One day, the Dow rises nearly 300 points. The next day, it gives it all back. United Airlines (UAUA) is down 99% one minute. A few hours later, it's back to even. In the evening, Lehman (LEH) is solvent. By the next morning, the company has filed for Chapter 11 bankruptcy. Bernanke is forming complete sentences at the start of the day but by the evening...

Fear rules the day. There is a general liquidation underway. About the only things increasing in value in recent weeks are the U.S. dollar, U.S. treasury securities, alcohol sales, and irritable bowel prescriptions. As for the dollar, there has been speculation that the dollar rally is the product of coordinated intervention from the U.S., Europe, and Japan given recent reports of just such a plan being drafted back in March. Given the fundamentals in the U.S., I wouldn't rule this out.

"Go for a business that any idiot can run -- because sooner or later, any idiot is probably going to run it." Peter Lynch

On Tuesday night, we learned that AIG's (AIG) former Chief Executive, Martin Sullivan, whose "retirement" was announced on June 15th, will be receiving a $47 million severance package. Poor AIG. Imagine how much better the shareholders would have fared if, instead of Sullivan, the board had promoted "any idiot" to the CEO position 3 years ago.

How comfortable would you feel with your plumber if he had to call another plumber to fix his own running toilet? How about a CPA who hired another accountant to do her taxes? What if your pediatrician didn't feel competent enough to examine his own child?

These are the questions that immediately came to mind Tuesday when I read that Wachovia (WB) has just hired Goldman Sachs (GS) to "perform analytics on our loans to evaluate various alternatives." I think Saturday Night Live's Seth and Amy can probably sum it up best. "Really?! Wachovia. Really?"

By now, it's probably safe to assume that everyone knows that oil and gasoline prices have been rising sharply and are near record levels. Even the recently discovered uncontacted tribe in Peru can be seen in this photo (courtesy of Reuters) trying to shoot down a plane for its fuel.

A loss of 49,000 jobs. If only it were so benign. On Friday we added to the heaping pile of rotting economic indicators the latest monthly employment report from the Bureau of (lack of) Labor Statistics. At least this time the headlines don't appear to be shading the report, but they're not fully capturing just how ugly it is.

Let's start with the nonfarm payroll numbers. This showed a loss of 49,000 jobs in the month. Nothing too surprising in the breakdown -- construction and manufacturing down, service-providing up modestly, professional and business services down, education and health services continued their strong steady climb, and our "less is more" Republican-led government continues to grow. The only somewhat surprising number was that leisure and hospitality employment continued to grow despite an obviously stressful time for the consumer.

Yet another housing data point to digest. This time it's the monthly New Home Sales report from the Census Bureau. It looks like all of the headlines concerning the release are touting a 3.3% rise in new home sales from last month (to an annualized rate of 526,000), and a number of articles are once again implying that, again, this may again be yet the latest sign again that the end of the real estate downturn again is here – once again.

Most of the articles I've seen either ignore or glance over the fact that last month's figure was revised down from an annualized rate of 526,000 to 509,000. So, if last month's figure hadn't been revised lower, this month's figure would have been dead flat with last month. Depending on your level of optimism or pessimism, that's either 0% growth or a 0% decline, but it's definitely less than 3.3% growth. It is, however, a nice easy way to manufacture growth. Personally, I'm thinking of revising my April intelligence lower by 10% to boost my self-esteem this month.

It looks like our overpaid Congressfolk are at it again - flexing and preening for the American public. This time, the House has approved a law that would allow us to sue OPEC for high oil prices. They'll debate and pontificate about limiting frivolous lawsuits and excessive malpractice awards but then turn around and pass a law like this? It makes me pine for the glorious days of the Truman-era "Do-Nothing Congress". Good times.

Before getting to the new OPEC law, let's look in at yesterday's Senate Judiciary hearing which is questioning oil executives about the rise in oil prices. Here's my favorite quote so far, and it comes from Senator Patrick Leahy, D-VT: "Normal supply and demand says prices should be around $55 to $60 a barrel."

I'm finally getting around to reviewing the latest monthly employment report. I would have tackled it sooner, but I don't type well when I'm rolling on the floor laughing and coffee is coming out of my nose. Now that my sides have stopped hurting and my nose isn't burning, let's take a look at the report.

To recap, the market was looking for a loss of 80,000 jobs in April, and the "official" number came in much better at a loss of only 20,000. The media pretty much universally applauded the report with headlines such as:

Here is just a sampling of the headlines I saw concerning Wednesday's stock market decline:

• "U.S. Stocks Slip on Crude Oil, Fall Hard" - TheStreet.com
• "Stocks Fall on Gushing Price of Oil" - Chicago Tribune
• "Stocks Decline as Oil Prices Creep Higher" - Associated Press
• "Stocks Skid on Record Oil Prices" - Seattle Times
• "Stocks Sink as Oil Soars" - BusinessWeek
• "Oil at $123 Hits Wall St." - Reuters
• "Stocks Retreat as Oil Prices Creep Higher" - Forbes

I've always been amused at how the press seems to think they can precisely explain just why the market goes up or down on a daily basis. Did oil prices rise Wednesday? Yep, by about 1.45%. Did the stock market fall? Yep, by about -1.80%. Isn't it logical to assume that the higher oil price led to the stock market decline?

Commodities are clearly in the midst of a bull market. On a daily basis, we're being deluged with stories of rising gasoline prices, rice shortages, soaring demand for steel, etc. These high prices will certainly encourage the development of new supply in time. A nearer-term impact will be product substitution when feasible. If steak costs too much, buy chicken instead. If the price of rice is too high, substitute potato. If the cost of cocoa soars.....bad example. I'm still buying cocoa.

The following example of the substitution effect is from a recent article in the Financial Times. It has me seriously thinking of swapping my Accord for some sled dogs.

As expected, the Fed lowered the fed funds rate another 25 bps Tuesday (1/4%). I thought I'd take a few minutes to help interpret their accompanying press release.

"Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further."