The Economy Guy

The Dollar continued its rally big time – down to $1.43

Oil, gasoline and gold went down slightly – with oil going down the most.

In the news today…..

Unemployment jumped last week (unexpectedly) to 444,000 – up 15,000.  A decrease was expected.  This increase, being unexpected, had a very negative impact on the stock market.  The current number, being above 400,000, indicates that the recession is still burning.

The service sector index rose last month to 50.6, showing a slight growth going on right now.  This is very good for the economy, and is one of the indices I watch for a final turnaround in the recession.  However, the service sector is a minor part of the overall economy.

The future market regulator, CFTC, is investigating if companies were falsely reporting oil supply levels to bolster gains in their own positions.  It was reported they are looking at July 2007 oil positions – a long time ago in my opinion.  I doubt much will come out of this investigation – a small fine at the worst.  But, it does supply my position that markets are manipulated – and buyer beware.

The ECB is putting steps in place to stop having European banks sell their asset-backed securities to Central Banks at a value great than their real value.  The ECB will immediately discount these securities by 12%.  This is a very different approach than the FED is taking.  The FED is in a full scale bail out.  The ECB is protecting its taxpayers, and causing the banks to eat their losses.  Greenspan has just come out criticizing the FED bailout of Bear Stearns, and recommending a less taxpayer backed method of bailout.