Stocks fall in eurozone as U.S. jobs report adds to investor worries

On Monday, Asia's stock market took a tumble, and markets in the European Union followed suit with falls of their own.

The reason for the beating taken by the foreign markets centered largely on fears that the U.S. is sliding back into a recession after a Friday report that the nation added no new jobs in August and kept its unemployment steady 9.1%. Another factor is worry over the ongoing European debt crisis, according to a report from the Associated Press.

Reactionary market declines could be seen across Europe on Labor Day as the U.S. stock market was closed. Germany's DAX index fell 5.28%, France's CAC 40 fell 4.73%, the FTSE 100 in London fell 3.58%, and the Euro Stoxx 50 fell 5.11%.

Retail sales across the 17-nation eurozone saw a surprise increase in July, but a report on the E.U.'s services sector released Monday revealed a slowdown across Europe for the fifth consecutive month, the AP said.

"The purchasing managers' index for the eurozone showed the services sector was still growing -- unlike the manufacturing sector -- but only barely," the AP said. "That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week."

The souring economic situations in Asia, Europe and the U.S. are leaving investors with "so much uncertainty, so much fear, that investors don't know what to do," David Kotok, chairman and chief investment officer at Cumberland Advisors, told the AP. "I don't remember the last time stocks were so cheap and nobody wanted them."

More evidence of investor worries were evident as well.

"The difference in interest rates between the Greek and benchmark German 10-year bonds, known as the spread, spiraled to new records on Monday, topping 17.3 percentage points," the AP said. "Yields on the Greek bonds were above 18%."

President Obama is set to give a major speech Thursday night in which he is expected to lay out proposals seeking to spark job creation. Obama previewed his speech in Detroit on Monday, saying the Republican Party will be publicly held accountable if its members don't support his job-creation plans.

From Monday's slumps in Asia and Europe, it's clear that investors on those continents will be watching to see whether Obama and U.S. lawmakers can turn the tide and stave off another recession.

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Photo: Traders in Frankfurt, Germany. Credit: Michael Probst / Associated Press

Asian shares tumble on grim U.S. jobs report

Asian shares suffered heavy losses Monday on the first day of trading after last week's bleak U.S. jobs report intensified fears of a global recession.

Japan's Nikkei 225 index was down 1.8%, Hong Kong's Hang Seng index lost about 3% and South Korea's Kospi nosedived 4.4%.

China's benchmark stock index slumped 2% to close at a 13-month low on fears the government would continue to tighten monetary policy.

Chinese Premier Wen Jiabao said last week that stabilizing consumer prices is the government's chief priority.

At a press conference in Beijing Monday, World Bank President Robert Zoellick said inflation remains China's biggest short-term risk.

The former U.S. Deputy Secretary of State was meeting Chinese leaders in preparation of a joint report to be released later this year outlining steps China needs to take to rebalance its economy away from exports and investment toward domestic consumption.

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Photo: A South Korean currency trader covers his face with his hands in front of screens Monday. Credit: Ahn Young-joon / AP.

Public Job Creation

Nancy Folbre is an economics professor at the University of Massachusetts Amherst.

President Obama has signaled a new commitment to combating unemployment, with a major speech planned for later this week. The big question is whether his battle plan will go beyond indirect means of encouraging long-run employment growth (such as tax incentives) to include public job-creation programs that could significantly lower unemployment over the next year.

Today’s Economist

Perspectives from expert contributors.

His Republican critics take a “been there, done that, didn’t work” approach to economic stimulus. But President Obama’s stimulus plan, the 2009 American Recovery and Reinvestment Act, relied primarily on tax cuts and increases in aid to the states, shying away from direct federal job-creation efforts that were considered politically risky. (Jared Bernstein, chief economic adviser to Vice President Joseph R. Biden Jr. at the time, provides a clear account of the administration’s rationale).

Perspectives from expert contributors.

The stimulus helped the economy toward recovery. Increased aid to the states temporarily buffered the impact of state and local budget cuts. But over all, the Obama administration has been characterized by public job elimination rather than creation. The latest estimates of government employment (preliminary estimates for July 2011) show a significant decline since 2008, to about 22 million from about 22.5 million.

This decline in public employment will inevitably be intensified by further cuts in public spending and has particularly ominous implications for women, who make up a disproportionate share of state and local payrolls.

As Eileen Appelbaum points out, men were harder hit by job losses in 2009 than women but also faster to regain jobs as private sector hiring revived. A recent report from the Institute for Women’s Policy Research provides a vivid, up-to-date graph of these trends.

As of August 2011, the seasonally adjusted unemployment rate for men 16 and older was 9.6 percent; that for women, 8.5 percent. A new Economic Policy Institute report notes that persistently high unemployment has lowered the earnings and family income of a wide swath of American families.

Democrats to the left of President Obama have long argued the need for direct job creation through new federal programs, targeted transfers to state and local governments or both. Robert Reich, who served as secretary of labor under President Clinton, has offered a model speech along with a model plan.

The National Urban League, a prominent civil rights organization, has outlined a 12-point proposal, Putting America Back to Work.

Representative George Miller, Democrat of California, has introduced several legislative proposals, most recently the Local Jobs for America Act. Money would go directly to eligible local communities and nonprofit community organizations that would decide how best to use them. The act would also underwrite approximately 50,000 additional private-sector on-the-job training positions to help businesses put people back to work.

Representative Jan Schakowsky, Democrat of Illinois, has sponsored the Emergency Jobs to Restore the American Dream Act, which puts more explicit emphasis on money for schools, health care and community service. This program would be fully financed through separate legislation creating higher tax brackets for millionaires and billionaires, elimination of subsidies for major oil companies and closing of corporate tax loopholes that encourage offshoring of American jobs.

In a post last year, I described several specific proposals to create jobs in home-care services, including a voucher program to help subsidize the cost of home aides for the elderly, moving them out of nursing homes and back to their own homes.

Last week, Heidi Hartmann, president of the Institute for Women’s Policy Research, mobilized an online discussion of participants in the Womens Scholars Forum (including me). The resulting briefing paper summarizes a number of additional ideas, such as expanding the length of the school day and school year to improve educational outcomes and developing an Urban Conservation Corps.

The briefing paper emphasizes a longstanding concern of women’s organizations: the need to make sure that “women get their fair share of jobs that are nontraditional for women, for example technical and craft jobs in construction, transportation, and green energy and that are supported by federal dollars or federally guaranteed loans.”

A good example of targeted spending in this area is a small grant that the Women’s Bureau of the Department of Labor recently awarded to Austin Community College in Texas to recruit women to a renewable energy training program.

A strong public job-creation effort could help qualified graduates of programs like these find jobs improving the energy efficiency of schools and other public buildings. The employment impact would be both quicker and more reliable than subsidized loans or tax breaks for renewable energy companies.

Right now, the unemployed themselves represent an important form of renewable energy that is going to waste. That’s why President Obama should take a close look at proposals to put them to work in a variety of publicly financed jobs.

Is California economy improving, or worse than ever?

Depending on who you ask this Labor Day, California's economy is either on its way up or headed straight for the crapper.

A report released today by the California Budget Project finds that the state has a historically low level of employment, even as earnings are declining for most workers. By July, the report says, the state had gained back only one out of six jobs lost during the recession. The state added only 2,760 jobs a month between February and July.

Government is dragging down the economy, the report says. Over the last three years, the state has lost public sector jobs at a rate twice that of the nation as a whole, the report says. Inland areas aren't helping either -- between June 2010 and June 2011, the Inland Empire lost 10,300 jobs.

Finally, inflation-adjusted earnings in California declined 1.9% between 2006 and 2010, the report says, making a typical worker have less purchasing power in 2010 than at any point in the last 10 years.

"Coupled with the latest figures showing extremely slow growth in the national economy, these state trends make it clear that we're a long way from a recovery that makes a real difference for California's workers and their families," said the report's author, Alissa Anderson, deputy director of the California Budget Project.

But according to a Labor Day Briefing from the state Employment Development Department, California "has been gaining jobs at the fastest rate since the boom year of 2006" and more quickly than the nation as a whole. California is also outpacing the nation in private job growth, the EDD says.

The EDD says California added 189,400 jobs from July 2010 to July 2011, which is a 1.4% growth rate at a time when the nation's employment picture grew just 1%. The state's year-over-year July job growth rate is the strongest in five years.

Industries that managed to grow year over year in July included professional and business services, education and health services, and even construction, the EDD points out. It says there are occupations that are projected to grow in the state: executive secretaries, registered nurses and accountants.

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Debt collectors, college roommates: Your weekly ScamWatch

Here is a roundup of alleged cons, frauds and schemes to watch out for.

Debt collection –- There are few things more intimidating than a telephone call from a collection agency. Some scam artists have been using that fear to bully people into giving up their debit card numbers on the telephone, then draining their bank accounts, the Better Business Bureau said in a recent alert. In some instances, the callers have personal information about the target, including actual debts, making the call seem legitimate. The bureau said anyone who receives a suspicious call about an outstanding debt should demand written proof of the debt and should never provide bank or credit card information over the phone until making sure the collection firm is legitimate.

Going away to college -– In addition to worrying about keeping up with their studies, new college students should take steps to prevent themselves from becoming victims of identity theft, the Better Business Bureau said. The group said it’s not always strangers who commit identity theft -– sometimes it’s a new roommate. To avoid being victimized, students should keep bank and credit card statements in a safe place and have sensitive mail sent to their parents’ homes, the bureau said. “In this day and age, you can’t always trust your peers,” said Stephen A. Cox, president and chief executive of the Council of Better Business Bureaus.  “It’s extremely important for students to be vigilant in monitoring bank and credit card statements to spot unauthorized activity.”

Life settlement company –- The Securities and Exchange Commission has obtained an emergency court order shutting down a Los Angeles company that claimed to invest in life insurance policies, but instead allegedly used investor money to finance the owner’s luxury lifestyle. The SEC accused Daniel C.S. Powell and his company, Christian Stanley Inc., of defrauding investors by making false claims that it invested in so-called life settlements. Powell raised at least $4.5 million from at least 50 investors nationwide but never used the money to buy life insurance policies as he said he would, the SEC said. Instead, he spent the money on luxury hotels, expensive cars and visits to nightclubs and restaurants, the SEC said. At the request of the SEC, U.S. District Judge George H. King issued a temporary restraining order freezing the assets of the company and placing a receiver in charge of the company’s assets. Powell could not be reached for comment. Life settlements are transactions in which policy holders sell life insurance policies to third parties.

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Sodium use up 144% in restaurants -- mostly through gourmet salt

So much for regulators' war on sodium – salt's presence on restaurant menus has boomed 144% in five years, according to new research.

But it's not just the regular stuff straight from the shaker, says Technomic MenuMonitor, which tracks more than 2,000 chains and restaurants. The actual amount of salt in food may have decreased, but more dishes are starting to feature fancier versions of the mineral.

"We are seeing more artisan, spice-blended and designer finishing salts being introduced broadly across appetizers, entrees and dessert menus," said Darren Tristano, executive vice president of Technomic.

In a trickle-down effect from fine dining, swanky salt is showing up across the food industry.

Small gourmet salt-selling boutiques, like The Meadow in New York City, are springing up around the country. "Iron Chef" Masaharu Morimoto serves up his televised creations on slabs of pink rock salt. At chef Thomas Keller’s French Laundry near Napa, recently deemed the most expensive restaurant in the country, the caramel ice cream comes with Maldon sea salt produced in England.

Asian stir-fry chain Genghis Grill mixes salt, cayenne pepper, garlic, ginger and Cajun spices into a blend it calls Dragon Salt. Last year, Wendy's made a big to-do of its "Natural-Cut Sea Salt Fries." Hawaiian black lava sea salt has shown up on other menus.

Good luck, then, for efforts to ban salt, such as legislation last year out of New York that proposed a $1,000 fine for restaurants using sodium in food preparation or consumption.

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Photo: A bowl of rock salt. Credit: Kirk McKoy / Los Angeles Times

Retail Roundup: Toys R Us, American Apparel, Sears and Costco, retail sales

 -- Toys R Us, which last year opened 600 temporary shops during the holidays, will reduce the number of pop-up stores this holiday season, according to Reuters. The nation's largest toy retailer, which hopes to go public next year, did not announce how many pop-ups it would open. 

-- Los Angeles-based American Apparel is in talks to raise as much as $160 million from several investors, including a private equity firm connected to Los Angeles billionaire Ron Burkle, according to Bloomberg, which cited several unnamed sources. The restructuring talks include the possibility that American Apparel's founder and chief executive, Dov Charney, could step down as chairman of the board so he could focus on day-to-day operations. 

The parties include private equity firms Colbeck Capital Management, which is affiliated with Burkle's Yucaipa Cos., and Authentic Brands Group, which is backed by L.A.-based Leonard Green & Partners.

-- Department store chain Sears has agreed to sell its exclusive line of Craftsman tools at Costco warehouse clubs. The power tools and other products will start appearing on Costco shelves as early as this weekend and are scheduled to roll out at all Costco locations this year, the Chicago Tribune says. Sears is hoping that the deal will attract customers who shop at Costco but not at Sears or Kmart, where the tools are also carried. 

Speaking of Costco, this week its chief executive and co-founder, Jim Sinegal, announced that he would be stepping down from the top post on Jan. 1. He will remain with the company until January 2013 to help replacement Craig Jelinek, currently Costco's president and chief operating officer, with the transition; Sinegal will also remain on the board of directors.

-- Major chain stores reported that sales rose a healthy 4.4% year over year in August despite stock market turmoil and Hurricane Irene. Discounters and luxury chains were among the best performers.

-- Andrea Chang