Hold onto your wallet


THE squeeze on the ordinary American promises only to get worse as the world price of oil goes up, the U.S. economy fails to create jobs, mortgage foreclosures increase, and the value of the dollar falls against other currencies.

After the recent shock of the roller-coaster ups and downs of U.S. and world stock markets wore off, the economy seemed to have leveled off into a state of some equanimity.

The initial market buffeting was due to the credit squeeze caused by collective realization that subprime mortgage lending and trading heavily on bundles of weak loans were both irresponsible and foolish.

Now things promise to get worse. In the face of the credit squeeze, which depresses the housing market and everything associated with it - mergers and acquisitions, production and plant expansion, consumption - we are informed that world stocks of oil and gas are depleted and demand for petroleum will exceed supply. The Organization of the Petroleum Exporting Countries has promised to increase production to try to meet the need, but not by enough. So that almost certainly means even higher prices at the pump.

The August jobs figures revealed that, for the first time in years, the number of jobs in the economy shrank rather than expanded. An increase of 150,000 positions is needed just to absorb new entries into the job market. Instead, 4,000 jobs disappeared, most likely due to employers' perceptions of the credit and housing market problem.

As expected, mortgage foreclosures rose. In other words, more people lost their homes, kissing their investment goodbye and being pushed into the rental market, with their credit severely damaged in the process. Congress has been mumbling about help for the victims, but the picture is complicated by the fact that a good percentage of those foreclosed upon were not ordinary homesteaders but multi-building speculators. Should the U.S. taxpayer bail out that group? No.

The Federal Reserve's Open Market Committee already has reduced the key interest rate in an effort to loosen credit and head off a possible recession. Predictably, some economists, not by nature a cheerful lot anyway, are wondering if that will be enough.

To make things worse, other currencies are now piling on the dollar, driving its value relative to theirs down. One euro now costs around $1.42, close to an all-time high.

What that means is that imported goods Americans buy - think, more than 90 percent of the toys on the shelves, with Santa on his way - will cost more.

So, buy less, stay closer to home, and eat less imported food - good, nonfat stuff, of course. And grit your teeth.