The lowdown on the July 24 increase in the the federal minimum wage? It will be net positive for the U.S. economy.

From the rhetoric of the supply side theorists --- the same people who advocated more than $1 trillion in 2001-2008 upper-income-favoring tax cuts that created the fewest jobs in any eight-year presidency since World War II --- increasing the minimum wage by 10.7 percent to $7.25 per hour will mark the end of the free enterprise system in the United States, or something close to it.

Acting boldly in any stock market carries with it considerable risk. Acting boldly in this market, amid the U.S. recession and an unresolved toxic asset situation, and you're looking at a 30-40% haircut up ahead. (Or worse.)

Still, investors capable of tolerating risk would be wise to position themselves in a few defensive plays with decent upside potential. But let's make one thing clear: defensives with an upside are not, strictly speaking, conventional defensive plays. They carry more risk but, one could argue, that risk is reasonable, given the potential for the capital appreciation pop. With the above as a backdrop, grocery chain Safeway (NYSE: SWY) is worth a review.

When you work in public policy or economics, you come across policies and programs in various countries in Europe and elsewhere that are innovative and/or that have otherwise have stood the test of time.

Still, the above doesn't mean they'll be implemented in the U.S. That's because the American culture and system presents its own, unique challenges and restrictions. Where else can one person -- 1 U.S. Senator -- stop the democratic process, thwarting the will of the majority, the will of the people?

Just a short quarter ago -- three months -- the lingua franca in economics and financial circles was "decoupling" -- the argument that the global economy could grow, despite an economic slowdown in the United States.

Then the U.S. slowdown persisted, lower growth rates and projections in Europe Asia followed, and the commodity price correction ensued, led by the most vital of all commodities, crude oil.

Oil, which for the better part of four years knew only one direction -- up -- pulled back about $30, or more than 20%. (Oil closed Friday down $6.49 to $114.59 per barrel). And unlike previous mild dips, emerging market demand -- the "rest of the world" in the oil market -- was not enough to protect the oil bulls. U.S. oil demand did matter -- it had declined on a year-over-year basis for more than three months -- and is projected to drop 3.1% in 2008, according to U.S. Energy Information Administration data.

What's more, the EIA expects U.S. oil consumption to drop another 2.3% in 2009, to 20.08 million barrels per day.

Investors/readers have probably already heard all of the bad jokes regarding Six Flags.

• "Things are so bad at Six Flags, it's now called Three Flags."
• "The only thing rising at Six Flags is the rollercoaster."
• "A contest offered a vacation prize. First Prize: a day at Six Flags. Second Prize: two days at Six Flags."

O.K., that last one was borrowed from arguably the greatest comedian of all time, Groucho Marx, but you get the point: times are tough for Six Flags (NYSE: SIX).

Six Flags has more than $2.4 billion in debt, hasn't posted a profit in years, and has a big hurdle next summer: a $288 million payment to preferred shareholders, The Wall Street Journal reported (subscription required). Six Flags' stock closed Friday down 10 cents to $1.02.

Attendance, down 3% in Q2, is expected to "decline by at least that percentage, or come in even lower" for the year stock analyst C. Leonard Bauer told BloggingStocks, adding that it's not an elaborate mystery concerning why Six Flags is becoming less of a destination of significance.

Those investors/readers who are of the persuasion that the U.S. stock market is about turn the corner should heed the words of caution from legendary banker Bill Seidman.

"There's always a chance of a large bank failure," Seidman told Newsweek. Seidman chaired the Resolution Trust Corporation, the federally-created liquidator for the last banking crisis in the 1980s.

Keep an eye on the big banks

A large bank failure would quickly extinguish what little momentum the market has established from mid July to early August, during which the Dow Jones Industrial Average has risen from about 10,850 to 11,734. Economist David H. Wang said he will not attach a more-positive descriptive to the 884-point move, because he "doesn't want to create unreasonable, and unjustified, expectations."

"First, our technical analyst friends would say the recent move up is still well within the range of a bear market correction," Wang said. "Second, from a fundamental standpoint, we still have major headwinds."

That the U.S. economy has recorded a series of rather negative statistics lately, would not be a revelation to the informed investor / trader.

That the U.S. economy is set to record a new data point of ignominious distinction, perhaps would be.

Assuming a modest 50-point close higher or lower Monday, the Dow Jones Industrial Average will have declined about 9% in June 2008, its biggest drop in June since June 1930 in the Great Depression, when the Dow fell 18%.

At mid-day Monday, the Dow was up about 45 points to 11,390.95. The Dow is down about 3,000 points since trading above the 14,200 level in October 2007.

Stock analyst C. Leonard Bauer said "the Dow reflects the underlying economic reality."

Many negative fundamentals

'We have a smorgasbord of negative fundamentals. Housing is in a deep slump. Oil and gas prices are at 20-year highs. Corporate costs are rising. Disposable income is falling. Credit requirements are way up. Inflation is rising. And job growth doesn't look too good right now," Bauer said. "Other than that, as Groucho Marx would say, everything is fine economically."

Another factor weighing on stocks, at least for the near-term: 'sell in May and go away' - - the seasonal closing out of positions, particularly winning positions, Bauer said, as key decision makers at institutional banks and investment / hedge funds head for the Hamptons (Long Island, N.Y. ), the south of France, and other destinations, for the summer.

Amid the cascade of data flowing from the financial world, every once in a while there's a data point with not only macroeconomic significance, but also potentially with trend-indicator characteristics, as well.

One such data point may have occurred Wednesday when MasterCard (NYSE: MA) released data indicating that U.S. consumers purchased an average of 9.45 million barrels of gasoline per day in the week ended June 20, 2008, down 2.7% from the 9.71 million gallons per day purchased a year earlier, Bloomberg News reported.

The consumption decrease occurs after a roughly 30-40% increase in gasoline prices compared to a year ago, and if the decline continues, it would represent the 'demand destruction' level that's essential to slowing gasoline price increases.

Further, a key oil analyst holds that view. Daniel Yergin, chairman of Cambridge Energy Research Associates, told a U.S. Congressional panel that "...2007 may well have been the top, the break point, in terms of gasoline demand," Bloomberg News reported Wednesday. He added that the price of oil has hit a break point where the United States will begin to seek alternatives.

U.S. stock prices are likely to fall further because record energy and food prices are constraining consumer spending, suggesting a worse-than-average recession, Merrill Lynch's U.S. sector strategist said Monday, Bloomberg News reported.

Brian Belski, Merrill's U.S. sector strategist, said this is not "your average recession," and that he would "urge caution for investors attempting to call the bottom in the current environment," Bloomberg News reported.

On Monday the Dow Jones Industrial Average closed down 0.33 points to 11,842.36. The Dow has fallen about 1,400 points since trading above 13,100 in late April and again in mid-May. The Dow has also been below its 50-day moving average -- which technical analysts believe to be an indicator of short-term support or resistance -- for more than two weeks. The Dow also has been below its 200-day moving average -- a technical indicator of longer-term market support / resistance -- for about six months. Technical analysts note that a strong market and Dow would consistently remain above its 200-day moving average; a bearish market, the reverse.

Bearish on DJIA

Economist Peter Dawson echoed Belski's evaluation and said the March -- May rise in the S&P 500 and the DJIA was not rooted in strong evidence, fundamental or technical.

"Basically, for the last five months or so, the U.S. economy has been treading water, going sideways. At the same time, we had a Dow rally off the 11,800 lows in March. That suggested trouble if GDP growth did not accelerate in Q2," Dawson said. "It hasn't so far, and the Dow sold off. I agree with Belski in that there's considerable risk to the downside for the market given the trend in consumer spending and the overall risks to the economy."

The U.S.'s recent economic doldrums, combined with a 4-year-plus economic expansion that produced less-than-optimal-results in several statistical categories, has caused investors' recollection of robust economic times to fade from memory.

For a refresher, albeit not an ideal case study, regarding what a robust economy looks like, consider China's economy: China's retail sales surged 21.6% in May compared to a year ago, Bloomberg News reported Friday, a rate seven times faster than May retail sales growth in the United States.

Retail sales increased to 870.4 billion yuan or $126 billion in May after rising 22% in April, on strong auto sales and building material purchases, Bloomberg News reported Friday.

Gasoline's 4-year rise and recent pop above the dreaded $4 per gallon level is having a predictable impact on small town America.

Large areas of the upper Great Plains, the South, and Southwest are being hit hard, due to a heavy dependence on generally low-gas-mileage pickup trucks, low incomes, and those aforementioned high fuel prices, The New York Times reported Monday.

The Times reported that several social phenomena present during the U.S.'s last oil shock are on the rise: gasoline thefts, people running out of gas, and substantial reductions in consumer retail shopping to allocate more money needed to meet higher fuel costs, among other consequences.

Economic growth in the United States will halt in the first six months of 2008 amid a consumer spending slowdown, a new Bloomberg News survey released Wednesday indicated.

The world's largest economy will contract from January-June 2008, according to the median of 62 economists surveyed from April 2-8, 2008, Bloomberg News reported. A majority now predicts that the U.S. economy is, or will soon be, in a recession.

Economist Glen Langan, who did not participate in the survey, said Wednesday that aside from the oil / oil services sector and agricultural exports, there's little that's positive about the U.S. economy right now.

"It's the worst economic picture since the 2001-2002 recession, clearly," Langan said. "And given the housing sector's deep slump, a lack of job creation, and a tapped-out consumer, it's difficult to see where the economic growth is going to come from."