Poof! That was the sound of approximately 62,000
jobs vanishing from the U.S. economy last month.
June marks the sixth straight month of payroll declines.
As for the month of May’s half percentage point spike in
the unemployment rate to 5.5 percent- it stayed the
same for June as well. It appears that the huge
percentage jump in unemployment was due to a lousy
economy and was not just a statistical fluke.

May and April’s job destruction number’s were revised
as well- it turns out that companies shed 52,000 more
jobs than the government originally estimated. The total
number of jobs lost for the first half of 2008 stands at
438,000.

The construction, manufacturing and temporary-help
sectors took the heaviest losses. Payrolls in the construction
trade declined by 33,000, factory employment fell by
43,000 and temporary employment agencies shed 30,000
jobs. The retail and financial sectors reduced staff as well.

Those with jobs brought in less money in June than they
did a year ago. Hourly earnings rose a paltry 6 cents, or
0.3 percent- the slowest pace of growth since September
of 2005. Over the past year, wages have increased 3.4
percent while consumer prices have risen 4.2 percent.

The economy has yet to experience a quarter of negative
growth. It seems that economic growth is being supported
by exports and government stimulus checks. That is really
quite sad. The American economy will not survive on exports,
and the boost provided by the stimulus checks has already
come and gone.

This pathetic report should lay waste to the idea that the
worst is behind us, and that brighter days are ahead. The
bursting of the housing and credit bubbles is now sending
shock waves through the real economy. Over the past several
years, America was living the good life on borrowed money-
it supported consumption and therefore economic growth
and job creation. We are now experiencing the hangover
from a wild and reckless orgy of debt accumulation- and
this one will not fade quickly.

© Greg Strid 2008

Maybe, instead of letting all of the useless hot air
generated in Senate hearings on the evils of speculation
with regard to record high energy prices, it should be
harnessed to power Washington DC. This would be real
action that could actually drive down prices, whereas
pointing fat fingers at speculators only makes headlines
and does nothing to address the real causes of the energy
price explosion.

The nasty combination of rising demand from emerging
economies and the downward spiral of the US dollar is
driving prices increasingly higher- speculators are merely
acting on current market conditions. ( Physical “barrels”
or “bushels” of commodities do not even change hands,
and the overall dollar value of futures contracts traded
is dwarfed by the value of goods actually consumed.)

A few weeks ago, Senator Joseph “Droopy Dog” Leiberman,
-Independent in name only- was slaving away on a
ridiculous proposal to ban large institutional investors
from participating in commodity markets altogether.
Bravo, a-hole. Droopy’s behavior seems to fit a long,
boring and destructive pattern. God forbid blame was
assigned where it actually belongs- this would cost
votes and create even longer and sadder faces in the halls
of government.

The silliness in DC is just another instance of shallow
politicians seeking scapegoats to appease a restive and
angry public- a public that has helped create the massive
rise in energy prices.

The American consumer has also fueled the growth in
emerging economies by blindly purchasing all that hums
and whirs- and to top it off, the money spent was borrowed
equity from over-inflated home prices- which is also helping
to drive the dollar lower. (Most of those nasty subprime
loans doled out like crack candy over the past few years
are souring, making US dollar denominated assets all the
more unappealing to global investors, which has helped
fuel the dollar’s decline.)

Pointing fingers solves nothing. Americans, and their
idiot representatives in Washington, will be forced to
clean up the mess they together have made. It will be
painful. It will take a long time. But, it is inevitable.

© Greg Strid 2008

A portrait of gaming billionaire Sheldon Adelson. I used a photo from a recent New Yorker article as my source.

This slightly strange assortment of goods is the end result of a shopping trip that I took this week. From left to right: 10 boxes of 100 mini lights purchased from Bed Bath and Beyond ($1.49 each), 2 boxes of Trader Joe’s English Breakfast Tea ($1.99 each) and one box of Trader Joe’s Green Tea (just over $2.00)- each box has 48 tea begs, and finally, an “end of days” or “I live in Jersey City” water supply- 4, 3 liter Poland Springs water bottles ($1.69 each with Duane Reade’s Dollar Rewards Club card). This is the way I shop. The Xmas lights I use all year round- and when big stores unload out of season inventory, I bring my largest backpack. Trader Joe’s tea is quite good and it’s dirt cheap. The water wasn’t that big of a steal, but the bottles have handles and can be stacked. I hope you take advantage of bargains whenever they come your way- let me know if you find anything interesting out there (cheap chain saws, dynamite, Super Soaker Water Guns, etc.) and I’ll spread the word. Got to go now, I’m off to plug in the 1,000 lights I bought.

If you head out to the beaches of Coney Island this summer, and you are relying on public transit, I suggest that you visit Coney Island Buffet on Mermaid Avenue, one block from the F train’s final stop. I do not, however, suggest a prolonged stay because you will miss out on the last bastion of freakishness left in NYC. But, the two fine, cold Modelos pictured above were obtained for a paltry $5.00- where else in pricey NYC can you match, let alone beat that? By the way, the beaches at Coney Island are wide and clean, and the water free of rank odors- so I suggest that you brave the F train and enjoy!

Record high oil prices and a warning about inflation
from the Federal Reserve smacked sobriety into
investors in US shares yesterday. Oil traded at $135
a barrel, and the minutes from the Fed’s late April
policy meeting implied that further interest rate
cuts are unlikely due to rising prices for goods and
services.

For the past few weeks, stock prices were merrily
marching higher. Investors were ignoring the
continuing demise of the housing market, weak
retail sales, paltry consumer confidence readings
and pitiful numbers from the labor market. Now,
global inflation is handcuffing the Fed’s ability to
deliver monetary stimulus to the economy.

Consumption (some would add “mindless” to this
term) drives this nation. By most estimates, it
accounts for approximately 70 percent of overall
economic activity. For years, consumers borrowed
heavily against their homes, or just outright, in
order to fill their lives with shiny things. Now, their
homes are no longer assets from which to borrow,
but liabilities from which to run. And, despite the
Fed’s feverish interest rate cuts, credit is getting
harder to come by.

Now inflation is gathering steam. Oil and food prices
are reaching record high levels, leaving consumers
with less money to spend at malls and food courts.
A vicious cycle is developing. Higher prices lead to
lower spending, which reduces profits and employment-
and this drives spending lower still.

Wall Street may finally be realizing what is really
happening on Main Street. But, the party could
easily last several months longer- with the final
round of drinks to be served this fall.

©Greg Strid 2008