Services are provided in native languages by bilingual attorneys: divorces, local and international, consultations about family matters by top experts, Hague Convention, child support, alimony, adoptions, wills and trusts, legalization of foreign divorces, registration and legalization of foreign documents, apostilles, mid-marriage agreements and prenuptials, restoration of vital documents, all matter related to the United States, former USSR territories, Europe, Israel and Australia.


The stock market has been a see-saw ridden on one end by the desire for returns and on the other by fear. Glimmers of recovery squeezed from dubious statistical measures ramp up investor appetite for risk and buoy stock prices until hopes are dashed by another dour economic report or event re-igniting fear and dousing market enthusiasm. While the market has recovered from its nadir, slow rebounding corporate profits will drag stock performance down as companies adjust business models to a new environment of tighter credit, stingy consumer spending and closer regulatory scrutiny.

Investors in today’s market would do well to keep mindful the lyric from the song “Cool” by Stephen Sondheim (music by Leonard Bernstein) in the legendary Broadway show ‘West Side Story: “Boy, boy crazy boy / Get cool boy / Got a rocket in your pocket/ Keep coolie cool boy.” Patience, calm and caution are the watchwords of the day.

The economy is at a crossroads and may take a number of directions according to a recent Wall Street Journal commentary:

1. Another Great Depression. Thanks to the Obama stimulus plan this scenario is considered most unlikely at this stage of the U.S. recession although entirely possible in Europe where the central bank has been more tentative in employing direct fiscal intervention.

2. A Quick Rebound recovery. This is akin to the rebound effect of a Bongi jump when at the lowest point of the fall tension causes an opposite upward reaction. The tension in economic metrics is found in tax incentives, direct government spending and lean inventories that eventually are restocked as pent up consumer demand restarts production. With so much wealth having evaporated and consumer habits perhaps changed for some time to come, however, a quick rebound also seems unlikely.

3. A Lost Decade. The International Monetary Fund observed recently that recoveries from global recessions due to financial crises are typically slower. The U.S. economy could languish for some time were housing prices to continue to decline, U.S. consumer’s remain reluctant to start spending and the rest of the world in no shape to buy our exports. Sluggish growth, the present levels of U.S. Treasury debt and budget deficits would invariably lead to rising interest rates as bond holders demand higher returns for perceived riskier U.S. debt. Inflation in general, is less feared because demand is historically low and not expected to suddenly explode. Rising interest rates, however, would pressure corporate profits and frustrate efforts to spark a housing recovery. This scenario in a milder form than Japan experienced in the 1990s seems to be where we are headed by most economist accounts.

The “Keynesian Multiplier” (stimulus spending increases GDP by a multiplier of each dollar spent), a controversial economic theory of government investment impact is expected to begin to kick in later this year at the earliest. The exact impact, however, will be debatable and difficult to measure.

To be sure, in the end, many companies will cease to exist and those surviving will emerge from the storm leaner and stronger (like a tree after trimming).


There has been some slightly encouraging economic news but one must resist the temptation to wear rose colored glasses. Below are some thoughts on some sectors of the economy and various aspects of government Stimulus programs.


Stress Tests: The Treasury’s so called stress test, ridiculed and scorned when first announced, has been a success. The object in the first place was to boost market confidence by separating the relatively strong of 19 of the largest banks from the relatively weak relatives. This as hoped removed the taint of uncertainty plaguing all 19. The weak links were required to and largely have raised capital to increase Tier 1 capital (common share equity regarded as the highest quality level of capital). Wall Street has responded positively.

Toxic Assets: Recall that initial the TARP funds were to be used to buy bad loans on the bank books. Instead funds were loaned and/or invested in banks, AIG, Freddie Mac and Fannie Mae and the Chrysler zombie and GM overweight auto behemoth. On the banking side it now appears that toxic asset purchases will not occur because:

1. Banks are more stable after an initial panic.

2. Change in “mark to market” (adjusting stated asset cost on financial statement presentation to the present fair market value) accounting rule alleviates some pressure by allowing relief from fair market value when there is no properly functioning market for an asset

3. Lack of eagerness on the part of buyers to participate in the program.

4. Stress testing has calmed the stock market fear about bank resiliency.

5. Banks have again been able to borrow money on the bond market without FDIC guarantees at reasonable rates above the U.S. Treasury yield.

FDIC. Chairman Sheila Bair in the agency’s first quarter report states that troubled loans are expected to accumulate. In the first quarter real estate loans accounted for 84% of the first quarter increase in loan delinquencies indicating that the commercial real estate sector is becoming a growing problem for the economy. The FDIC will raise an additional $5.6 billion in reserves through a special fee assessed on its member banks. Presently there are 305 banks on its problem list, nothing like in the Great Depression, but highest since 1994, and likely to grow. I believe that we are past the worst shock of large bank failures although many smaller banks holding many commercial loans are likely to succumb to poor loan decisions.

Profits. President Obama said in NYT Magazine interview on May 3, “what I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector where such a heavy part of our overall profitability over the last decade.” In other words, without the risky hedge fund investments and investment banking profits, banks will again function as banks, risks will be measured, and profits lower and ultimately more sustainable.


Despite some positive signs, the housing market continues to be the bane of attempts to stabilize the economy. The Congressional Oversight Panel on March 6 reported “America is in the midst of a home foreclosure catastrophe.” This calamity continues despite efforts at containment. The national Association of Realtors reports that foreclosures are dragging down the price of U.S. homes by 14% while 12.1% of all U.S. homes are delinquent.

The Hope Now (Bush October 2007) failed because most modifications permitted only the payment of arrearages over time. The Hope for Homeowners (Obama) called for loan modifications to 90% of the fair market value of a home but failed because lenders balked at talking the asset write down and financial statement loss. Making Homes Affordable is the latest program which also has a high likelihood of failure because:

1. Although banks receiving TARP funds must participate too few homeowners will qualify.

2. Rising ranks in unemployed has created a class of homeowner for whom modification or refinance will be irrelevant. A family without a breadwinner cannot afford any mortgage.

3. Mortgages are difficult to refinance or modify for many reasons, including:

a. The complexity of Collateral Debt Obligations secured by bundled and re-bundled sub-prime loans leaves a vacuum of authority.

b. Mortgage servicing companies lack the staff or authority to negotiate.

c. Mortgage servicers generally make more money if the loan is not modified.

d. Some mortgage contracts forbid modification.

e. Second mortgage holders refuse to execute waivers requested by the first mortgage holder seeking to modify.

4. Mortgage rates had been lowered by the Fed buying U.S. Treasury obligations pushing up the price and lowering the yield. This action lowered mortgage rates making refinancing more achievable and home financing more affordable. This past month the Fed did not take such action and mortgage rates edged upwards. It is said that each 0.10 change in mortgage rates effects a $1 change in home prices.

5. While the inventory of listed homes has shrunk, the shadow inventory of foreclosed homes is still increasing.

Congress to date has rejected the call of many to give bankruptcy judges authority to modify or “cram down” mortgages. The lending industry argues such authority vested in a judge would further tighten lending and raise interest rates. The housing dilemma must be solved for the economy to fully accelerate back to growth. Last month the number of pending sales contracts increased but it remains to be seen if buyers will qualify for loans.


Ford is relatively healthy and did not request or receive government funds. Chrysler was dead and didn’t know it and GM was overweight, had clogged arteries and needed life support. Why did the government step in to save GM from liquidation? There are reasons:

1. The collapse of GM would have wrought an avalanche of job losses at a time when the economy was already suffering through a huge job contraction. You know that times are bad when shedding 532,000 jobs in a month (May) is considered positive news because it is down from 545,000 jobs lost in the previous month.

2. GM has a going concern value (the value of the company assuming it continues in business) deemed to be greater than its liquidation value (value from selling assets, paying creditors and distributing what is left, if anything, to shareholders).

3. Possible unstated reason: the U.S. government may believe it needs to retain a certain level of manufacturing know how and capacity in the automotive sector in the event of a major ground war on the scale of WW II.

Present shareholders will be wiped out in any event when GM transfers its keeper assets (Cadillac, Buick, Chevy and GMC) to a new corporation (New GM), delists from the NYSE, and becomes a private company (owned by the U.S. (60%), Canada (12.5%), the UAW (17.5%) and bondholders (10%)). New GM will be able to focus on fewer but higher quality new models for fewer divisions and will have pared down labor costs that should make it more competitive. If successful there will be a new IPO. The structured bankruptcy (meaning many details worked out in advance) will avoid much protracted litigation with suppliers and dealers. Potential disputes will come, however, from allocating expenses between Old GM and New GM and determining service pricing. The big questions:

1. Will consumers start buying new cars again in the numbers of the past instead of clinging to their old clunkers?

2. Will vehicles meeting the new more stringent fuel efficiency tests be attractive to consumers?

3. Will GM avoid gimmicky name changes and design fads in favor of annual quality enhancements and gradual more subtle style changes that provide lasting value and cement customer loyalty (as Toyota and Honda have successfully done)?


State budgets represent another Catch 22 in sorting out how the economy will dig out. State budget shortfalls demand higher taxes and fees but higher taxes and fees shrink consumer spending aggravating the recession and furthering shrinking state revenues. Home values, income and spending must increase for states to retain a secure fiscal footing that will, in turn, enable borrowing on the bond market for projects at affordable rates.


A shock wave swept across the investment world when Standard and Poor’s suggested that the UK’s credit rating might fall below AAA. UK had just experienced the first failed debt auction since 1995. It is projected that UK debt will climb to 97% of GDP by 2013. The U.S. is a much larger economy but debt is projected to climb to 83% of GDP by 2019 (presently at 41.5%). Standard and Poor’s is not now considering lowering the U.S. debt rating but the threat is there with budget deficits rising to unprecedented levels. Treasury auction prices recently fell due to these concerns and a greater appetite on the part of investors for higher risk and higher returns (i.e., investors are not so fearful that they will buy U.S. T Bills at a zero return to park money for safety. They are again looking for higher yielding investments). This ebb and flow of fear has been going on for months now as economic concerns and concurrent fears of political instability around the world heighten and ease.

The biggest U.S. creditor and biggest player in all this is China. China’s sovereign wealth fund (government investment fund) holds $1 trillion of U.S. Treasury debt. China has raised concerns about these investments and some have suggested that China may bail out of the U.S. debt market leading to astronomical interest rates and with devastating effect on the U.S. economy. This is unlikely because:

1. There are no buyers in the market for $1 trillion in U.S. Treasury debt.

2. China depends on the U.S. consumer to buy its products keeping prices cheap by not allowing its currency to fluctuate on the market which would take the Yuan to a higher value vis a vis the dollar. A higher priced Yuan would make Chinese goods relatively more expensive in U.S. markets and U.S. goods less expensive in China. The currency issue is a sore subject between the U.S. and China.

China could slow its new purchases of U.S. Treasury issues, however, making an immediate impact on interest rates throughout the U.S. economy.

The recent higher yields at U.S. Treasury auctions means that investors are also not buying the claim that the U.S. economy will grow at 3.2% (Congressional Budget Report) when growth resumes or that fiscal responsibility will become the new paradigm in Washington. Thus, the real test of confidence in U.S. debt will arrive in a couple of years when the recession is history and investors feel more secure about the economic and political climate. That is when we could see sharp increases in interest costs.


The Targeted Asset Loan Facility in the U.S. has stimulated securitizing ABS or asset backed securities (e.g., auto loans) in the U.S. but the market is completely closed in Europe. ABS multiplies the availability of credit in the economy and fosters growth. There is nothing wrong with the device. Bad loans should not be made. And, securitized loans become riskier when they are re-bundled again and again further removing the investment portal from the underlying loan transactions.


The freewheeling U.S. consumer has become suddenly frugal. Living within one’s means and being fiscally responsible has been preached. Now, the admonition is being followed at an inopportune time. Consumer spending must increase to secure a vibrant recovery. The shock therapy of experiencing an economic collapse almost guarantees that the spending will simply not be as rampant as before. The business model of borrowing heavily to expand is outmoded replaced by more conservative business reality. Businesses not adjusting to this new environment will vanish from the scene.


Moore’s Law describes the geometric rate at which industrial change will occur. We should not overlook the new great next thing sure to come along. For example, some scientists foresee machines with superhuman intelligence. This may be frightening to those familiar with Karel Capek’s play R.U.R. (Rossum’s Universal Robots), but invention poses the always intriguing and terrifying prospect of tremendous economic growth and the question whether the achieved prosperity is worth the toll on humanity.

© 2009 by Robert S. Steinberg, Esquire, Miami Florida
Articles and consultations authored by attorney reflect the state of law as of the date of their writing. The laws change daily. Users of this site are advised to consult attorney regarding their situation.
russian divorce services Payment by credit card
The highest compliment you can pay me is the referral of a friend or a relative.
+1-212-205-2211 New York
+1-212-574-3288 New York (Fax)
+1-617-850-9199 Boston
+1-310-929-8444 Los Angeles
+7-495-662-8721 Moscow
+7-921-946-0582 St.Petersburg
+7-812-309-5697 St.Petersburg (fax)
+38-044-392-8634 Kiev

Divorce in Russia ©

Copyright © 1998-2021

Russian attorney at law Karina Duvall.

Terms and conditions of Russian-Divorce PC