More Pizza And Beer, Mr. Ben

When Ben Bernanke speaks, people listen.

America's counterfeiter-in-chief gave a speech, and the Dow tumbled more than 400 points in three days.

Perhaps it was not his fault.

About anything can spook a stock market, at which time traders exercise their experience and judgment, as cows do in a stampede.

Nevertheless, the chairman of the Federal Reserve has a knack for words.

He said, "The adjustment in the housing sector is still ongoing."

Indeed it is.

Some friends bought a house last week four blocks off the beach in a trendy beach commune. You know it is trendy when there is a Starbucks every 30 feet and the residents wear scarves and capes — and those are the men.

The home's asking price: $719,000. Selling price: $500,000.

An associate saw a house in a golf resort for $420,000. He bought the house next door, similar in size and features, for $288,000. It was in foreclosure.

Adjustments are ongoing all right.

Bernanke further remarked, "We have not seen major spillovers from housing into other sectors of the economy."

This was the fourth sentence of his speech. Up until then, the banker had told only one lie in three sentences, something of a record.

No major spillovers?

Subprime mortgage originations are down about a half-trillion dollars from the good old days of last year, when homeowners used their homes as piggybanks. They withdrew equity to pay off credit cards, which themselves had been maxed out to buy pizza, beer and Starbucks coffee.

If they no longer can get the dough to buy that stuff, retail sales may fall, as indeed they did in April.

Over at dailyreckoning.com, Richard Benson reports, "Since 9-11, 60 percent of job creation has related almost directly to the housing boom and consumer spending, generated from home equity extraction through mortgage refinance."

So jobs are gone, too, although you could not tell that from the rosy government job reports.

Benson says, "The housing boom created an America with over 1,200,000 real estate agents, and hundreds of thousands of jobs in the mortgage and home construction industry."

Many of these people were independent contractors, who do not qualify for unemployment benefits.

Although they may not be making a dime or may be out of the business entirely, the government still counts them as fully employed.

The latest payroll survey says we added 88,000 jobs. This is the government's favorite jobs report, the one you get from the media, the federales' PR apparatus. It is a non-random survey based largely on computer modeling — you know, like the global warming computer modeling, also reported with conviction and enthusiasm.

Meanwhile, a broader measure of jobs, called the household survey, showed a loss of almost 500,000. This is a random survey, an actual count of households. It passes without notice.

But Bernanke, who holds a doctorate in economics, should have noticed. He might have taken it as evidence of a spillover of housing problems into the general economy.

If you don't have the income you once had, and you buy fewer pizzas and beers, then your problem has spilled into the pizza and beer businesses, and their incomes fall. Also, you must forego the enjoyment of those things and many others, such as clothing, shelter and that new car you wanted. Sales are down in all of those industries.

Things appear to be spilling all over the place, Mr. Bernanke.

You can read his speech at federalreserve.gov, but be warned. It is one of those assignments where you start with a pot of coffee and end with a quart of vodka. You may get a hangover that even a trip to Starbucks cannot fix.

Phil Lucas is executive editor of The News Herald in Panama City, Fla. Contact him at plucas@pcnh.com. To find out more about Lucas and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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