The August employment numbers looked better than they actually were for two reason:

#1) Nearly 600,000 people were simply dropped from the labor force. That's not unprecedented during a recession, but it is unprecedented when the economy is supposedly "strong" like the Federal Reserve and White House tells us it is.

If those people had not been dropped from the labor force then the unemployment rate would have spiked up.



#2) The BLS added 120,000 jobs through their Birth/Death Model. The Birth/Death Model is supposed to catch jobs that are created by the "birth" of businesses not surveyed in the payroll survey. The number of jobs included in this model are estimates based on past data.

In other words, the BLS tries to apply data to the present based on data from a year ago. The August Birth/Death Model added 11,000 financial jobs and 15,000 construction jobs.

Let's apply a little common sense here: does anyone really believe that 11,000 more financial jobs were created last month while the entire credit industry was seizing up? Does anyone really believe that the construction industry was adding more jobs while the real estate market was contracting?

But this news was nothing compared to the bigger, badder news that came out Friday.

The dollar dropped to the lowest in a month against the euro on concern the worst housing slump in 16 years and a credit market rout may push the U.S. into a recession.

One month low. Big deal, right? You have to read much further down in the article to see the significant news.

The U.S. dollar index comparing the currency with its six primary peers fell to as low as 79.841 yesterday, the weakest in 15 years, from 80.791 on Aug. 31.

A 15-year low is a big deal, yet it barely got reported at all.

You don't suppose that those hundreds of billions of mortgage-backed securities that we've sold foreigners over the last 10 years, the vast majority of which can not be sold now for any price, has something to do with the fact that the dollar is dropping?