Bush's free-market speech sets summit tone

Rising unemployment is expected to force more homeowners into default. Congressional Democrats are calling on the Treasury to step up efforts to provide more direct help to homeowners.

On Friday, a House panel is scheduled to hold a hearing to look at whether the Treasury is moving aggressively enough to use its bailout funds to stop foreclosures. Kashkari is expected to testify.

Congress may get another chance to review the Treasury’s progress soon. So far, roughly $290 billion has been spent or committed. Under the TARP law, the Treasury only has access to the initial $350 billion of the $700 billion package. To access the second $350 billion, this administration or the next will have to make a request to Congress for the money.

In any case, the suspension of the plan to buy bad mortgage-related investments leaves the longer-term fate of the program in limbo.

“The emerging tug-of-war about how to deploy the TARP resources between the Treasury and the Congress could unravel much of the progress that has been made since mid-October,” Brian Bethune, HIS Global Insight’s chief U.S. financial economist, wrote in a note to clients.

Now, as leaders of the world's 20 largest economies gather in Washington, they’re expected to call for greater global cooperation and regulation of financial markets. Many of those leaders fault the excesses of U.S. free-market capitalism, and a lack of regulation, for the current economic turmoil.

In a news conference Wednesday, Paulson conceded that reforms are needed. But, in an apparent preamble to this weekend’s meeting, he said there are more problems facing the global economy than a wave of failed risky bets on Wall Street.

“(The) excesses cannot be attributed to any single nation,” he said. “There is no doubt that low U.S. savings are a significant factor, but the lack of consumption and accumulation of reserves in Asia and oil-exporting countries and structural issues in Europe have also fed the imbalances."

The global nature of the worst financial crisis in 80 years came into clearer focus this week. With the downturn apparently accelerating, the Organization for Economic Cooperation and Development cut its economic forecasts for the United States, Japan and Europe, saying all three were headed for recession. Germany, Europe's largest economy, reported that its output shrank by 0.5 percent in the third quarter, the first contraction in five years.

AP New home sales drop as recovery teeters   The housing market is in the midst of a rocky recovery, but it’s too soon to declare the end of one of the worst slides since the Great Depression. New home sales fall to lowest level since March Incomes rise at fastest pace in six months Home sales surge, boosting recovery hopes Advocates want more for black unemployed

The once-sizzling Chinese economy also is cooling, with industrial growth slowing in October to its weakest pace in seven years as manufacturers scaled back production. The Chinese government unveiled a $586 billion economic stimulus package, briefly cheering financial markets. But as consumers cut spending sharply in its primary markets, Europe and the United States, the problems facing Beijing’s leaders will likely worsen.

At home in the United States there are few positive signs. More than 500,000 people filed new claims for unemployment benefits in the latest week — the worst showing since the weeks following the Sept. 11, 2001, terrorist attacks.

Retail sales plunged by the largest amount on record in October as the financial crisis and the slumping economy caused consumers to sharply cut back on their spending.

Obama and other Democrats are proposing a new package of fiscal stimulus and help for ailing U.S. automakers, but such measures are likely months away from enactment. Japanese politicians are debating the details of their own pump-priming plan and the British government is expected to follow suit in a report later this month.

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