Image from Time.

You may have heard the phrase “Bull market” when the Stock exchange is going up.

Then there’s “Bear Market” when stocks are heading south.

Right now we seem to be in a”Kangaroo Market” where the markets are wildly jumping all over the place.

After some great rises in recent days, stock markets Thursday lead off like lead balloon.

The Standard & Poor’s 500-stock index fell 3.9% before noon. The NASDAQ and the Dow Jones Industrial average fared similarly, dropping 5.2% and 3.68% respectively by close.

Our neighbors across the pond are facing similar economic downturn– London’s FTSE 100 index ended the day down 4.5% and Germany’s Dax lost 5.8%. The possible causes are numerous and range from gas prices rising 4.7% to rampant concern over a return of the dreaded r-word…recession.

The Economist has helpfully pointed out, however, that market falls do not necessarily indicate recession, and frequently occur in the midst of economic recovery.

Does this kind of drop bode well for the U.S. economy? We certainly hope so.

No, we’re not talking about salsa or hummus, we’re talking about the economy!

Over the past week, a number of factors have led to increased speculation of a “double dip” recession.

Anxiety over jobs, a slow growing GDP, and a first-time downgrade in the U.S.’s credit rating are all contributing to fears of the economy slipping back in to a recession.

On Friday, Standard & Poor’s lowering of the country’s top-level credit rating led Christina Romer, former Chair of Obama’s Council of Economic Advisers, to describe America’s future with some less than savory terms.

Pretty darn f#&%ed”

She may be pretty darn right..

Thanks to NPR!

A Happy, Healthy Meal: McDonald’s announces changes to its most famous order.

Call your legislators! Congress flooded with calls about the debt ceiling.

Another race gap? Recession has hurt minorities most.

Two more years! FBI Director’s term extended for the first time.

And, how natural are “natural fragrances?”

Traditionally, Memorial Day weekend has signaled the start of the summer vacation season. But in recent years, the economic downturn has made the holiday nothing more than a tease.

Over the past three summers, the travel and leisure sectors have been hurt by the surge in ’staycations,’ the stay-at-home alternatives for people who couldn’t afford destination vacations.”

This year, according to NPR, the tease is over!

Now that people are feeling more secure in their jobs, the travel and lodging industries are both predicting a healthy (or at least a healthier) vacation season ahead.

Not to bring you down: While job security might be becoming less of a thought, ever-increasing gas prices are still on the mind of many Americans.

Thanks to Economix

Bought gas lately? Not a pleasant experiece for the wallet.

Gas and other energy aren’t as cheap as they used to be.

As power prices go up, our spending power goes down.

Check out the chart above… Motoko Rich of Economix noted that

with real incomes falling and the prices of basic goods rising, this might not bode well for consumer spending and in turn, the fragile recovery.

What’s so bad about people buying less TVs, toys, and food? Well, if nothing else this stuff fuels our economy which is now expected to grow at a slower rate.

To make matters worse wages are hitting record lows, ZERO to be exact.

Katherine Reynolds Lewis notes that working for free, although not ideal, gives the worker valuable experience and a chance to prove themselves. With a hat tip to R.A. at Free Exhange who explains the trend by noting that

If it’s worth taking on someone to do a job, it’s probably worth paying them something. The problem is that there’s a discontinuity in the wage spectrum. Pay above the minimum wage is legal, and no wage at all is (probably) legal, but a positive wage less than the minimum is not. Market clearing job matches at wages between zero and the legal minimum can’t take place.

Unpaid labor is a sad truth for bloggers (hint hint) but would you our readers take a wage-less position over joblessness? Also, even if you are being paid is the price of things pinching your pocket?

Thanks to Wikicommons

Some of our readers may recall we recently suffered from a minor inconvenience called “the World Financial Meltdown”.

If you are still asking yourself, How the @#$%&!! did that disaster happen?…we have good news!

The US Government has the answers in the Financial Crisis Inquiry Commission Final Report.

It is a beast of a report so rather than have you wade through hundreds of pages of financial analysis, we’ll let the Internet do the mining for you.

The wonderful financial blog Calculated Risk highlights the reports BIG conclusion that the

financial crisis was avoidable. …

Despite the expressed view of many on Wall Street and in Washington that the crisis could not have been foreseen or avoided, there were warning signs. … Yet there was pervasive permissiveness; little meaningful action was taken to quell the threats in a timely manner.

Expanding on the points produced in the report Calculated Risk describes

the keys to the crisis are 1) the willful lack of regulators to do their jobs, combined with 2) the rapid “innovation” in the mortgage market

For a deeper look at who’s to blame check out Frum Forum’s collection of posts on the report.

The system may have failed in the past but this new information should let us prevent future meltdowns right?

Don’t count on it.  As Sewell Chan, of Economix, notes:

The Wall Street overhaul enacted last year hopes to blunt the impact of such boom-and-bust cycles — by reining in the use of exotic financial instruments, better supervising big banks and limiting the damage if one of them fails.

But the first two efforts are under attack by the new Republican majority in the House, and the new process for containing the fallout from a giant bank’s collapse is untested. Meanwhile, the financial sector’s outsize role in the economy hasn’t changed; the giant banks that were considered “too big to fail” have only gotten bigger.

Not very comforting is it?

Thanks to Wikimedia

Everybody can remember a bully in the playground from their youth. This big nasty character would take candy or money from innocent little ones.

You better watch out! Today some of these bullies have grown up and may be after your house!

There has been a crisis in the housing market where big banks (who own the loans on homes around the country) have been falsely repossessing houses.

Here’s what’s been happening:

Banks make loans to individuals and resell the ownership of the loans to investors.  To do this Stephen Ganel, of Time, notes

the banks had to file and retain paperwork that transferred the ownership of the mortgages from the original lenders to the new investors. Well, it appears the banks bungled that process, or at the very least in a number of case, in potentially many cases, they lost the paperwork.… (then)the banks tried to cover it up.

To deal with the missing paperwork, Calculated Risk notes, banks used

“Robo-signers” [, who] are individuals who signed affidavits stating that they had “personal knowledge” of the facts in a foreclosure case, when in fact they did not.

Was this just a mistake or was it something more sinister?

To find the truth some of America’s biggest banks temporarily stopped foreclosing and begun internal investigations.   Banks are coming to the conclusion that they have done nothing wrong.

This Monday, Bank of America concluded that their loan process was fine and restarted foreclosing.

Not trusting the banks, 50 state attorney generals have launched their own investigation. Along with this the Federal Government has begun its own investigations of bank practices.

The results of these investigations won’t be in for some time (does anything other than slush money move fast in Washington) but banks are feeling a little pressure.

Foreclosures can depend on the ruling of judges and it seems they are not trusting banks evidence as much as they used to.

In the end this may just be another bump on the road (hopefully) to recovery. Then again, when your looking to buy a house this could change how you look at mortgage and how its filed (ideally not in the circular file).

Even if that is just a bunch of Austrian assumptions (for a better explanation check out the video above) our economy is definitely not in the pink just yet.

With that comes pain and sacrifice for consumers (unless your Snooki who is the center of an insane reverse advertising war).

Economists see more than just sacrifice they see a Petri dish to be studied.  One aspect that is being analyzed is what things are considered “necessities”.

Thanks to Free exchange

As pointed out by the Economist’s Free exchange:

I would not have imagined that the downturn would lead to decline of 20 percentage points in the share of those labeling a clothes dryer a necessity. It suggests that the psychological impact of recession extends well beyond those who remain unemployed.

It also seems that houses may be becoming a luxury:

Thanks to Yglesias

Houses may become a luxury but an economic downturn doesn’t have to stop you from living in a mansion for free.

Speaking from experience an abandoned mansion is a great place to blog from.  Don’t take our word on it: find a mansion, fire up you laptop and drop us a comment.  Writing comments is a penny pinching way to have fun.

Thanks to Wikicommons

Are You about to become EXTINCT?!?  If you are a member of the Middle Class, we are talking to YOU!

That’s right there are some pretty smart people out there saying the American middle may go the way of the DoDo bird and be found only in museums.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

This is the dark projection Michael Snyder provides via Yahoo! Finance.  The article provides a number of shocking statistics to support this view.

Not only is the middle class being squeezed while they work but their retirements are threatened as well.  Laura Basset of the Huffington Post notes

The percentage of American workers who said they have less than $10,000 in savings grew to 43 percent in 2010, according to a recent survey by the Employee Benefit Research Institute. Nearly a quarter of the workforce said they have postponed their planned retirement in the past year and a CareerBuilder.com survey reports that 61 percent of workers say they are now living paycheck to paycheck, as compared to 43 percent in 2007.

Such a large issue can’t suddenly appear; why hasn’t the collapse of the middle class been noticed before?  An excellent piece by Edward Luce of the Financial Times answers this noting that

For years, the problem was cushioned and partially hidden by the availability of cheap debt. Middle-class Americans were actively encouraged to withdraw equity from their homes, or leach from their retirement funds, in the confidence that ­property prices and stock markets would permanently defy gravity (a view, among others, promoted by half the world’s Nobel economics prize winners, Spence not included). That cushion is now gone. Easy money has turned into heavy debt.

There is truth in this statement but the collapse of the American middle class has been noted before.  It was so long ago we forgot.

The great American middle class, the provocateurs contend, is no longer so great. It is shrinking steadily, goes the theory, and shedding its members into the economic extremes of wealth and poverty.

This is part of the opening paragraph from a Times article written in 1986.  Fears of a disappearing middle class are nothing new.

If this problem has been seen as a threat for so long is it really a problem than?  The middle class survived the 1980s can’t they survive the 2000s?  That will have to be seen but this recession has far surpassed its post War predecessors.

Thanks to Democracy in America

As reported by the Economist’s Democracy in America the duration of unemployment has increased to levels previous unseen.

This would make one believe things are worst than before.  However, the US middle class has over come in the past so perhaps they can continue to soldier on.

Frankly, we at US Democrazy have no idea.  What could really help us, and you, understand the state of today’s middle class would be for our readers to report what the US  (or other countries) economies are like in their area.  So stop just reading and start reporting; we’re glad to listen for a while.

Thanks to Wikicommons.

We have some bad news for you.  Brace yourself here it comes:

US payrolls GREW by 431,000 in May.

Bad news? that sounds like good news!?! Well it’s not good news… as economists expected 540,000 new jobs.

But wait, there is more.  Free Exhange, a blog brought to you by The Economist, notes:

Most of that big figure—fully 411,000 jobs—is attributable to temporary census hiring. The underlying employment trend looks quite weak. Private employment rose by just 41,000 in May, down from an increase of over 200,000 in April.

As shown by a drop in stock markets, after the job report was released, people are worried about unemployment.

However, not everyone is worried.  Dian Chu, writing for Zero Hedge, makes the reasonable point that

the big picture of the employment trend needs to be the key takeaway from the latest jobs report

…

Overall, the labor market is trending in the positive direction. Smart investors would focus on the fact that the US economy is improving vs. three months ago

So what should be the takeaway from last month’s job data?  We have no idea (we’re bloggers not geniuses).  That’s why we’re turning to you our readers.  Maybe if we all put our heads together we can find the answer.  Or maybe we’ll end up getting no where.  Either way it should be an interesting discussion.