"How does it feel to be a third world country?" - Excerpt from Ricky Standup comedy!

"At the bottom of a panic, the news doesn’t have to be good for stocks to rally, it just has to be less bad than what has already been discounted". and in my view the market stil has to reach that sort of a point. More bad news is to come in the folloawing quarters and the stocks should atleast reach the already made lows, if not make new lows. !! 

Today the market had an amazing 400 point rally.. The main contributory factor to today’s tightening was the US government’s rescue of Citigroup announced over the weekend. Citi bank will now receive guarantees on over $300 billion of distressed assets and a $20 billion capital injection. 

The 400 point rally is preposterous for the Citi bailout.. Housing data was out and it, like any other economic data, was disappointing.. Meanwhile, the outflows from EM is still continuing. For most of the EM, the FDI or FII is a significant contributor for the growth.. so,  as long as these withdrawls do not show a sign of revival, the dollar is going to get strong.. and the EM currencies are going to get weaker.. Anyu sign of dollar weakness would be temporary.. I guess, a strong dollar would continue well into 1-2Q of 2009. 

With Congress balking at a rescue for the auto industry, and Chrysler and General Motors warning that they could face bankruptcy without one, investors are worrying about financial companies’ exposure to the Big Three, as well as to automotive suppliers and dealers. Over the past three years, big banks like Bank of America, Citigroup and JPMorgan Chase helped the automakers sell more than $56 billion of new debt securities. That figure does not include $47 billion of risky loans made to various affiliates of Chrysler, Ford and G.M. that are backed by auto leases and car loans to individual car buyers, some of whom are now struggling to pay their own bills as the economy craters. Many of these auto bonds and loans have plummeted in value as things have gone from bad to worse for Detroit’s once-proud carmakers. A $7 billion term loan that Ford issued in 2006, for instance, was trading for 32 cents on the dollar late last week in the secondary, or resale, market. Considering this, the banks still have more write offs to go. and not to forget the consumer loans, commercial loans... 

Today, I sold my BGU (3X levered Russel Large cap index) too early after I had a return of 30% in two days.. If I had caught the peak, i would have made 50% in two days!! ..It would not be a bad idea to short BGU for the next week or so,, and then buy it back again.. 

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Gold - I was a eternal bull on Gold, though I wrongly own the equities of a gold mining company. It was a wrong judgement on my part coz, after all a gold mining company's stock is  a stock and it would not be spared from the overall equity selloff. The wise thing would be to own the Gold ETF (GLD), or the gold coins. Today Gold rallied and crosse dthe $800 mark, mainly coz the Dollar has weaked against Euro. 

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Deflation case: 

• The Bureau of Labor Statistics announced last week that the seasonally adjusted consumer price index fell by 1% during the month of October, implying an annual deflation rate around -12%. That's the biggest monthly drop in the CPI since publication of seasonally adjusted changes began in February 1947. The core CPI (excluding food and energy) saw its first decline in a quarter century.  
• The yields on inflation-indexed Treasuries for medium-term maturities are actually higher than those for regular Treasuries. If taken at face value, that means investors anticipate an average deflation over the next 5 years at a -1.29% annual rate. A TIPS Treasury is adjusted for inflation and thus is less risky and should yield less than a regular treasury, in nomral inflationary situations.. 
• Extremely low yields on short-term Treasury bills.
• The rate at which the economists are revising the GDP growth forecast downward is astonishing. Now, US is no longer expected to GROW in 2009. 
  

And the FED is aware that in case of deflation, prevention is better than cure. The traditional means with which the FED could contain the risk of deflation and jump start the economy is to lower the fed funds rate. But, FED slready has lowered the target rate to 1%. But, the bad news is that any lowering of interest rate (though the FED would lower it by 50 bps in its Dec 15-16 meeting) the effective fed funds rate (this is the effective rate at which banks lend to each otehr overnight) and 3 month T-bill are already 50 bps below the target Fed rate of 1%. 

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The weekend was fun, 2 days of golf and tennis with Shakib.. :) 

Cigs: Friday - 2; Satday - 1; Sunday -0; Monday - 1. 

Urge: Friday - 2; Satday -5 may be.. Sunday - 0, Monday - 5!! 

Today me Sammie and Harish saw the standup comedy of a British artist Ricky Gervais, writer of The Office (UK version).. Amazingly hilarious.. It was beautiful, the way he builds the story, making it lively and comical as he builds it up, and ends the story in a grand crescendo .. with a bang climax.. Though at times the british accent was hard to comprehend, it was amazing on the whole. 

Song: "Stairway To Heaven" - Led Zepp.  

This song is an OST of one of my fave movies "Almost Famous". Vamshi hated it.. Well, this song was not made part of the movie coz of the length of the scene.. 

Mood: "I wish I could DRUM! "

Technical levels defied!!!

New lows!!

Dow at 7,552.29 down 444.99 (5.28%) Nasdaq at 1,316.12 Down 70.30 (5.07%) S&P 500 at 752.44 Down 54.14 (6.71%).

Crude briefly dipped below $50 a barrel today, continuing a steep correction that began in July. However, the broad economy or the market does not seem to be happy abouot it.. . A global recession next year looks probable, with both developed and emerging economies expected to slow. But the outlook for the world’s major economies becomes gloomier by the day. Yesterday’s US inflation data - which showed the sharpest fall in prices since records began - triggered fears of deflation. Higher than expected unemployment figures today added to negative sentiment (The U.S. Labor Department said that jobless claims were up 27,000 last week to 542,000, the most in 16 years). Investors are worried whether the stimulus plans and the bailout plans would work the way out if it..

The uncertainty surrounding the future of the big three Detroit car makers has been weighing on the market all week, and will continue to do so until the situation is clarified. Today for abrief moment there were headlines that the bipartisan group had come to an agreement and the market, every sector, every stock rallied. And when the actual news that the congres did not come to an definite rescue plan and that they are going to re-convene for another hearing of D3 sent the market tumbling again. The state of the market is very fragile (or may be its the wrong word), unpredictable, and it is more of a gamble sort than an fundamental driven investment.. I personally, am not ready to long any stock, and short either.. you never know when the market makes a + or - 1000 point move..

Problems in the CMBS market have also become worse. Fears of defaults are perhaps an even bigger factor. Two major JPM CMBS deals are reported to be close to default yday.. . The market is looking for names that have the biggest exposure to CMBS. Citi among all banks has the largest exposure to CMBS , and not surprisingly so, it got wacked. Today the investors turned toinsurers. Hartford Financial and Lincoln National, two life insurers with large commercial mortgage exposure have seen their spreads spiral upwards in recent days, and both are now trading upfront. Even property/casualty insurers with relatively strong capital positions, such as Chubb and Allstate, widened sharply on fears of investment losses. And the situation is going to get even worse from here..

Even guys at Goldman gave in to the volatility and the unpredictability of Oil prices. Today , in their Commodity note, GS said that they are closing all of their oil trading recommendations. Well, thats what you do when you are wrong consistently.. If you get it wrong every time you do it, you better stop doing it.!! :)

Tracking the $700 Bn bailout..

Is FED committing the same mistake that it is trying to rectify or regulate!! Courtesy Alea..

Fed balance sheet leverage: 50

Total assets: $2,076 billion

Capital: $41 billion

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These days a look at 52-week lows makes me feel nostalgic.. the same companies propping up again and again.. Todays nteworthy list contains:

F - Well, hanging by the prospect of a bailout..

GM - Same case as above. The next hearing is convened in December.

AAPl

GOOG - after all, online advertisement spending is not recession proof...

BAC, C, GE, GS and hell lot of other financials - same old story.. a fear of more skeletons in the closet!!

But if I were to be a long term investor, long term being 2-3 years, there are plpanty of investment oppurtunities around.. Of the companies I would buy:

3M COMPANY (MMM)

Apache Corp (APA)

AT&T (T)

Home Depot (HD)

Eli Lilly (LLY)

Walgreen (WAG)

Johnson Controls (JCI)

Citi (C) - if it is still kicking after 1-2 quarters..

General Electric (GE)

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On the persoanl front, lately I am being preoccupied with some trivial/nontrivial things. I hope things get sorted out soon..

I spoke with a friend of mine today, complaining about myself.. She patiently listened to the whole 30 odd min of conversation and after I ended it, she forwarded me the link of my last/lost blog.. Its been quite sometime since I read/updated it.. I had to stop it because carthiik had come to know that I smoke through one of my posts. Anyways, it was fun reading through my past!!

Song: "Dream On" - Aerosmith

Mood: Pathetic!!

Cigs: 1

Urge: 1

A lazy day.

Market tanked.. and the forcast points to a doomsday!!! 

Shall post the content tomw.. 

The guilt/shame of letting your parents down is a million times worse than the pleasure you get from smoking a life time of cigarettes.. 

Cigs smoked : 2

No of times had the urge to smoke: 2!!

Yes, in this respect, I continue to disappoint myself!! 

Song: "Fix you" - coldplay.

Mood: Dull!! 

Random post..

Finally, the CEO's of big banks come to their senses and decide to forgo their bonuses.. GS started it, UBS and Barclays followed suit.. Citi executives should wake up and make the same, in addition to all the cost (employee) cutting they are doing.. 

John Paulson, not in any way related to Hanky Paulson, has reversed his bearish call and started buying Residentail Mortgage backed loans. Well, John is one of the Hedge Fund managers testified before the congress a couple of days back. The real question is - whether he really believes that the market has bottomed out, or whether he was arm-twisted to change his stance. 

Jerry Yang, the infamous CEO of Yahoo has finally stepped down, and the rumors of Yahoo and MS merger are going rounds again.. Cliffs and Alpha Natural Resources have finally called off their merger plans citing the economic uncertainty and the commodity market conditions as reasons. Lowes and Target joined the list of retail companies reported weaker sales, though today Home Depot, the largest home-improvement retailer, reported 3Q profit that fell LESSER than analyst estimates. 

It was fun listening th etestimony of Detriot Three (CEO's of Ford, Chrysler, GM) before the congress today making their case for a federal bail out. Though the congress is skeptical about getting the bailout money back, I dont think not bailing out is an option before them. 

UK economy explained.. It is far more wrose than many anticipate!! 

US govt better have a clear picture of what it got itself into by spending about 4 T in bailing out and fixing the economy.. Most of it is borrowed by selling treasuries. Considering the fact that the tax dollars would be less in 2009 (with all the unemployment around and the losses by the corporates) and the interest expense to be more than what it is, dollar is going to weaken drastically I guess (in 2009)..

Song: 'Re-offender" - Travis.

mood: Pensive!

An interesting trivia on this band I like.. This band seems to have gained their limelight when during a concert it suddenyl started raining as they started singing their 'then' famous song ' Why does it always rain on me?? 

No of Cigs smoked : 0

No of times had the urge to smoke :  May be 10 times.. 

Congratulagtions SMU..

We made SMU proud today... :) .. SMU is ranked 18th is Business Week's latest Fulltime MBA B-School programs.. Seems our batch did a very good job and gave tonnes of positive feedback on the program.. But I personally believe that Cox is not as great a MBA program as 18th rank vouches it to be... I believe a B-Shcool should best be judged by 1. Faculty 2. Profile and quality of Students 3. Career Services .. and not by average GMAT score, salary forgone to pursue an MBA, % of international students, scholarships, Capital expenditures or by endowments.. Cox, had (note: its not 'has'), some amazig faulty before.. But most of the good Professors left the campus because of the quality of the studenst and the school management.  I did talk with some of my favourite professors about the quallity of my class mates.. Well they were infact disapponted by the 'lazy' 'easy going' attitude of the class.. and when asked why they do not do anything about it, the answer was, the management wants the Profs to be mild with the students, assignments, exams and grades.. Now COX has just three Professors I regard 'Exceptional', from about six before.. 

Cox students who make up the class are not best of the breed.. They lack the drive and initiative to do an MBA,, they do it for the sake of doing it. and this attitude is reflected in the way they are prepared for the classes, assignments and exams. Career Management Center is another drawback of Cox.. they SUCK!!! No doubt Cox has an amazing alumni network,,, and CMC does very litlle to pursue the companies, or to push the students in pursuing the companies.. Finally, the genaral management of the school.. It sucks to a even larger extent.. Its the management's responsibility to make sure a decent crowd is recruited for the program. But, i have not seen any improvment in the students quality now and before.. One of my class mate has lied about his professional experience to get an admit.. and he is an inconspicious asshole.. yet he made it to the class.  He is not a sole example/exception. there were a couple in every batch that came in.. 

Anyways, my point is - had the management had put SOME effort in recruiting students, be more linient to the Professors than to students and improving the career services (by improving I mean firing the whole CMC department), Cox should indeed be worth standing at 18th position of all US MBA schools.. Ofcourse, I am proud to be a Cox graduate, as it is what shaped up most of what I am now... Congratulations SMU.. Congratulations COX.. 

Citi has announced job cuts of 52,000 in near term and bring their headcount to 300,000..Quite a big cut indeed.. and the market didnt percieve it as a good news though the job cuts would reduce expenses of about 50-52 Bn in 2009. 

Nothign concrete has come out of the G20 meeting over the weekend. There were few statements but no guidance os soothing of any sort.  Meanwhile, Japan, Hongkong and France officially declared that they are in a Recession. 

Had a lot to cover, but was troo lazy to write it.. 

Song: "Breakdown" - Jack Johnson 

Mood: Calm.. 

No of Cigs smoked: 1

No of times I had the urge to smoke : Every minute!! :(

Stuck in the Middle.

After 6 straight 'declines' by 'potential brides', I write this in retrospect. 

Everyone, I believe, has multiple facets to their personality. I have two, one a traditional, conservative, decent telugu kid and the other, an outgoing, openminded, carefree, westernized confused kid. This 'split' personality has translated into my lack of conviction about the kind of girl I want or need. When I interact with my undergrad friends and my family, I tend to be the first kind of me, so I, at that very moment, tend to be interested in a homely, traditional girl. Next moment, I find myself in the company of, say, Harish and Sammie, and the whole paradigm shifts and a 'modern' girl appeals to me. 

With every girl I had to talk with, I say the exact same things verbally- that I am reasonable, practical, I smoke, I booze, I party over the weekends, I love rock music, hate telugu movies or songs, hate IT, I am a semi 'gult', not so very inclined to settling in US,  I am not money oriented, I am very particular about 'she' working, I shy away from 'decisions' and 'responsibilities', . But the tone in which I say projects me as someone that they are not interested in..

With a conservative and traditional girl, my involuantary words/actions tend to project myself as a pseudo 'gult', with a prejudice against 'gults', and from the girl's perspective, I probably would be a non-compromising guy with a preconceived condescending notion about 'certain' things. With a girl who, say, likes Pink Floyd, the tone, involuantry again, would be pretty toned down and I come across as a shy, confused guy and may be a guy with low self-confidence. 

Well, there is another reson for my 'dual-mode'; I am scared to hilt by the mere fact that arranged marriage in itself is a risky proposition. And when I interact with any kind of girl in that confused state of fear, I tend to be more inclined towards the other kind.

Smoking and boozing, I guess, recude my chances even further. But I believe its always better to be bare-faced about them, rather to lie about it. I know a bunch of friends who didnt admit it with their fiancee before marriage, and when the 'wife' came to know about it, they promised they quit, but yet continue to smoke. I dont want to be one. By being brazen about my habits I do not mean to flaunt it, I am being frank and unpretentious about it.... however, I agree that it is a hard point to convey in a single one-on-one meeting or a couple of emails/calls. Another counter argument is that if I think I could quit it after the marriage, why the f*** can I not stop it NOW!! ...

Had a wonderful and yet disturbing last couple of weeks. No regrets what soever.. I need to fix myself before I start cribbing about the girls. As a first step, I officially am quitting smoking  again!!  

Song: Sprite Commercial

Mood: Relaxed!!!

'Wild' is back again!!

Yday market swing was pretty dramatically wild.. a 11% swing from the intraday bottom to the peak.. But I believe it is just a technical correction.. Nasdaq has tested its Oct bottom and once it touched it, it bounced back strong, gaining about 7% for the day. Dow ended 550 points up for no reason either.

Yday jobless calims data and todays US Retail Sales data was not any good. Retail Sales slid  by a record 2.8% in Oct, the fourth consecutive  monthly decline and the largest percentage point drop since records began in 1992. Retail sales report details the dollar value of purchases made at retail stores (auto dealers, department stores etc.. ). It is useful to divide the data into auto and non auto components, since automotive sales are prety volatile and in these markets they are adversely affected by the banks inability to lend money. Excluding auto the purchases dropped 2.2%, almost twice as much as 1.2% drop anticipated by the economists. Consumer confidence data this month remained near the lowest level since 1980. 

Add to the  mix the redemptions at hedge funds and the money thats being pulled out of Mutual funds and fund of funds. According to a research firm, nutual funds posted an outflow of $31.8 Bn in the week ended Nov 12, compared to an inflow of 2.2Bn the previous week. Hedge funds had to pay back $40.1 Bn in October, the largest outflow ever. and Fund of Funds lost about $38.3 Bn. Further more, the research firm expects the funds to continue selling liquid assets regardless of the price and performance. 

Consumer credit is the next shoe to drop!!!

Yday American Express sought to convert itself to a bank holding company so as to access the FED support - a clear indication taht Amex is cash strapped. Lately Amex has been facing problems in debt markets to raise money as investors were shying away from the companys debt because of increased credit card payment shortfalls. Infact CEO of Circuit City attributed the short fall of credit card sales, and the unavailability of (cheap) credit to buy electronic goods as a factor to its downfall. Consumer banks have started to tighten the lending standards and raised the annual percentage rate for credit card debt. In its latest filing JPMorgan noted that the charge offs (% of loans that can not be recovered) are expected to rise for the next two quarters, and for the first 9 months of the year JPM set aside 11.5 Bn to cover the potential losses in the consumer loan portfolio - three times the corresponding 2007 figure. Well, things are not definitely looking good either for the Thanks Giving or for the Christmas.. I hope I get good deals on my WII, PSP and SLR!! 

Interesting 'light' read: A piece by Michael Lewis (author of Liar's Poker), calling "The End" of Wall Street. 

I wish I had added something more to this post instead of talking with some old friends of mine.. :) .. One of my closest junior, ex-booze mate, ex- roommate and my friend is coming down to Dallas. Its been more than 5 years since I last saw him. I am longing for the weekend already, all eager to meet him. Lately, over the weekends, I find myself in the company of some good'ol friends!! Its FUN!!! :)  

Song: "you dont know how it feels" - Tom Petty. 

Mood: Nostalgic!

 

Everything is BIG in China!!! even the stimulus package!!!

China announced a long-rumored 4 trillion yuan ($586 billion) stimulus plan to invest in low-rent housing, infrastructure in rural areas, as well as roads, railways and airports to spur expansion, helping sustain chinese growth . It will also increase purchases of grain to support the price for rural farmers and allow tax deductions for fixed asset investment as previously rumored. The funds, almost 1/5 of China's 2007 GDP, will be used from now till end of 2010. This investment dwarfs the stinulus plan outlined by Treasury and Fed, and gives all the more reason for Fed to announce a second leg of stimulus plan.

Though the news is pretty positive for the asian markets, there are doubts on the amount ($586 M). THough the notional amount is 4T Yuan, the incremental spending is just 1-2 T yuan. however, the news and the spending would benifit the housing and infrastructure industries in China, and might as well life the prices of Steel, Iron ore, building materials and indirectly shipping. In addition, this stimulus plan would provide the much needed employment for the unemployed and help restore consumer confidence.

It would be interesting to see how Chinese Govt would finance such a stimulus plan. Over the years the govt spending has increased at 30%, much above the rate at which the revenues increased. With falling corporate profits, planned tax cuts, rebates the fiscal deficit is definitely going to bloat, and well, it is not good going forward for China.

Though the prices of commodities, asian and other international markets saw a rebound, US markets quickly erased the early gains and ended in red for the day. Well, the fear of pulling the plug on GM over shadowed the positive news. Deutsche Bank issued a SELL recommendation on GM and with a target price of ZERO.. yes absolute Zero!!! The company is not worth anything for the current shareholdders. GM is currently trading at a 62-year lwNews of Circuit City going belly up also added to the market panic.

Ethanol Stocks:
PCIX (PAcific Ethanol), Aventine, Vera Sun.. down big YTD, though there is tremendous govt backing for ethanol use in gasoline. Govt has mandated production of 11.1 Billion gallons of ethanol to be used in gasoline, and the current production capacity very much facilitates it. But the questions are, would the US consumer revert back to his Normal driving habits, and bring the gasoline demand to peak levels again.. and would the oil trade at above 100 dollars level again!! . I do not know the answer, but by the way the market is treating these stocks, the answer should be NO!!.

Five Factors That Give You The Big Picture Of The US Dollar

Song: "The world I know" - Collective Soul
Mood: Confused!

Job data is out.. and well,, as expected .. worse than expectations!!

U.S. job losses continued its accelarating fall this month pushing the unemployment rate to 14-year highs in October. Nonfarm payrolls tumbled 240,000 in October, largerr-than-expected 22000. The unemployment rate soared 0.4 percentage point to 6.5%, its highest since March 1994. Us has thus far lost 1.2 million jobs this year.

Sector wise, Manufacturing and construction were the worst hit.
manufacturing -90,000
construction -49,000
business and professional -45,000
financial-sector -24,000
retail -38,000
leisure and hospitality -16,000 jobs.
temporary employment -50,000

In addition, economists at GS and other investment banks piled on the data with their own bleak job data forecasts. GS today wrote that the unemployment rate is expected to rise to 8.5% by the end of next year and trend even higher in 2010. They also forecast another rate cut by Fed, to 0.5% by Dec. "We do not see a resumption of anything close to trend grwoth before 2010" they added. Btw.. GS yday added another 3500 layoffs to its already 1500 odd headout cut. Sadly, I was shocked to know that my friend is one among the 3500.. bad times indeed... Bottom line: the beating will not stop!! :)

and am off to San Diego!!

and.. the euphoria fades!!!

Was lazy for the past one week to post anything new.. 

Over the last two days the euphoria of a new president and a hope for 'change' are over written by a fresh batch of disappointing data in manufacturing, job, sevices, CDS, weak earnings data. Not many companies have posted a significant upside earnings surprise and markets started to sink in the reality that we are no where near to knowing the length or depth of the downturn. 

I safely sold most of my investments and waiting for the market to turn!! Today I was forwarded a list of 3x ETFs. 

BGU - R1000

TNA - R2000

ERX - R1000 Energy

FAS - R1000 Financials

BGZ - short R1000

TZA - short R2000

ERY - short R1000 Energy

FAZ - short R1000 Financials.

A better investment strategy would be to own shorts for a couple of weeks and to buy the longs after a couple of weeks. JPM CEO today addressing Korean banks did say that the down turn would come to an end in the next four months but US would struggle with the economic problems for another year. However, the stock market front runs the recovery in the economy. 

The first Xmas card has arrived!! Courtesy - FT.. 

BofEngland lately has been facing a lot of criticism for it bystander stance when Fed has been agressively cutting teh intrest rates to stimulate teh economy. Today BofE has responed with a surprise slash in the interest rates of 1.5%, when the estimated cut was 0.5% -1%. Bank rate is now at 3%, lowest in more than half a century. The rationale behind such an agressive cut is pretty clear - global recession is inevitable and the world is coming to an end :) .. Followed by BofE rate cut, there was wide spread speculation that ECB would follow the suit, however, ECB resorted a more conservative stance and cut the rate by a mere 0.5%.

Oil.. its good to see oil trading at 60 dollar level today, however, todays IEA report predicts that the 60-70 dollar oil would be short lived. In its flaagship report that is going to be out tomorrow, IEA predicts that oil would trade at 200 dolls a barrell by 2030 and 100 by 2015 for teh fact that the companies would not be able to pump NEW oil to offset the deciling production levels from older levels. Yet, the market seems to be paying no heed to IEA report, and for now market is subscribed to the global slowdown theory. 

Its time to go short dollar, I guess. One source of dollars strengthening is the lack of dollars among G7 countries and emerging nations. With the currency swap provision with non G7 nations, such as South Korea, Brazil , Mexico and SIngapore, dollars are pumped into the system and would ease the dollar-buying pressure for these nations.  Another argument in favor is that the repatriation of funds to US is subsiding, with global equity markets stabilizing. It would not be a bad idea to start buying GLD. 

Tomorrow is going to be yet another i nteresting day with  more unemployment and non-farm payroll data coming out. Today new jobless calims data and continuing jobless claim data sort of gave a glimpse of what to expect. New Job less calims stand at 481000, versus expectations of 479000. The consolation is that the revised previous weeks figure was 485000, indiacting a 4000 decline. Continuing jobless claims grew again and now sits at 3.84 million from a revised 3.72 million. Unemployment is expected to stand at about  6.3% tomorrow, last month it being 6.1%.  Non-Farm Payrolls are also expected to come in -200,000. Fingers crossed, for the index to reach 8000 mark!! 

A scary picture on what would happen should the Detriot three should go belly up.. Gist: If they cease to exist, the first year total employment impact would be a loss of 3 M jobs.. in economic terms, it would reduce US personal income by 150Bn in first year and about 400 Bn in three years, and a total governement income tax loss of 150 Bn in three years. The second scenario in whihc the automakers recover 50% each  in second and third year is slightly less scary. I dont think governement would be willing to let any of the auto maker go under. Last week Treasury has rejected GM's appeal to lend 10Bn. Today evening the auto makers had a meeting with Pelosi to discuss a possible bail out. Analysts  forecast that GM lost $3.51 a share in the quarter, or about $1.9 billion. Ford is expected to report a loss of 93 cents a share, or $2.2 billion. Is it worth buying F or GMC... With the bailout almost possible, it should not sound like a bad idea though. F now is trading at $1.97 and GM at 4.99.. 

A must read article .. 

Nouriel Roubini foresees a hard landing for chinese economy.. This eternal bear was pinpointedly right on the current crisis. 

Tomw I am flying to San Diego.. 

Song : Butthole Surfers - "pepper"

Mood: lazy