors.

War spending in the amount of additional $33 billion and a total budget $160 billion for the two simultaneous wars in Iraq and Afghanistan is an area that could be drastically modified with a concrete exit strategy from both territories in the near future.

Iraq troop withdrawal this summer has been committed by the President and the savings from it could be utilized in paying back the national debt as it would result in the return savings via interest payment contraction on the borrowings.

Passing the health care legislation with a government insurance program should unequivocally cut the health care costs and decrease the deficit because of the widely acknowledged health care expenditure draining the present economy. Even more reason to introduce the public option in the legislation to minimize the projected escalation in health care spending cited above.

Other areas aimed at reducing national deficit are the cutting and eliminating minor domestic programs and major military equipments.

Raising taxes on big banks and oil companies is an effective means to earn income and a long overdue transformation from the Bush-Cheney era.

The White House being optimistic in cutting the inherited deficit in half by 2013to slightly over 4 percent of the GDP juxtaposed to the projected $1.3 trillion deficit exceeding 9 percent of the GDP at the dawn of Obama Presidency highlights the stark contrast in economic policies between the two administrations.

Overhauling finance and energy sector in addition to the health industry would yield the desirable outcome in the national debt decline.

Allocating necessary funds towards education, science and research, food and drug safety, NASA space programs innovation and climate change legislation reflect short and long-term aspirations.

Concerns over sustainable deficits in the long run are justified. At the same time, the confidence in the guaranteed economic boom is disappointingly low especially after successful intervention to avert the financial collapse in the year 2009 that stabilized the stock market up until now, apart from dealing with other economic woes.

“Limited long-term solutions in the budget expressed by the skeptics” – They fail to view the entire picture in detail that ensures the economic security throughout the decade and beyond primarily owing to the robust fiscal policy adopted in the budget.

In fact, it’s possible to balance the 2011 budget with a shortfall exacted at $1.27 trillion.

Defense spending $895 billion is blown out of proportions and require trimming.

Discretionary ‘other’ spending $520 billion upon careful review could lead to huge savings.

The combined total for these two expenses are $1.4 trillion that could be easily restrained to below trillion dollars for the prolonged deficit sustainability.

On the revenue side – Corporate Income Taxes estimated @$270 billion is relatively low for the world’s leading industrialized nation with U.S corporations playing a prominent role as the multinationals offshore. Therefore, the Obama administration could close loopholes in the tax evasion through tax haven and extract more income to reduce the deficit.

Foreign Corporations in the United States should be evaluated for their operation in promoting local employment against enhancing economic prospects to their country of origin.

Likewise, in excise taxes and custom duties – the tariff and import duty revision on overseas items could produce additional revenue.

Similarly, updating the estate and gift taxes including the ‘other,’ is an opportunity to extract more income.

President Barack Obama and the administration have prepared the budget diligently. It deserves praise and credit for the broader vision. The economic recommendations are solid while remaining essential.

However, a daunting task is the legislation on national issues such as health care, finance and energy crucial to contain the agonizing deficit. The grueling legislative process is dominant in opposition and weak in positive action.

Therefore, the opposition from both sides of the aisle must work together with the majority in resolving the economic crisis to benefit the people across the political spectrum.

People should coalesce nationally in this respect and help President Obama and Congress in seeking legislation approval on the listed national issues from across the political aisle, particularly free of filibuster threats.

Perhaps, bust the filibuster movement is imminent.

The legislations are urgently needed for instant economic relief.

Finally, the fiscal budget has –

Remedy for the past problems, Solutions to the present challenges and Investment in future goals.

Thank you.

Padmini Arhant

Housing Market Recovery by decelerating Foreclosures

By Padmini Arhant

As stated earlier, the key to the economic recovery is to revive the job market, the housing market and passing the health care legislation. Both job and housing market is entirely dependent upon the consolidated commitments from the public and the private sector.

The public sector represented by the government has the right agenda with the President’s proposal to levy tax on the financial institutions responsible for the financial crisis. However, the collected tax and fees from the finance industry is rumored to be accumulated in the stimulus pool against the Republican supporters’ demand that the proceeds be applied to the national deficit reduction.

Another contentious issue is the industry retaliation to the tax levy trickling down to the end consumer. It’s reported earlier that the industry has vowed to pass on the charges to the customer with an alternative threat to move jobs overseas.

Banking sector’s response of this nature is not unusual and prompts a swift termination of such protocol through regulations blocking the antagonistic traditions that brought the economy on the brink of collapse. Otherwise, taxes and fees should be imposed on the bonuses and stock options claimed by the executives and the senior management.

It’s important to enlighten those individuals fixated on reducing the national deficit when the economy is struggling to emerge from the deep recession. Further, the national deficit is a matter of great concern regardless of political allegiance as the debt mitigation burden is on the immediate and the future generation.

Minimizing deficit by merely returning the revenues and sources of income while, ignoring the cited economic woes is analogous to an attempt to contain the flood with an imaginary barrier.

Expansion in economic growth would directly contribute to the deficit contraction and there is an urgency to divert attention towards the two components i.e. the job and the housing market.

An element of truth noted in the funds being allocated to the potential banks’ bailout per disclosure by the current Treasury Secretary Timothy Geithner on the $75 billion housing market stimulus package.

The frustration in this respect is mutual and shared between the Tea Party movement and the Progressives in a bizarre convergence. It’s indeed a relief to view the polarized factions possessing some commonality, proving that a consensus can be arrived on national issues.

Taxpayers can no longer afford to bailout industries who betray them upon being bailed out and fail to fulfill their end of the bargain, i.e. to create and protect jobs that would lead to the economic revival.

Reverting to the tasks ahead for the public and the private sector, the effective strategies are:

Congress should reinstate the repealed Glass Steagall Act that prohibits the finance industry from indulging in speculative trading and instead focus on equity building, deposit security and bar insurance undertakings with high-risk collaterals.

The stand-alone Consumer Financial Protection agency as part of the rigorous financial regulation is a requirement to address the waywardly conduct demonstrated by the financial sector.

President Obama’s proposal in the creation of an agency to safeguard the consumer interests against abuses in mortgages, credit cards and other form of lending is precisely the remedy for the ethically deteriorating banking sector.

Abandoning the measure is a green signal for the repeat episode. Any legislators opposing the proposal are clearly against their constituents and the national interest.

In another related issue, stripping the Federal Reserve of all regulatory responsibilities is based on the dismal performance by the Federal Reserve authorities in the past two decades predominantly due to excessive power entrusted to the single most Federal institution.

On the contrary, the Administration’s position to expand the Fed’s role is a move in the reverse direction considering the status quo.

A noteworthy factor in the legislative affairs is, whenever a suggestion or a legislative proposal is made to reform any industry from the democratic side, the Republican representatives in the House and the Senate have unanimously rejected with a rare exception of one or two daring members casting their vote by bowing to the conscientious call of duty.

The partisanship and double standards was prevalent during the Clinton Presidency but even conspicuous throughout the Obama presidency.

The point in reference is available in the recent Financial Reform bill favoring the stand-alone consumer financial protection agency introduced by the Democratic Senator Chris Dodd and initiated by President Obama.

In contrast, the legislation with a similar agenda from the Republican aisle is overwhelmingly approved not only by the Republican minority but also with the cooperation from the democratic side.

A classic example being the year-end legislative amendment to the financial reform bill put forth by the Republican House of Representative Ron Paul –

The House Financial Services Committee approved Rep. Ron Paul’s measure by 43-26, calling for drastic expansion of the government’s power to audit the Federal Reserve.

The irony being, the ideological opposition consistently against the democrats sponsored government action characterized as ‘take over’ in any legislation is somehow complacent to the vast government intervention in this particular case.

Nevertheless, the amendment is a positive step in the financial regulation aimed at achieving transparency and accountability from the Federal Reserve, the long desired goals in the political and economic sphere.

With populace demand, the gridlock in Washington could be prevented by identifying the legislators contesting the party and not the issue. Likewise, those lawmakers obstructing their constituents opportunities for self-benefit through filibuster and unfair deal negotiations in the Senate vote, ought to explain the reason behind violating the constitutional oath.

Proceeding towards the core economic issue, the housing market decline has unequivocally contributed to the liquidity freeze and paralyzed the residential and the commercial real estate trajectory across the nation.

The housing market synopsis from the news report is depressing and conclusively the forecast is dire unless multiple course of action from the combined forces of the finance industry, the Treasury and the Congress is taken to resurrect the dying sector.

Source: Associated Press, January 16, 2010

Mortgage modifications fall well short of U.S. goal

Housing market may face another difficult year, economist says

By Alan Zibel

“Almost a year later, it appears about 750,000 homeowners – a fraction of the 3 million to 4 million originally projected – might complete the application process, predicts Mark Zandi, chief economist at Moody’s Economy.com.

A record 2.8 million households were threatened with foreclosure last year, up more than 20 percent from a year earlier, RealtyTrac reported this week.

The foreclosure listing firm expects another record this year.

Home prices, meanwhile, are down 30 percent nationally from the peak in mid-2006.

“It’s a very serious threat to the housing market, and still one of the most significant risks to the broader recovery,” Zandi said.

The Obama plan aims to help borrowers in financial trouble by making homeowners’ payments more affordable.

But just 66,500 borrowers, or 7 percent of those who signed up, have completed the program as of December, the Treasury Department said Friday.

Another 49,000, or more than 5 percent, have dropped out of the program entirely – either because they missed payments or were found to be ineligible.

Thousands more remain in limbo awaiting an answer.

There’s blame on both sides:

Mortgage companies say they have struggled to get back the necessary paperwork, while homeowners and housing counselors say navigating the bureaucratic maze often seems impossible.”

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Resolving the Solvable: By Padmini Arhant

Since the government is the largest employer during the economic recession, it’s reasonable to expect the agencies involved in the housing program to function efficiently. In addition, maximum utilization of technology should enable user-friendly application format.

As for the homeowners and the counselors faltering on the paperwork submission despite simplifying the process presumably with a deadline, serving a written notice with a foreclosure warning should yield the necessary response or action from them.

On the paperwork completion, it’s entirely up to the homeowners to salvage their homes from being foreclosed. There are non-profit workshops and agencies working in many counties apart from the internet sources to assist homeowners with the documentation.

Eligibility is the bone of contention in most national issues from housing to health care.

Perhaps, the program needs a thorough review and necessary threshold adjustments to accommodate the volume that would eventually relieve the homeowners, the mortgage companies and the banks from the debt confinement.

It appears that the stringent rules often cause more harm than good in resolving crisis of great magnitude confronting the nation at the present time.

Given the gloomy economic environment, sometimes leniency or relaxing the rules on an individual basis would help the situation with the homeowners retaining possession of their homes.

Foreclosure is an epidemic and drastically affects everyone involved beginning with the mortgagee, the lender, the county, the city and the nation at large, not to mention the crime emanating as a result of the unfortunate event.

Improvement in home values made possible through customized lending as opposed to generic programs is crucial in dealing with the escalating foreclosures, thereby significantly easing the economic recession.

Thank you.

Padmini Arhant

Financial Crisis Inquiry

By Padmini Arhant

Today, the financial crisis inquiry commission summoned the financial sector executives to investigate the activities that primarily contributed to the financial market’s downward spiraling and led the economy to the brink of collapse. The inquiry is a step in the right direction to convey a strong message that no one is above the law and democracy cannot be undermined.

Although, the executives are perceptive in self-defense and evading responsibility for the financial meltdown, the fact of the matter is, these financial moguls capitalized on the economic vulnerabilities during the Bush administration. It’s generated from the deregulations and substantial prime rate reduction alluring average citizens with a political slogan that linked patriotism to home ownership.

More concessions were offered by the Bush-Cheney Presidency through massive tax cuts for corporations, financial institutions and the wealthy individuals boosting the investment banks’ portfolio, thereby driving them from equity markets to speculative trading.

It created an enormous capital infusion with investment banks competing with the commercial banks in the absence of Glass Steagall Act. Followed by AIG collaborating in the insurance deals on the credit borrowings invested in derivatives and hedge funds with risky assets as collateral and underlying value further exacerbated the risk management.

When the bubble burst, so did their balance sheets. It went disarray with the majority lead players burdened with toxic assets that transformed into dead weight liabilities in the form of large risk exposure eroding their capital and solvency, consequently relying on the taxpayer bailout to salvage the financial market and the economy.

Apart from the financial institutions, the architects behind the policies since the early nineties are equally responsible for the debacle.

For instance, the former Federal Reserve Chairman Alan Greenspan,

The former treasury secretary Henry Paulson and the current treasury secretary Timothy Geithner,

The present Federal Reserve Chairman Ben Bernanke along with the financial team under the Obama administration represent the convenient exchanges between the Wall Street and Washington through the revolving door of Goldman Sachs, Merrill Lynch, Morgan Stanley and the Lehman Brothers prior to being acquired by Barclays…to name a few.

As found in other national issues such as health care, communication and energy, the prevalent culture between Washington and Wall Street is a huge conflict of interest leaving the average taxpayers and consumers at the mercy of the “corporate owned government” enterprise.

Investigation is necessary to determine the cause of the status quo. However, it’s significant to have the financial sector pledge to revive the credit market through liquidity flow to small businesses and corporations. It would jumpstart the economy, since financing businesses and corporations positively impact the job market. Meanwhile, the manufacturing sector could be resurrected pervasively, producing the desirable drastic unemployment contraction.

Simultaneously, the finance industry is required to stimulate the real estate and construction areas of the economy. Considering the dismal job growth accompanied by the plummeting residential and commercial real estate values due to the sub-prime mortgage fiasco,

The financial institutions should invigorate the financing and refinancing options to homeowners and commercial estate holders by offering reasonable, incentivized programs that would allow the property owners to comply with the payments and retain the values respectively. The viable strategy would ease the burden on the lender and the mortgagee leading to the property value appreciation.

President Obama’s proposal to levy taxes against the financial institutions that have benefited from the taxpayer bailout is right on target. Not surprisingly, the financial industry is resisting the tax, estimated to yield $120 billion in revenue for the ailing economy. Taxpayers from bottom up shared the trillions of dollars finance industry bailout.

Having stabilized the balance sheets from the massive interjection of funds, the institutions are now challenging the government against the tax proposal by warning that any such levies in the form of fees and taxes would be hurting the consumers, claiming that the customer will ultimately bear the charges through bank fee hikes.

Alternatively, the banks are threatening to move jobs overseas upon any tax or fee imposition.
Despite the pre-existing exorbitant fee and charges applied to banking transactions, the banks’ retaliation to tax proposal via potential fee increase or job export is not only outrageous but also audacious.

Financial sector being the economy’s engine, the credit flow across the spectrum is pertinent to the swift economic recovery including the financial market gains.

The financial institutions’ lack of concern for ethics and the excessive greed triggered the financial market crisis ultimately affecting the global economy. Therefore, there is an urgent requirement for aggressive financial reform to prevent history repeating itself in the near future.

Thank you.

Padmini Arhant

The Mighty Deception – Focus on Politics and Economy

By Padmini Arhant

January 19, 2010 marks the first anniversary for the Presidency of Barack Obama. The columnist from the leading national news organization chided the right and the left political factions in the article, the excerpts listed below.

“In a world of ideological sniping, Obama can’t win.”

By Richard Cohen, Washington Post, January 5, 2010

“Last month, no American soldiers were killed in Iraq. Last month, the unemployment rate dipped a bit, the stock market ended the year up, the financial system did not crater, Detroit’s Big Three began to get a pulse – and yet a consensus started to form that Barack Obama, who is either responsible for or merely presided over all this good stuff, is a failure.

On the left, the president is being pummeled for health care legislation that does not include a public option and has not dispatched insurance executives to Guantanamo. On the right, he is being pummeled for socializing the economy, establishing death panels and allowing maniacal Nigerians to load their Calvins with boom-boom and fly into peaceful Detroit. It’s a cartoon.

Any way you measure the polls, Obama did not have a good year.

In foreign policy, Obama has sorely disappointed his fans on the left for escalating the war in Afghanistan and on the right for not escalating it enough…

He has not brought peace to the Middle East.

Obama could be a great president. He has already achieved much – possibly saving the country from financial ruin, salvaging the auto industry, getting some sort of health care reform. Possibly, possibly.

Yet, his numbers sink as his achievements rise. He is the Johnny Appleseed of cognitive dissonance, so utterly detached that when he wins it seems to be only for himself. Pollsters measure him but poets have described him.

William Butler Yeats got it down years ago: “The best lack all conviction, while the worst are full of passionate intensity.”

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Perspective: By Padmini Arhant

The author’s hyperbolic characterization of the left position particularly with the dispatching of the insurance executives to Guantanamo and the article concluding with the quotation ‘the worst are full of passionate intensity,’ suggests the print media eternal love fest with any incumbent administration.

As such, democracy is under siege with the legislations merely passed and mostly stalled at the Corporations’ will, aided by their representatives’ inaction in the Senate and the House. It’s further exacerbated with the established print and mainstream media presenting the figures but not the facts thereby joining the elitists against the populists.

Therefore, it’s essential to place things in perspective for a fair analysis.

Iraq war without casualties in the past month is great news. However, the reason behind that is adopting the “left position” to scale down the troop level and make a firm commitment for troop withdrawal, a diametrically opposite decision by the administration on Afghanistan. Despite the reality, the pledge towards peace and non-violence is characterized as “ideological sniping” rather than pragmatic stance.

The dip in the unemployment rate and the rise in stock market are welcome. Nevertheless, the national unemployment and the states’ joblessness is still in double digit with the middle class dropping to the poorer category and the poor driven to being food stamps dependents.

Stock market performance is directly related to the real and projected industry earnings. Since, the health care reform unarguably in favor of the health care industry in the absence of robust competition such as the government insurance program, the health industry stocks skyrocketed at the confirmation of the public option eliminated from the debate.

In other areas, the defense stocks always thrive rain or shine with the U.S perpetual engagement in warfare. The exception to the genuine growth is the technology sector boosting the figures and again with the drastic employment cuts to survive global competition.

It’s indeed a relief that the financial sector did not crater with the infusion of trillion dollars that has surely benefited the Wall Street more than the main street still being defrauded with no aggressive financial regulations in sight including the oversight demanding accountability on the massive taxpayer bailouts.

Detroit’s big three began to get a pulse – yet the State of Michigan ranks the highest in unemployment rate with an average 15.8 percent described as the worst annual rate in “at least 40 years,” and disproportionately greater among the African American as well as other minority groups.

It’s true that the Obama presidency salvaged the financial and auto industry from ruin and currently involved in the health care reform. Although, the salvation of these sectors were carried out to protect jobs, stimulate the economy by unleashing the liquidity in the financial market while reining in on the foreclosures through affordable lending programs, the progress has been either too slow or in many instances absolutely non-existent due to the bailout beneficiaries’ usual business tactics.

Meanwhile, the financial institution such as Fannie Mae and Freddie Mac executives are back in action with the same modus operandi i.e. extravagant bonuses for extraordinary failures in the sub-prime mortgage debacle that initiated the free fall of the economy into the ditch.

In the health care reform as cited above, the proof of the pudding relies on the economic impact of the remaining uninsured millions other than the 30 millions predicted to be covered under the exclusively private proposal. Other issues, like raising taxes on health care plan opted by the work force in lieu of employment benefits are a matter that will weigh in on the cost factor determined by the supply and demand free market elements.

“Some things never changes,” regardless of the power in the White House or the Congress is evident in the past year evaluation.

The Wall Street traditions continue with the financial, health care, communications and energy industries dictating terms and conditions in defiance of the free market fundamentals.

Among them are:

Demanding bailouts and refusing to be subject to scrutiny,

Legislations drafted to promote obscene profits at the expense of exhausted taxpayers and exploited consumers eventually driving the economy to the cliff and,

Last but not the least the communications industry, Comcast resisting government intervention in the monopoly of the diverse media, such as the takeover of NBC and sister networks along with the national communications service and AT&T barring competition in the deal with Apple computers in the Smart Phone – iPhone subscription services and more.

With respect to green jobs creation, the notion is ideal and it would invigorate the battered economy, provided the energy giants do not railroad the budding entrepreneurs vital to expand the sector for community access and local job opportunities.

It’s clear that the ideological sniping from the left or the right is ineffective with the administrations in power succumbing to Wall Street pressure on all issues.

There is one thing to expect loyalty from the supporters through lavish praise and flattery that would simply qualify as cronyism in the backdrop of ‘business as usual’ environment. Another aspect where the actual situation in people’s life has not changed in terms of retaining jobs, homes and the health care proposal entirely entrusted under private care responsible for the status quo.

My silence is not necessarily my disappearance into the oblivion. Any suggestions and requests made thus far in both domestic and foreign policies have been slighted even though they are decisively in favor of the struggling populace at home and abroad. Perhaps, that might be the cause for the utter disregard of opinions and ideas offered upon several political figures’ insistence to participate in the legislative process.

For instance, my request towards transparency and accountability promised during the election campaign by the Obama candidacy has deviated to closed chamber discussion with lobbyists and party members notably in the health care legislation, financial regulations and climate bill negotiations.

I’ve been urging that the oversight committee (if it exists!) hold the financial sector accountable for the bailouts and demand they comply with their end of the bargain in facilitating the credit flow and lending practices crucial to energize the stagnant economy, is largely ignored.

Likewise, the stimulus packages passed under both Bush and Obama administrations viz. TARP money $700 billion in 2008 and $787 billion in 2009 respectively has substantial amounts in cash that has not been invested vigorously to protect or create jobs in the manufacturing sector and public projects i.e. infrastructure maintenance, green technology etc.

I’m still awaiting on the logical reasoning behind withholding the vast stimulus funds for purpose other than the economic recovery via housing market revival, job growth and tax credits to small businesses and medium corporations who are forced to minimize overheads through job cuts.

In addition, the Congress passed relief funds for meager $75 billion to deal with the housing market particularly to decelerate foreclosures, is reportedly served with an acute amount of approximately $2.3million and not billion. Further, it’s reported that the treasury secretary Timothy Geithner’s explanation was “the funds held in reserve to rescue financial institutions from the housing market downturns.”

I emphasized on the required urgent action during the Bush administration bailout activities in resurrecting the Glass-Steagall Act and the long overdue aggressive financial regulations to prevent the precipitous decline of the financial assets hurting the average citizens. Not surprisingly, it received no attention.

Now, it appears that the recently passed House bill on the financial reform has incorporated some of the rigorous policies instead of the comprehensive GS Act possibly anticipating the standard revolt from the Senate.

Not all is lost but there are serious grievances among the general public that are justified with the families facing economic difficulties and it’s appropriately revealed during the November 2009, gubernatorial and congressional elections.

Considering the facts, should one remain complicit to the prevalent camaraderie between Wall Street and Washington in spite of the culture corroding the systems and bankrupting small businesses and ordinary individuals in the society?

My specific role is to represent the people i.e. the humanity at the domestic and international fronts. The task is to work for the general mass and common good to restore democracy, peace and harmony, social justice and freedom, the basic right of all living beings.

Unfortunately, the guidance on foreign policy has been deliberately dismissed by selective entities with a cavalier approach to humanitarian crisis affecting millions of innocent lives. There will be in-depth discussion in this context to dispel the myths and misconceptions surrounding the international crises.

Washington functions on the dogma that “Those who try to please all, pleases none.” The irony in the legislators’ action is the public interest invariably marginalized over the personal and special interests in the appeasement trend.

Hope and Change is yet to be experienced and possible with a paradigm shift that recognizes alleviating people’s plight as the primary goal in public service.

Thank you.

Padmini Arhant

National Unemployment – A Reality Check

By Padmini Arhant

According to the latest reports, the current jobless rate is 10.2% with 16 million Americans competing for 3 million jobs. Apparently, this figure does not include the underemployed. The Corporate related unemployment is further expected to rise up to 10.8% by the end of next year. Another grim factor is the joblessness among the self-employed and the small business retrenchments reportedly escalate the figure to an alarming 17.5% resembling the severe depression era.

Growing unemployment is a major impediment as consumer spending is directly linked to the job market posing a downside for the entire economy. Despite, the economic growth at 3.5% along with the 9.5% annual productivity for the recent quarter, the American workforce is yet to benefit from the surge in these areas.

The most affected sectors appear to be construction, manufacturing and retail. Although, the recent stimulus signed by President Obama extends unemployment benefits for 14 weeks and 20 weeks to the worst hit states combined with the tax credits for the first time and other home buyers, the problems confronting the industries required to generate jobs is attention worthy.

Construction industry is obviously dependent upon the housing sector and the housing market revival methods are due for review with respect to foreclosures and lending practices by the finance sector.

In fact, the credit crunch is predominantly responsible for the sluggishness in the respective areas of the economy. Unless and until the bailed out finance industry honor the commitments made to the American public during the substantial bail outs, the industries tied to credit market particularly the housing, manufacturing and retail cannot emerge from the recession.

If the various bailouts approved thus far have the built-in transparency and accountability factor then the oversight committee ought to investigate the recipients on the investments of those taxpayer funds legislated for providing jobs and stimulating the economy. Regardless, the trillions of dollars accumulated to the national deficit from the banking sector and automobile industry bailouts deserve scrutiny in terms of actual allocation that is not conspicuous given the depressing jobless data.

On the other hand, the government must provide a legitimate reason for not moving forward with the committed investments held in the $787 billion stimulus package including the remainder from the Bush administration passed TARP funds. When the controversial economic stimulus took place at different times, the purpose was to revitalize the economy with the desperately needed job growth besides enabling the relevant productivity levels and overall economic performance.

Any delay in energizing the job market would adversely affect the broader economic prospects for all industries with the consumer base lagging in the necessary spending, the fulcrum of the economic cartwheel.

Manufacturing industry has been harshly hit with the corporate executive failure in the automobile industry precipitated by the finance sector’s liquidity freeze that triggered the economic meltdown in the shadow of the hedge funds and sub-prime debacle. It is imperative to jumpstart the manufacturing sector macro economically to achieve the targeted employment goals.

Evidently, the prevailing policies and the applied mechanisms are either inadequate or ineffective. Perhaps, the additional or aggressive measures could bolster the weak sectors in promoting the anticipated job growth, the real indicator of the economic pulse. Nevertheless, the consolidated interjection of the monetary reserves and management resources from the private and the public sector is paramount to resuscitate the ailing job market.

A disturbing aspect of the impressive 9.5% productivity report is the executive attitude towards the workforce. In spite of the workers’ significant contribution, i.e. limited labor force tripling the mass production, the management has categorically denied wage increases, additional hiring or other compensations in the form of bonuses etc. claiming that it would be detrimental to the organization ‘s profit oriented schemes.

It is elaborated as corporations aimed at increased earnings in the backdrop of weak dollar, declining exports, business decision to operate on lower inventories and other economic woes. As reasonable as they might be, somehow the conditions seem to apply only towards the labor force explicitly stated by the industry spokesperson that the workers should remain content with the fact that they have a job in the gloomy economy.

Meanwhile, the CEO’s salary package maneuvered from the Congress chided bonuses to lucrative shares and stock options with immediate encashment irrespective of the corporate results; the disingenuous modesty is adequately serving the highest in the hierarchy. Never mind the exploitation of the workforce, the human capital in this context.

In terms of the businesses with cash reserves operating on small inventories, the strategy is counterproductive, not to mention the catastrophic impact on the wholesale, small businesses and the retail industry. The wholesalers relying on the medium and large corporations’ inventory purchases forced to carry out massive layoffs potentially having a ripple effect on the economy with a possible inflation.

The swift passage of the ‘Cap and Trade’ bill boosting the green technology sector would be a phenomenal job growth subsequently alleviating the burden on the national deficit.

In light of the available facts, it would be appropriate to attribute the unemployment status to the myriad of activities or the lack thereof by both private and the public entities. It could be highlighted as the culmination of stringent corporate policies, limited private and public investments, reining credit flow, uncontained foreclosures and lack luster home sales in the housing market…causing the precarious unemployment situation.

Therefore, the government and the free market thorough evaluation of the status quo are essential to invigorate the frail job market.

A jobless economic recovery ultimately leads to a negative economic trend in the absence of robust stimulants explained above. Jobs represent the nerve of the economy with serious economic and political ramifications.

Contrary to the rhetoric echoed in the chambers of Congress and the media, the health care reform is equally important in the equation because it bankrupts the small businesses and individuals alike. Both groups are constantly struggling to make ends meet with the atrocious health care costs prohibiting investments in other necessities.

Economy and health care matter are intertwined and partisan politics has no place at the critical moment debilitating many American lives.

It is incumbent on the United States Senate to rise to the occasion and overwhelmingly approve the health care bill with the federal run health care program titled as the ‘public option’ in recognition of the American plight.

The simultaneous actions by Washington and free market are vital in curbing the rising unemployment statistics. Job assurance to every American translates into job security for the legislators and the executives. Since jobs create taxpayers and consumers,

Washington and Wall Street cannot thrive without progress in the main street.

Thank you.

Padmini Arhant

Capitalism alias Communism

By Padmini Arhant

Throw a treat to the man’s best friend and he/she will do any tricks for you.

Not quite true, contrarily some canines unlike the ‘few’ in their masters’ species resist being the “Pavlov’s dog.” Besides loyalty, the canines’ discriminative power is unparallel to the particular voices on the airwaves and cable news network ever willing to perform on the note – ‘show me the bait and leave the trashing to…’

Lately, with the relevant media on vacation, the field is wide open and vulnerable for dumping wastes of all kind. As usual, the specific network presenting ideas and style taken right out of their targets’ page yet choosing to remain oblivious to’ plagiarism,’ do not refrain from perennial attack politics.

Recently, there has been deafening noise and fear mongering about the nation becoming ‘Communist’ and claims that certain entities may be out to destroy the sanctity of the sacred ‘Capitalism.’ Further, the network featuring the long confused biracial harmony against the alleged Anti-Profit, Corporate bashing otherwise the ‘indomitable’ alien force is indicative of the desperate times seeking desperate means.

It’s a feast to the eyes when the image on the HD / 3D monitors transcends race but again demoralizing when it happens for the wrong reasons. As though the berating isn’t enough the religion is brought into the conversation as an ally. The emphasis on the United States of America, proclaimed as the exclusively “Judio-Christian” nation presumably conquered by the aliens determined to eliminate the demonstrably competent ‘Capitalism’ and threaten the viability of the robust free market system. Never mind the other religious representations and diversity in the society. They are mere taxpayers, consumers and statistics among the electorates.

It should be obvious by now that the United States is a planet within a planet with the multitude race, religion, non-religion and several other factors from all over the world. The bellicose barrage playing the religious card is nothing but gutter politics.

Whatever works to polarize the democratic secular system used to ignite the sparks regardless of the blazing fire possibly consuming the pyrotechnicians and the entire gamut?

In view of the over pouring incendiary remarks marred with ignorance, it’s essential to demystify the myth dominating the communication mass media, the single most propaganda machine overly misused in the modern age partisanship.

Understanding Communism:

Karl Heinrich Marx, The German political economist, sociologist… perhaps conceptualized a utopian environment against the extreme inequalities at that time. The political theorist’s influence over the exploited working class permeated the western and central Europe, and subsequently the other parts of the world.

Communism emerged from the societal decay with the wealth concentration in the particular segments, i.e. the agricultural landowners and merchants seeking entitlement to national wealth while depriving the remaining population from similar fortunes, and leaving them to compete with one another in the Darwinian ‘survival of the fittest’ world.

What began as the revolutionary movement towards the greater good for all developed into the previously condemned parochial system, as it operated with the power sanctioned to the selective groups in the nation governance that simultaneously set aside the enormous wealth for them in the name of the republic. Communism on the face of it initially portrayed as the well-oiled machine satisfying the wants of all, only to be degenerated in the systemic abuse of power.

Even though ‘Communism’ spread to benefit the ‘Community’ with the objective of creating a classless and stateless society, the end did not justify the means. The classic examples are the former Soviet Union and the present China, Cuba and North Korea.

Again, the interesting twist in the twenty first century is the nostalgia for the former Soviet era among the economically deprived many Russian citizens in the fast-paced ‘ONG’ (Oil and Natural Gas) enriched Russian economy.

In fact, the United States held responsible for the failure of the former Russian leader Mikhail Gorbachev’s ‘Glasnost’ (Government Accountability and Transparency) and ‘Perestroika’ (the political and economic reform). The reason attributed to the Western paranoia to the pervasive ‘Communism’ and the secrecy behind the iron curtains.

The irony in the response to Communism by the United States is the successful dismantling of the former Soviet Union along with the brutal deterrence in Vietnam, Laos and Cambodia, and isolating Cuba and North Korea, while fervently forging alliance with the vastly threatening Communist regime in the Far East – China.

Communism soon became the most dreaded form of authority in the latter half of the twentieth century because of the iron fist rule in the former Soviet Union and across the Soviet bloc, that caught on like the wild fire to the South Asian regions led by China and adapted by Latin America in their rejection of feudalism.

Furthermore, the equality theme dissipated with the ruling Communists’ power absorption and control of the major institutions on the land, specifically the mass media. As a result, the population promised to be free of social and economic barriers subject to severe oppression on all accounts like in the case of contemporary China, Cuba and North Korea.

Perspective on Capitalism:

The widespread ‘Communism’ in the mid twentieth century triggered the wealthy to converge and protect their capital in the ‘Capitalist’ economy more so than ever. Capitalists’ paradoxical dual platform was protectionism while floating free trade practices essentially enabling a monopoly on not only the national but also the global economy. Hence, the free market archaic labels on every consumer product sold in the global market.

In an uncanny resemblance to the ‘Communist’ system the free market has not met the expectations of the people in the society as they are entrenched in consumers and workers exploitation like their counterpart ‘Communism.’ The common tools for both systems are ‘Power’ and ‘Wealth’ for suppression of freedom and choice in the form of civil liberties evidenced in the on-going ‘health care’ battle.

How did the free market infiltrate the national economic and political scene?

The Capitalist agenda thrives in a democratic system with mega investments in the political campaigns. All levels of government i.e. local, state and federal elections are heavily funded by the lobbyists aka the ‘Special Interests’ representing every imaginable industry. Any effort to legislate the ‘public’ financing with a cap on electoral spending demolished prior to the declaration of such process to let the private industry proliferate in the nation governance usually beginning on the campaign trail.

Some poignant moments in recent memory –

The finance sector giants such as ‘Goldman Sachs’, AIG, Citi groups etc smoothly organizing the fire sale of the rivals and massive bailouts for themselves. The oil industry with Exxon Mobil, Chevron Texaco, ConocoPhillips and others possess the political proxies in the House and the Senate rallying for off shore drilling and blocking the ‘Cap and Trade’ energy bill.

Should the ‘health industrial complex’ trail behind in the muscle-flexing match?

Absolutely not. Therefore, the Health Care Industry actively promoting the anti-government slogans through their paid political representatives, so that they can continue the absurd profiteering strategy without the people represented public option in the contentious health care reform.

On a broader perspective, the national defense controlled and managed by the ‘military industrial complex’ behind every military operations ranging from the civil to international wars vehemently opposed to any ‘peaceful’ resolutions to justify the phenomenal defense budget crescendo regardless of the political factions in the White House.

The proof of the pudding is in the decision to proceed with the additional troops deployment in Afghanistan. Despite the colossal failure in the ‘so-called’ war against terror, the pursued military occupation misdirected as ‘nation building.’ Such adamant position is reflective of the Machiavellian policy and ‘hawkish’ representation at crucial levels of government, relevant departments in the administration and the defense hierarchy. Ignoring the human casualties on all sides and squandering the scarce national resources is the motto of the defense program conspicuous in the status quo.

The role of Kellogg Corporation and the internationally defamed ‘Halliburton’ in Iraq and Afghanistan herald the degradation of morality in the lowest order.

Again the private industry prioritizing extravagant profit over people’s lives is synonymous with the military and medical industrial complex, ‘apparently’ engaged in saving and safeguarding lives.

Likewise, in other areas of life sustenance the Nuclear industry in their effort to leave the footprints has the legion in Congress, respective Cabinets and the White House to stampede the renewable energy alternatives in the green technology vogue. In this context, the anti-environment coalition is ever stronger than witnessed before. It’s not uncommon for the opposition to rise against the incumbent power’s any and every policy. However, the vitriolic politics defying common sense and logic in the ‘global warming’ issue is the height of idiosyncrasies that is reprehensible.

How does Capitalism perform in the global economy?

Globalization is nothing but the marginalization of the domestic and foreign workers alike. The two most important wings of the business sector, the workers who are also the consumers are the convenient scapegoats for the free market operators. In order to cope with the vigorous global competition, the corporate downsizing with massive layoffs or outsourcing at a relatively cheaper rate with a disregard for standard labor laws on foreign soil is the preferred path to ‘Nirvana,’ (the eternal bliss), in the capitalist jargon it is the cornucopia of profits.

As for the environmental hazards are concerned, the deadly gas leakage in the devastating Union Carbide disaster in Bhopal, India – killing several thousand residents and abandoning millions suffering from life threatening diseases as well as the oil spilling on the domestic and international shores meticulously evaded or dealt against it through the top-notch legal expertise hired at a premium price.

Global economy is also heavenly for tax evasions with the Corporations reallocating off shore income towards their personal future.

The icing on the cake is the communications mass media – a blaring private and free market owned enterprise to undermine democracy. Issues of national interest and citizens welfare browbeaten to conjure the dazed viewers and readers. At the same time there is responsible journalism visible in the most editorials, columns, articles and television presentations other than the cyberspace to counteract the partisan tidal wave

Lately, the legitimate concerns in the form of opinions, ideas and commentaries on numerous national and international issues either discounted or dismissed as an unqualified intervention in the asserted ‘our highest government ’ matter, striking yet another chord with ‘Communism.’ in the first amendment right.

Aiming at profit is the fundamental cause for any commercial activity. Nevertheless, the methods and strategies to achieve those profits often found unscrupulous in the modern market economy. Wealth acquired at the cost of the citizens’ life and livelihood does not last long, and no sooner than later the proprietary disillusioned on the asset transformed into liability.

The analogy presented, as “One size do not fit all.” It does not apply to those corporations playing by the rules with an utter respect for the democratic political system…stay focused on the business management rather than ‘nation’ control. These Corporations occasionally victimized by the labor Union’s excessive demands viz. higher workers compensation under the guise of ‘labor protection.’ There are also individuals abusing consumer rights in business dealings with contempt for the other party’s status.

The excessive greed for ‘Power’, ‘Profit’ and ‘Popularity’ in the aggressive world economy and political system has eroded the human qualities for care, compassion and courage to uphold justice and fairness in the society.

Concisely, Capitalism is the new era Communism dictating terms and conditions to the market forces and intrusively implementing national policies through political agents on the prolonged or permanent Corporate payroll at the dawn and during the representative’s political career.

The common denomination under both systems is – the powerful oppress the powerless and the victims are none other than the general population in both Capitalism and Communism.

Democracy is meaningful with the government of the people, by the people and for the people.

Thank you.

Padmini Arhant

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