Summer Reading and Job Growth
Aug 10, 2010
Posted by Jody Eisenman | Filed under Uncategorized
I just finished Lowensteins’ new book, “The End of Wall Street”, one of several books written about the sub-prime crash and the subsequent financial chaos. I would highly recommend this, as well as his previous book about the demise of LTCM (Long Term Capital Management) titled “When Genius Failed”. Anyone interested in the stories of the demise of Bear Stearns might enjoy “House of Cards” and “Street Fighters”.I read about 2-3 books per week, so if want my opinion, please feel free to call or email.
The markets reacted negatively to Fridays’ job report. US private employers (that is, excluding the government) added fewer workers in July, and June’s numbers were revised downwards as well. The stock market tanked on the news, falling over 100 points, but rallied late in the day to close down just twenty odd points. Still, it would seem to many economists (as well as yours truly) that the economy is not recovering anywhere nearly as quickly as was hoped for. In todays’ Bergen Record, there was a very revealing article about the casino industry in New Jersey. When casino gaming was first legalized in New Jersey, gamblers flocked to the tables in record numbers. It was common for people to stand 2 and 3 deep at the blackjack tables! People did not want to use the rest rooms for fear of losing their seat. As gambling revenues skyrocketed, the tax revenue for New Jersey soared. Today, gaming makes up by far the largest portion of taxable revenue to the state. Unfortunately, the politicians never planned on a recession hurting their business. As such, they never invested much money in Atlantic City. Therefore, unlike Las Vegas, where people can walk the Strip at all hours of the night safely, Atlantic City is very different. A walk along the boardwalk or even a couple of blocks from the casinos will lead you into areas of slums, pawn shops and crime. No the recession has hit, combined with legalized gambling in almost every state, the whole industry is hurting and all of New Jersey is feeling the pain.
Meanwhile, consumer credit continues to shrink, while people are reluctant to spend, let alone take on additional debt. In the meantime, the dollar dropped against the Euro, and fell to a 15 year low against the Yen. However, yields continue to drop, with the 2 year treasury going to another record low. One wonders how long foreign investors will continue to invest in such low yielding treasuries in the face of a weakening dollar.
