October 2009 Comment: There's a truism that applies to casinos everywhere and to anyone who frequents those establishments... "the house always wins."

Speaking of the 'house', one of an ever-so-slightly different sort, the White House today proudly(?) proclaimed that the government's stimulus efforts have saved or created 650,000 jobs.

Our own in-house economist, Pete Grant, was quick on the calculator to Twitter up some illuminating perspective for us on the scale of those numbers.

Of the $150 billion spent in stimulus programs so far, that translates into an average expenditure of $230,000 per each of those 650,000 jobs saved and/or created. Alternatively, the government could have created three million jobs by simply paying 1.5 million workers $50,303 (which is the average annual household income) to dig ditches, and another 1.5 million workers similarly employed to shovel them all full again!

A simple observer almost wants to cry, "Shenanigans!" It reminds this author of my reaction while reading Thursday's news in which the Commerce Department reported that the U.S. economy during the third quarter enjoyed a 3.5 percent annualized pace for GDP growth. Encouraging as it might sound, that modest number came sailing in propelled by the strong quarterly tailwinds of a massive 22.3 percent pace in the purchase of big-ticket manufactured goods (largely reflecting car purchases under the government's Cash for Clunkers program), an equally massive 23.4 percent pace in spending on housing (spurred by the government's First-time Home Buyer tax credit), and a third quarter boost in federal government spending by 7.9 percent.

From any angle you choose to look at it, the federal government has been taking what seems to be a shockingly large and ever-expanding role in the management of the national economy, whether it be through the grass-roots stimulus programs mentioned above or through the top-down themes of partial- or outright nationalizations, bank bailouts, and other TARP-like support for the likes of Fannie Mae & Freddie Mac, AIG, GM, Chrysler, GMAC, etc.

Given that government policy, programs, and spending on a massive scale is what's currently fueling our economy, it makes any attempt at investing more akin to a random gambling crapshoot than to our national tradition of rational speculations based upon considerations of conventional economic metrics and corporate fundamentals. And this random crapshoot certainly seems to be borne out by this past week of volatile action in the U.S. markets in which the Dow Jones industrial average has had a series of triple-digit days, moving up or down by at least one percent in four of the past five sessions. So much for the idea of a rational stock market that already has every fundamental thing, more or less, "priced in".

So if you care to invest in stocks, bear in mind that the fundamentals no longer apply, and that Wall Street has become something akin to a casino... arguably it could almost be called The People's Casino because so much of the economy has been falling under government control. Everything, that is, except executive bonuses. According to an article today (Oct. 30th) by Bloomberg:

"In Washington and on Main Street, politicians and voters are railing against Wall Street's multi-million-dollar pay packages. In the financial world, most executives expect their bonuses to match or exceed last year's, with 1 in 10 predicting their best-ever payout. ... The survey responses are at odds with populist outrage unleashed when American International Group Inc. earlier this year paid bonuses to the financial products unit responsible for the derivatives trades that fueled $100 billion in 2008 losses and led to a $182 billion taxpayer bailout."

Bottom line: 'Business as usual' on Wall St. means that you can play this casino all you want -- pull the lever, spin the wheel, roll the dice, whatever. You'll win some, you'll lose some (and probably your shirt), but the one thing that's nearly certain: the house will come out on top.

Choose physical gold. It gives you a seat at another table where the deck isn't already stacked against you.