The big picture: China, Wall Street, jobs

Re: 'Fears of an REO glut persist' (April 16)

Dear Editor:

It always amuses me that the media publishes articles like this, as if this story is something new and unexpected. When will the media start becoming proactive and not so reactive?

The so called "shadow inventory" is not a new phenomenon. Where did everyone think all of those foreclosed subprime and exotic loans go? Those are the loans that defaulted first and the properties the banks are now holding. The borrowers who are currently falling behind (received) prime loans: (they) were fiscally responsible until they lost their job and now are relying on unemployment benefits to get by. What happens when those benefits run out?

There still hasn't been an industry created to help create jobs. It is time to wake up and face reality: we are a nation without true leaders. I believe those in Washington are either spineless, clueless or careless. Let's look at the real issues facing our country:

1. China. We have been running a huge trade deficit with China for years. Corporate greed has led to the exporting of manufacturing jobs and some information technology jobs overseas, with China being the biggest recipient. While I am all for capitalism, the exporting of these jobs was nothing but a move to increase corporate bottom lines at the expense of consumers in this country. In a true capitalistic society, all players are on equal footing and are privately owned. China is not privately owned and their industries are subsidized by the government. China has given us products contaminated with lead paint, melamine, mercury, cadmium and the tainted drywall.

(Its manufacturers) are not held to the same manufacturing standards as we have in the U.S. A recent judgment against the manufacturers of the tainted dry wall, a Chinese government-owned manufacturer, has been ignored to date. Is this really fair and competitive? It will be the American taxpayer who will end up footing the bill to remediate the drywall issue.

In addition, the Chinese government has blatantly manipulated the nation's currency to keep it undervalued, thus keeping labor and manufacturing costs artificially low. The current administration knows this and has issued statements that it will look at taking action to remedy the situation, but it hasn't taken action to date.

2. Wall Street. Big banks and investment firms have learned nothing from their near collapse in 2008. They were bailed out with taxpayer's money and now "thumb" their noses at those who bailed them out. While their mismanagement and arrogance led to a panic on Wall Street and the subsequent loss of MILLIONS of jobs, which have not been replaced, they feign ignorance while testifying before the various government panels. They are now taking low-interest loans from the Fed and reinvesting in bonds and stocks, playing the speculation game once again.

There is a difference in investing because you have done your due diligence, and investing because you believe a company, industry or bond is undervalued, versus speculating. The same is being done in commodities, specifically oil. What substantive facts do they have to be "betting" on oil? The current inventory of crude oil and gas is at 10-month highs; 10 months ago crude oil was under $50 a barrel it is now over $85.

What is driving the price up? Speculators! Those betting that the economy will turn and start recovering, thus increasing the demand for oil and gasoline. We haven't even discussed derivatives: the betting off the success or failure of an investment without holding the asset. Until our representatives in Washington address the recklessness of Wall Street and their "I want to be rich now" mentality, they are at risk of another meltdown.

3. Jobs. No matter how hard the media tries to spin it, the fact remains that there are millions of unemployed. The number everyone keeps seeing is 9.7 percent, the truth is the number is (much higher) once you factor in all of those who have quit looking, whose benefits have run out, who are underemployed (part-time employment) and were self-employed.

In March, a report was released stating that 162,000 jobs were created and that only 48,000 were temporary U.S. Census jobs. I beg to differ. I would like to know how many of those jobs were created by government programs such as HAMP (Making Home Affordable Program). Due to the new regulations, the lenders are forced to work with homeowners who are falling behind in their mortgage payments. Someone has to be hired to help with the huge caseload -- (millions of) borrowers are behind on mortgage payments. What happens to those jobs once the lenders work through all of those loans? I think those jobs are as temporary as the Census jobs.

In addition, a week after the report on job creation came out another report (was released) showing that jobless claims rose unexpectedly. What happened in a week's time? I continue to see announcements of downsizing, cuts and the like. How do you have economic recovery without job creation?

I want to see what happens when all of the government subsidies expire. What type of growth will we see?

Nick Chucales
NMC Consultants
Westerville, Ohio

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