While the announcement of the resumption of direct talks between the Palestinians and the Israelis is certainly an encouraging one, the buzz since the talks were scheduled has definitely been downbeat. Chalk it up to expectation management or perhaps just a bout of skepticism given the past history of talks between these two sides, but while all but genuine enemies of peace welcome the talks, few expect them to produce a breakthrough.

Further, the talks themselves run counter to a trend that has many in the world worried. A "be careful what you wish for" moment has arrived. For all those who wanted America to stop meddling beyond her borders, less meddling is just what they're getting. Or at least less effective meddling ... which is to say less well-funded meddling backed by much less political will to meddle back home. 

Veteran Mideast watchers are in fact, worried that the United States is losing overall influence in the region because our body language in the region is so bad. Sure, we've added substantially to our force structure in Afghanistan, led the move to place targeted sanctions on the Iranians and pushed for this new round of direct talks. But at the same time we're sending another message with the final pull out from Iraq, the waning support for our presence in Afghanistan, the clear lack of appetite for any military confrontation with the Iranians or anyone else. 

At the same time, in Latin America, there is a general sense America has become disengaged except to the extent that we have beaten up the Brazilians for coloring outside the lines on Iran. In Africa, America continues to do little beyond lip service and as in Latin America, even friends of the U.S. figure they had more attention from the Bush Administration. In India, it's the same. The president is heading there. But the Indians wonder what, if anything, the Americans are inclined to deliver to strengthen the relationship -- especially since what Bush gave, the nuclear deal, was so important to New Delhi. The Chinese watch America bogged down in Afghanistan and Pakistan and realize that given our limited bandwidth, it restricts our ability to effectively deal elsewhere. The Europeans are happy with this stance ... the Russians especially so. 

The question on the mind of the world is, "has America changed?" On my last trip to Asia, the question I got most often was "when are things going to get back to normal." They meant the economy, of course. When would we become the locomotive we once were for global markets? But it extends beyond that. They worried that the world's policeman might be calling in sick at just the wrong moment in the near future.

While there is something satisfying about this to Americans who hated the double standard of being depended upon and resented simultaneously...and while it must frustrate Obama officials who are working hard to manage what they see as a rich global agenda...it is a real issue, at least judging from many of the conversations I have had recently with international officials visiting Washington. They might not want the United States to be what it was under Bush, might hate the idea of U.S. intervention in a place like Iran, but they wonder what will happen if they need the United States in some place relevant to their priorities and the U.S. simply won't answer the bell.

To understand the origin of this problem, you have to look to the same issue that is at the core of the political and economic problems Barack Obama has within America's borders. America's sense of its own future, of its promise, of its financial security, and of its strength has one wellspring that is greater than all others and this administration has been stunningly maladroit at handling it. It is, of course, the value of the homes in which American families live.

Look to Monday's New York Times article called "Housing Fades as a Means to Build Wealth" by David Streitfeld. The piece states that economists are starting to doubt that what was perhaps the most important single component of the financial plans of most Americans -- the idea that their houses would gain enough value to provide an important element of their long-term wealth -- may no longer be valid. Baby-boomers approaching retirement find themselves without the resources on which they counted.  A nation without a savings rate to speak of finds itself unable to depend on the savings engine that was almost seen as an American birthright. 

According to the article:

Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.

"People shouldn't look at a home as a way to make money because it won't," Mr. Baker said.

If the long term is grim, the short term is grimmer. Housing experts are bracing themselves for Tuesday, when the sales figures for July will be released. The data is expected to show a drop of as much as 20 percent from last year.

The supply of homes sitting on the market might rise to as much as 12 months, about twice the level of a healthy market. That would push down prices as all those sellers compete to secure a buyer, adding to a slide that has already chopped off as much as 30 percent in home values.

A country distinguished by its optimism may be losing one of the most important sources of that optimism. Yes, jobs are vital. America's current labor crisis is a social and economic disaster and the apparently real prospect of a jobless recovery is chilling in its own right. But even with 15 percent real unemployment, 85 percent of Americans are still working. The home ownership rate, down from a 2004 peak is still 67 percent. And yet, for some reason, despite the fact that it was a mortgage crisis that triggered the economic mess in which we now find ourselves, precious little has been achieved to restore the confidence in housing markets. Defaults are still high, still at record levels in many places. Housing prices are still soft, still far down in many places. 

Home is very much where America's heart is. Home values and family values are inextricably intertwined. Declining prices, insecurity about being able to stay where you live, insecurity about being able to retire, these things eat away at this country's confidence. Recent talk about cutting back on home interest deductions as a way of combating the deficit are therefore not only ill-considered, they are non-starters. Because to even seriously consider such a move would destroy confidence in an already weak market and the resulting collapse would take down the world economy. Other steps contemplated by the Obama administration that would make buying a home harder would have a similar effect.

What's more, it would also make America an even more reluctant actor on the world stage. If you think we are looking increasingly inward now, imagine what would happen if we get a double dip in U.S. housing markets or if people are chronically economically insecure. It would be the effective end for a long time of American involvement in all but the most critical issues around the world. And it would, of course, mean the end for President Obama if it happened on his watch. It's why that the best gauges on which to read his future...and for determining what kind of an international stance you can expect from the U.S. going forward ... are the ones that track American optimism and self-confidence as manifest in U.S. wealth creation either expressed through home ownership, housing prices, employment figures and wages