When you spend $787 billion, there's a lot of pressure to show results. So, there's no surprise that success is being proclaimed across the country. States are saying that they've used the federal stimulus package money to create or save more than 388,000 jobs this year. Teachers, construction workers and other professions have realized the upside of stimulus cash according to reports from 33 states and Puerto Rico, with the remainder of the results being released on Friday.

Of course, the numbers "should be taken with a grain of salt," says Ethan Pollack of the Economic Policy Institute. The states were tasked to count the jobs created or protected, but the results have been of dubious accuracy. This doesn't mean the stats can't provide fodder to people on both sides of the aisle.

Columbia Business School's Frank Lichtenberg says the data shows a solid economic impact, and the Obama administration's Council of Economic Advisors believes the stimulus spending has taken care of between 600,000 and 1.1 million jobs.

And, there are those who disagree.

Experts inside the Bush Administration tried to warn about the mortgage meltdown. They even proposed new regulations to set guidelines for the risky loans written by the banks who now have their hat in hand looking for a bailout. The banks fought these regulations and the Bush administration caved in. Now, we taxpayers are paying for this lapse in judgment in two ways -- an economic meltdown and a huge tax bill. According to an Associated Press report today, regulators warnings to banks in 2005 included:

• Banks were warned exotic mortgages were often inappropriate for buyers with bad credit. Anyone surprised about that?
• Banks that bundled and sold mortgages were told to be sure investors know what they were buying. We know that's not true. AAA ratings were given to much of this debt that proved to be of much lower quality and much more risky.
• Regulators urged banks to help buyers make responsible decisions and clearly advise people that interest rates might skyrocket and huge payments might be due sooner than expected. Do you believe that mortgage brokers or banks clearly warned people about the dangers of the loans they were taking? I don't.

The real estate market is collapsing fast. Why? People borrowed more money than they could repay so they could "buy" houses they could otherwise not afford. And the banks that pushed those loans now find themselves the miserable owners of those death support systems for debt. The banks don't want these economic death traps -- so they'll dump them at a fraction of the price at which they were sold. (The Wall Street Journal reports that in June 2008, Credit Suisse sold a 1,230-square-foot home in Corona, CA for $198,000 that went for $450,000 in December 2006).

Bloomberg News reports some stunning statistics about how quickly banks are taking possession of those houses. U.S. foreclosure filings spiked 55% while bank seizures -- when a bank takes ownership of a house also known as real estate-owned (REO) -- skyrocketed 184%. Bloomberg says that "more than 272,000 properties, or one in 464 U.S. households, got a default notice, was warned of a pending auction or were foreclosed on."

This transfer of titles to banks is contributing to a massive loss of wealth. Bloomberg reports that home prices fell "15.8% in May, the most since at least 2001, according to the S&P/Case-Shiller home-price index." And Bloomberg indicates that 33% of home sellers in the second quarter lost money. Moreover, according to SeekingAlpha, 33% of houses bought in the last five years are worth less than the amount of their mortgages.

MAJOR PAPERS:

• The Wall Street Journal reported that it is the Bush Administration versus Democrats versus Republicans to decide the strategy to stabilize Federal National Mortgage Association (NYSE: FNM) -- Fannie Mae -- and Federal Home Loan Mortgage Corporation (NYSE: FRE) -- Freddie Mac. The Administration's plan would let the Treasury Department advance a credit line and the opportunity for the government to buy equity in either firm. A package is expected to pass but not before the political and economic ramifications are battled out. Democrats and Treasury want it to be a part of a housing rescue plan; Republications oppose it.
• The Clinton Foundation, headed by former President Clinton, believes it has a pricing agreement in place that it expects will make malaria drugs affordable and available to millions of poor people worldwide, the Wall Street Journal reported.
• The Financial Times reported that UBS AG (NYSE: UBS) and Liechtenstein's LGT Group will today be accused by U.S. Congressional investigators of using the "cloak of bank secrecy laws" to help American clients evade billions of dollars in taxes.

OTHER PAPERS:

• Globes reported that Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) is talks to acquire Barr Pharmaceuticals Inc (NYSE: BRL). The price tag is said to be between $7B and $7.5B.

MAJOR PAPERS:

• To help stabilize the housing market, the Wall Street Journal reported that the Bush Administration is planning to help create fresh funding for mortgages. The plan, which still requires final approval, is said to ease an excess-capital requirement for government sponsored organizations Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, and the Federal Housing Administration.
• The Wall Street Journal also reported that a merger between Northwest Airlines Corporation (NYSE: NWA) and Delta Air Lines Inc (NYSE: DAL) may be derailed after Delta pilots notified executives they remain unable to reach an agreement with Northwest pilots on how to integrate pilot ranks should the two combine.
• The Financial Times reported that BAE Systems Plc (OTC: BAESY) won a $715M order to supply nearly 1,500 mine-resistant vehicles from the U.S. government.

OTHER PAPERS:

• The Chinese government has locked out Australian mining giants BHP Billiton Limited (NYSE: BHP) and Rio Tinto Plc (NYSE: RTP) from selling iron ore into its daily spot market, the Sydney Morning Herald reported. Mining sources said that the decision may have already cost Australia up to $300M in export profits.

The $150 billion fiscal stimulus package that's winding its way through the U.S. Congress will not represent a panacea for the U.S.'s economic ills, an economist argued, but it will represent modest good news for one segment -- the beleaguered housing sector.

The fiscal stimulus bill currently under discussion in the U.S. Senate calls for raising Fannie Mae and Freddie Mac's conforming loan limit to $729,750 through 2008 from the current $417,000.

Conforming loans are conventional, fixed-rate mortgages for good credit borrowers that banks make that are eligible for purchase by Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). When Freddie and Fannie purchase these loans from banks, it "frees-up" money that the banks can use to grant mortgages to future borrowers, thus expanding the pool of funds available for mortgages.

Economist Steve Affinito told BloggingStocks Thursday that while it's important to underscore that the higher conforming loan ceiling will not eliminate the U.S. housing sector's recession, it is "a critical, essential step in the right direction," in his interpretation.

I have been wondering lately if the sagging value of the dollar is actually going down through economic gyrations or being pushed down by design.

There are many repercussions. No one less than Rodrigo Rato, head of the International Monetary Fund, warned Monday of a potential "abrupt fall" in the US dollar that could roil the global economy. "There are risks that an abrupt fall in the dollar could either be triggered by, or itself trigger, a loss of confidence in dollar assets," Rato said at the close of annual meetings here of the IMF and the World Bank, according to news reports.

Here is what is really on his mind: Europe may take steps to temper the strong appreciation of the Euro, which is weighing on exports from the 13-nation bloc. "There is a risk that exchange rate appreciation in countries with flexible exchange rates -- including the Euro area -- could hurt their growth prospects, and that in these circumstances protectionist pressures could worsen," he said.

From my perspective I have wondered if the Bush administration is at least applauding the weak dollar as it improves U.S. trade imbalances, helps prop up the stock market and worried investment bankers, and strengthens American companies in many regards.

According to the Bureau of Economic Analysis, a subsection of the Commerce Department, after peaking at $321 billion in 2000 it then began a precipitous decline, dropping to $167 billion in 2001 then to $84 billion in 2002 and $64 billion in 2003. This figure has since recovered jumping to $184 billion in 2006; however, it is still meaningfully below the 2000 peak, with the upswing being very erratic from year-to-year, suggesting many countries are still hesitant to invest in the U.S.

The decline in foreign direct investment has had an impact on U.S. employment data as well. The number of Americans employed by foreign companies within the U.S. from 2000 to 2005 is down, declining from 5.7 million to 5.1 million. This is not a good number when considering the US economy has had four solid years of growth. Even with a downturn in foreign direct investment one would expect, purely from inertia, employment to have gone up.

Treasury Secretary Paulson is attempting to put the foreign direct investment tide on a sustainable uptrend, albeit doing so with a political touch. Paulson needs to soften the blow many foreigners felt following the Bush Administration's unilateral withdrawal from the Kyoto agreement, the Dubai Ports World debacle and the tough scrutiny of the Alcatel-Lucent ADS (NYSE: ALU) transaction which all left foreigners with a bad taste in their mouths.

Historically, even during good times, foreigners like to allocate a good portion of their new-found wealth into the U.S. Despite cheaper labor costs in emerging-market economies like China and India, the U.S. has a highly productive labor force, a society which produces millions of college educated students each year, a very solid currency and a flexible real estate market to construct buildings or plants in rural or urban areas. These are all attributes that can be found in few other major cosmopolitan cities.

Paulson's actions suggest the U.S. has a lot of fences that need mending. Forget the trade deficit, focus on foreign direct investment numbers to get a real sense of what the world thinks of the U.S.

Have you ever become mad at global retailer Wal-Mart Stores Inc. (NYSE:WMT) for having prices that are "too low?" Well, Senator Lindsey Graham is unhappy because prices are too cheap at Wal-Mart -- and he thinks it is President Bush's fault. Can we examine?

There have been many attacks on China as it repeatedly come under scrutiny for manipulating the value of its currency. As we all know, much of what Wal-Mart sells -- outside of groceries -- is made in China these days. Pick up any 10 random items in general merchandise and my guess is that at least 60% will have been made in China.

According to estimates, it takes 40% more yuan (Chinese currency) to buy a dollar than it should. Artificially deflating the yuan makes American made goods more expensive in yuans, thus the Chinese can afford fewer American products. In turn, American companies and their industries decline -- industries that employ American workers. On the flip side, Chinese made goods are artificially cheaper in U.S. dollars, and Chinese companies can still turn in a profit. American companies have a hard time competing with these artificially low prices, so who usually ends up paying the price of cost-cutting? You guessed it -- the American worker.

Sen. Graham wants the U.S. government to "tell" the Chinese to quit deflating the yuan -- or to impose a big tariff on Chinese goods entering the United States. A Chinese tariff would very well prove disastrous to Wal-Mart's "everyday low prices" most likely. Get 'em while they're hot, folks.