the econy is probably still shrinking. this antitative easing is a icky business anthere could be toouchmoney in the econy in a year or so or there might be too little. by the time the bank of england knows forsure, it will probay be tooate. it is not turning off the p yet. >> one maineadline for you, the ited states seeking to hold somalia together has publicly warned eritrea to stop armed islamic militants. an uxpected consequence of n1 swine flu is fecting egypt. organic waste has beepiling up. thrat population is no booming. christian frasier reports. >> nce the age of eight, he has recycled waste. 14 hours a day for 30 years and life just gt even tougher. 85% of the rubbish that they retrieve is sted, recycled and resold. it is araud trial existence in whicthe pig pys a crucial ro. ch month, the day the move their way thrgh 6,000ons of the rotting food collected. the exa money wasital for s family's welfare. >> i sold pigs twice a year to pay for amenng the car a t school fees for o three young children. i cannot repl

the green shoots of the econy reviving, you have seen it?>> i see unployment that is so high, the numbers, -- don't see it. >> how long you ha been out of work. >> it's en about a year now. >> small wonder folks li jeff goldstein wereloomy. >> how long d you think you were ing to be out of work. >> i thoht i would be out of wk for a month, tos. >> how long u have been t of work. >> two yea. >> two years. >> i'm o over a year now. mine ends in septber. >> the unemploymt you me. >>es. >> we come to find out what's new about the job rket for america's 14.5 million officlly employed. for many it's that their unemployment benits are runng out. even after having been extended several times duringhe great recession. that's because of long-tm unployment. >> 5 millioneople now ou of work for at least half a year. the highest percentage sin thgovernment srted tracking lonterm joblsness in 1948. sperate times, despera meases. includg a resume fg for our camera. >> iope somebody out there watching. >> i see. >> charles stewart from brooklyn. tecs techni

a healthy econy requires consum spending and consumers won't spend unless they feel they have job secuty. duda says with all the government involvement in th economy, it is n clear what ll happen when the uncle sam steps back. >> mbig concern is what happens when some of this stimulus subsides. wh's gonna happen to the job market in the fourthuarter this year d the first quarter of next year. so where i've been very timistic up until now the market has gotten to where thinis fair but to get beyond fair iant to feel better about thfirst quarter two thousand ten and i think thiss still ve fuzzy. >> rorter: the employment report for july, d out on friday, is seen as critil to market psychogy going forward. jobs losses are expected. but experts say if the losse are fewer thanhree hundred thound, the market will take it as a bullish sign. scott gurvey, "night business report new york. >> paul: now, let's take look at some stks in the news toght. and those are the stocks ithe news tonightsusie. >> susie: tomoow, with lender cit stilon life support, we look at coercial lending and when credit c

so if the econy is doing better, whare the banks still in trouble? as stt gurvey explains, it's a matter of timing. >> reporter: it willake months before the gen shoots appearing in the economyhow up at your nehborhood bank. that's because the job ls comes first, tn the missed mortge payments, then the foreclosures. d with home foreclosures com trouble for retaers and others dendent on consumer spending. morningstar banknalyst jamie pete, says that's why banks are just beginning to el the pain from mmercial mortgage failures. >> you have almostalf a year between e time when the first mortgageayment was missed to the bank'srobably charging off the loan. d so what you have is half a year and sometimesn commercial credit it's almost as longs two yearof lagging charge-offs the banks are having. so the combinati of that the facthat these problems have ju been accumulating throughout the recession is at some banks have ju reached that breing point right now. they just can't take a more loses. >> rorter: on top of that, some banks may have troue paying spec

thank you. 7//& captioning sponsored bwpbt >> susie: hazardous to the econy's health. thatas the warning today from the congressional watchdog monitori the government's bailout of the tion's banks. according to report from the congressional oversht panel, banks still have plenty problem loans on thbooks and thatould threaten the economi recovery. how bais this situati? stephanie dew talked today with the panel' chairwoman, elizabeth rren. >> how vnerable is the financial stem to the toxic asse? >> what's vulnerable -- it's vulnerable in two waysfirst, mostf the toxic acids -- assets th were there in oober are still thereith all th implications terms of as they n't pay off, they run the risk ofringing the bank down the seconds so long as these assets remain onhe bank's books, every time they get capil in, they use it as sort of a hedge agnst those assets rather than turni around and lending that capital. so it gets in the way of small buness lending andther things we ne to get the economy restarted. >> how lg will the treasury's private investnt program go towards clean

in the second quarter year, japan's econy contracte by er 15%. this is the wor contraction of any rich ecomy in decades. and wh that means is th chinis going to overtakehem ster within aouple of yes, faster than was initially thought. this iand going to putchina in the spotlightet again. we alrdy than they'rehe 800-pound goril in the region nothe number onerade partner for japan over e u.s. but also as apolitical partner in the region. i think yo can so that with the u.s./chinatrategic dialogue in july wch made japanery nervou >> japan going numberthree. for the united ates, what is threal iact here? just a psychological hing? we get over itand -- oh a psychogical element t in terms ofubstance and size this is a historic moment. the first time that the indurialized world, the world's coming out of you recession in which wre not going be pulled out by either europe the u.s.r japan. th tradional economic locomotives. we he it is china, asia, in general. i find itnteresting that today, in thworld of ag-2, the u.s. and china, both nations right now t

risk-taking by banks is an absolutely essential ingredient for th restorati of growth i thelobal econy. >>ut with bi pofits comes rewed concern overay and bonuse one veteran argues the bon culture ll never disappear, but it needs to be linkedo longterm pformance. >> we understand that it cannot be right for peoplto walk off with a sack cash after one year. >> for many ordinary businesses, thoshuge profits will be diffilt toake, especially r manypeople who believehe investment banking world caused aecession inhe first ace. one person who fes ptty hard done by is simon ight. the banks would not give him a loan to build new housin >> i am disappointed they have them big bones. if i take money out of the business, when it is doing well, i am not helping myself. even so, i think is preposterous they have to have a proven track record of steady groh. >> theontroversy will continue. lar this week we will find ou how bank stakeholders hve performe >> good to have you with us. still to com-- ttling mother nare. wrestlingwith the elements. first, tough yea for japan's corpate sector. a bi jumpin

they begin two-day meeting in washington tomorrow,o decide what's next for the econy and terest rates. many economis have already decled that the recession is over and that the u.s.conomy is on the th of recovery. but as scott gvey reports, even the experts he lots of questions out the central bank's next move. >> reporte fed watchers would like answers to three quesons when the central bank conclus its august meeng on wednesday. first, they want to know abo plans to raise ierest rates. second, they want to know the fed thinks the econoc recovery is real. anfinally, they want to know if chairn ben bernanke will be re-appointed to a cond four- year term. ll, answers to two out of three isn't ba first up, there ist a owball's chance in a very wa place th the fed funds rate wi be raised from its zero to .25% range this mont or, acrding to jim o'sullivan of u.b.s., anytime soon. >> most likely they'll reat the nguage, indicating that the funds rate'soing to stay exptionally low for an extended period. in addition, we uld expect the woing to be a bit more optimist sounding on the outlook f

on subprime serities like some of the other western economies and especially the emerging european econies so it didn't have ch a hard fall because it didn't soar as high. >> and franc also had pitive news. what is the explanaon there? >> silarly, france was sowhat bufferedrom all of theubprime contagi thing. as recently aswo or thre years ago, francwas an economicdnchline. the labor foe is not very mobile. it'sarder to hire d fire people. th cuts both ws. when youry insuleate yourselfamid a gbal contagio the likes we have seen the past two years, yu're bound to do better th the other economies. >> okay. but despite that, there are many european economi that are not seeing anyreal signs of hope. let's talk aboutgreat britain. ploymentate is up. spaiis now approachg nearly 18%. how do thos facts fit inith e news of tod? >> well,t showsyou that you're not talkin about a single eity in the european zone economies ain, for example, was precisely one of those economies that binged on subime, that espoused new paradigm thiing, that built condo as far as the eye can see, that opened its borders t

in a sluggish econy, investors adorthe few companies whose earnings are soaring. the economy is probablstarting to grow w, but few are looking for rip-snorting growth. and there are two very gd reasons for th. the first is intest rates. when rates re, borrowing becos more expensive, and it becomes harder for cpanies to borrownd expand. sht-term interest rates are currently zero, or vy close to it. so it's good bet that rates will rise in the future, a that could keep onomic growth mud. given the soaring deficit an the fact that tas are their lowest in decas it's likely that taxes will rise in e future, too. although paying the debt ia good thing, ring taxes typicalldampen the economy. d, in a rare alignment of investing, growth ocks are so eap these days that even som value managersre looking at th. the drawback to growth fds: when they fa, they fall hard. but magement styles often remain in fashion for fi years or more. you won't have to wait untilhe next cycle to jumpn. i'm john waggor. paul: recapping today's market action stocks round after yestery's selloff.

and the is obama o to the side somewhere worryin about the econy and so on. >> she's going forwa with this iniative to frica. this is important unto itself in the united states estaishing a dial wogthis ntinent. >> h it is absutely. d what i fond very interesting is the dercurrents of china in both places, in e nort korea and in the african equation. china, remember, is the largest play in so many countries in africa right now. it isasically, has movedhe uned states off centerstage. the inese are buildingvast projects, dams and so on, all over africa in rern for natural resources. they want oil in places, like angola and various -- numberf other places. sudan. so really this is critical quarter you said to try to get back into that area thathina has dominated. equally, china's importa in e north korean equaon as well. so find the interplay, t undeurrent of china in all of this, very intriguing. and the united states does have to reasrt itself especially if africa now. >> and then on t of at, chin owns a great dal ofur debt. >> well, and in terms of that and the united stas, theeen uni

we're not going to an econy that is madly driven by consumerism. so people elect the agent cnge, barack obama in 20. what they'veeen in 2009 has been a traditional, liber, deck cratic appach. and so i think there's some anger out there. t's not, listen, it not overwhelming yet. it's certainlynot like it was with ll cliton in 94. but certaiy the warning signs are there for e oba administration. they need to respond well in th next six mons. >> rose: how have you changed? i me you explain to me how you ink how you see theyo world. buyou, has being in the center othis media thing, is it dierentk than litical attention? i mean is it less, ist mo, is it more mfortable? >> it's a lot more fun not having to wake up at 5: every mornin and saying what your local newsper's writing about yo >> rose: or spending lot of time on t phone raising money. >> that, oh, yea no, this is -- is is -- butou know what, thoh, charlie, m the show,t's like, we talked about thibefore. >> ros right. >> you and i, lt's not tell our bosses, we'rehe luckiest gs in the world. >> ro

from tat can be derived molds of how our entire econies beha. rulenature but the free market will automatically bng out the best result for ll. it was the chica school of thought, the valet the by iedman and his colleagu were the driving force. they won nine nobel prizes. t post financialcrisis, t chicagschool appears toe in retrt. robert luksas one the remaining high priests o the chicag school. he won th nobel prize for economics in 1995 >> we tught we knew lot. it turned out we didn'know a damn thingbo the stability the banking system so you know it's bck to the dwing board. we'll e what comes out it. somebody is ing to have to figure this stuff out. >> you don't mind melton freedman right. >> yeah. mean if he w right something,e was wrong about others but mbe we should all apologe for not grasng the fragileature of the finanal system but i don't see why chicago in particular. >> reporter: these days, economics muscles its way io etty much every subject matt -- istory, the environment, en a bit of self-help. t it's a cani of orthodox economs

if i you ak people today f you suld spend more mone to stimulate the econy or not spenmore money because of concerns of the deficit,t's close to 60% sa we houldn't spend more money. he's gotten himsel flatened down but still has, as chuck suggests, there's a lot goodwill out there for him, and i think the white housepeople believe that he has strong support from s suppters. in other words, his ba is very solid and thas important. gwen: s, alexis,does that mean the people who e not his supporters and en some who are his suporters but who are nervouright now, do they ok athe numbers and ay ok, i' got a way to push back the presint's priority? >> absolutely. i've beecovering the senate and paying lot of attention to the t republicans who looked at ll the dynamics dan ju talked about, very popular esident, as chuck was saing. what can do with a popuar present? well, what they' looked at is thedetails about how you can find room to bring him down on the ideathat he's not as popul on certn policies, s th're not trying tobe personal, per s except for a w senators. but they ant to attack himon p

the consumer is the heart and soul of the american econy. >> the outlook for consumer confidence is dismalthis recent setback may only be not only temporary. new numbers for back-to-school shopping so sales were down 5% from a year ago. pamela brown, abc 7 news. >> tnk you. >>> rising unemployment means more people cannot afford to keep their homes. b loss is the number one cause of foreclosures. payrolls fell dearly $250,000 last month. economists estimate nearly 2 million people will lose their homes this year. that is up from 1.4 million last year. those in foreclosure may still be able to keep their homes under a new bill that would allow federally regulated banks to rent out properties for up to five years to help stabilize the markets. >>> the cash for clunkers programs has been moving a lot of cars, but it is hurting some charities. people are cashing in their clunkers, so donations to nonprofits are down. one in prince george's county received 7400 cars. this year, donations have dropped by 25%. the obama administration is tripling the number of people who handled the paperwork wit

free trade, in all economists without exception, i am talking about economists, not politicians, all econies do agree the free trade is essential and is positive. it has been demonstrated by theory and practice. the question is, why is it that noneconomists are against free-trade? it has to do with one of the characteristics of economics, it has to do with the fact that it is not a popular science. people do not like economists, people do not like economics and you understand why. economts work globally. we say free trade is good for you as a group, for you as a nation,ut if you happen to be a worker in an industry which disappearsecause of chinese competition, to hear that free trade is good for you is completely irrelevant. you have this contradiction in economics between discourse, which is a global discourse, free trade is good for you, and the individual perception of free trade which can harm singh individuals. this is why it is extremely important that the government, the national government or whatever, would take care of the negative consequences of free trade and other economic mod

econy, little sectors like manufacturing and agriculture, made substantial gains in market share versusiers from other countries. i can tell you that firsthand that the business community has found them extremely helpful. to close, i'd like to offer just three brief recommendations for a trade agenda that i think the obama administration can embrace. earlier this year the chamber issued a report entitled international engagement. it will be on the website. this is a much more extended version but i'll stick to my three points. first, go on the offensive. the administration will be stuck playing defense against protectionist measures like buy american until it devises a forward-leaning trade agenda of its own. as prize fighter jack dempsey used to say a best defense is a good offense. if the administration had already done that, would the absured trade act put forward by congressman mike michaud and sherrod brown would have attracted more than 100 supporters in the house? of course not. the internationalists who run the administration, folks like larry summers, ron kirk, hillary clton, t