April 25th

From GE results (april 11) till today (April 25), S&P is up 4.2%, NASDAQ is
up 5.7%. What happened in between. GE bad, GOOG, CAT good, MSFT ok.

Looks like a good runup and time market took a breather.

Nobel Winner Stiglitz: US Facing Long Recession
Friday April 25, 12:16 pm ET


The U.S. economy is already in recession -- and may echo the 1930s, Nobel Laureate Joseph Stiglitz said Friday.


"The big question is: how will the government respond?" said Stiglitz, in an interview with CNBC. Stiglitz, a Columbia University professor and 2001 winner of the Nobel prize, detailed his bleak outlook for the American economy.

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"This is going to be one of the worst economic downturns since the Great Depression," said Stiglitz.

He explained that main cause of the current situation is historically unique -- and thus is befuddling those charged with creating solutions.

Other downturns were primarily caused by excesses in inventories or inflation; but this slowdown is due to the condition of "badly impaired" banks and financial entities, which are unwilling and/or unable to lend capital -- stymieing the very borrowers who usually drive the country back to vitality, Stiglitz said. And the Federal Reserve may have used up its ammunition -- and the faith investors and planners have put in it.



"[The Fed] will be between a rock and hard place. And we're not over-worrying about credit. But [simultaneously], we need to start worrying about the real sector," he said.

And if inflation wasn't the prime recession cause, it's still a menace. The professor points to the two-pronged danger of high oil prices joined by climbing food prices, harming businesses and scaring consumers.

"Oil is particularly bad," as it means that more U.S. dollars "will be going abroad," he said.

The housing downturn is an even worse economic factor than casual observers realized, Stiglitz said. He explained that during the real estate boom, Americans were able to withdraw billions of dollars from their home equity.

"[But] with housing prices coming down, it's going to be difficult to do that anymore," he said -- drying up a spending source. And within that problem, still another complication: people typically spent the money they drew off their home equity on consumption, rather than investment -- garnering no return on the spending.

"The savings rate as we go into the recession is zero. Which means [savings] will go up, " he said -- decreasing consumer spending and weakening retail further.



What about the government stimulus package?

"The Bush Administration's response is too little, too late -- and very badly designed," he declared. The amount ostensibly being infused into the economy by tax rebate checks will be a "drop in the bucket" compared to the money being held back and siphoned out by the factors he mentioned.

"If you really wanted to stimulate the economy, increase unemployment insurance," he suggested.

"The president is telling people to go out and get jobs -- and there are no jobs for them," he said.

GE saga

After the BSC saga, C got some funding from private equity,
Wamu got some and the stock market went up from the low of
1270 to 1370.
Most magazines were blaring that we had seen the bottom.

Then comes GE with a warning and the stock tanking 20%.
In a way, that is good for me since i am short GE.

Inflation, 80000 jobs lost in march (3rd month down in a row)
and what is going to cause this market to stablize of go up?

There seems to be enough cash in the sidelines, but a good chunk of
this may be smart cash.

April 01 2008

Just yesterday,i was feeling that i should pare down
the debt for vehicle. With DOW up 400 today, it appears natural to feel
that i should jump headlong into stks.
UP's make you feel regret for not getting earlier, DOWN makes
you feel that it is still not down to cover your shorts.
Volatility causes so much vacillation that it makes sense to
have a PP slide that clearly spells what one needs to do.

Tue April 01 2008 DOW UP 400

Up's are getting bigger. Downs are getting smaller.
Short term market seems to be going up.

Next leg down, cover ge, close sds and start going long slowly.