Tom Petruno

Stock mutual funds just racked up their biggest quarterly advance in six years.

The government's ugly report this week on June employment showed that U.S. companies still are cutting jobs at a fast pace.

Government and private-lender attempts to stem the home foreclosure crisis so far have mostly focused on loan modifications or refinancing -- giving borrowers a temporary or permanent reduction in their monthly payments.

Wall Street's rally since mid-March has been strong enough to persuade many Americans to stop selling their stock mutual funds and start buying again.

Three-dollar-a-gallon gasoline is back, and nobody's happy about it.

Here is the way it was supposed to work: Uncle Sam would borrow and spend trillions of dollars to save the economy and the financial system, but interest rates would stay near rock-bottom and nobody would worry about the potential side effects of all that spending -- like, say, inflation or a devalued dollar.

Harvey Kauffman isn't looking for excitement in his investment portfolio. So the retired La Costa septuagenarian has almost all of his savings in bonds -- including California tax-free municipal issues.

When the global economy began its dive eight months ago, one of Wall Street's biggest fears was that a deflationary spiral would kick in -- falling prices for goods and services leading to falling wages, in a vicious circle that governments and their central banks would be unable to stop.

For stock mutual fund investors, the first quarter of this year had been looking a lot like the fourth quarter of last year: an Acapulco cliff dive. ¶ But this time around, the equity market landed on a trampoline. Since blue-chip indexes including the Dow Jones industrials sank to 12-year lows March 9, the market has rebounded for five straight weeks. ¶ The comeback dramatically pared stock fund investors' first-quarter losses, turning another catastrophe into a mere extremely painful pummeling. The average domestic stock fund lost 8.2% in the quarter ended March 31, according to investment research firm Morningstar Inc. ¶ By contrast, at the market's lows last month the loss for the new year had been about on par with the fourth quarter's devastating collapse of about 22%. ¶ The numbers have just gotten better with the start of the second quarter, as stocks have continued to rally. The average domestic stock fund's loss had been trimmed to 1.8% by the end of last week.

It's a simple matter in our capitalist economy to explain why so many people have lost their jobs in recent months: Companies have been desperate to slash costs to protect what's left of their bottom line.