PRE MARKET WED

Beige book comes out at 2 PM.

Since the 2007 "Recession" began we have lost alomst 7 MILLION jobs! and another 2.5 MILLION is said to have been "not created" for those wanting to enter job poll. There are many more that are accepting a lower paying job than previous and working part time that desire full time, this U6 measure of jobs is 16.8%

If all Governments had to do was print money, backstop all institutions deemed too big to fail and guarantee their losses, print more money to pay for stimulus, take over the mortage market, car manufacturing and the financial sector, enter period of unrestraiuned spending and gov hiring, add even more unfunded liabilities we can't pay for......I suppose we would never see contraction.

However, Americans have suffered through a profound loss of equity of nearly $10 trillion between homes and funds, and suddenly the US Consumer is beginning to pull back, as the Bank Credit decline is showing.

If you add bank tightening standards to change in Consumer behavior and a job picture that shows a stubborn pattern of weekly claims around 570K, and where companies have NOT signalled they will pick up the hiring pace, it is hard to imagine a picture of a ROBUST ECONOMY able to SUSTAIN growth.

In late 90's tech spending was goosed, the INTERNET was a baby. In 2003 we goosed Housing and auto's and experienced historic record BOOM in both.....but no controls were administered, and no one claimed responsability for controlling excess speculation, and n fact the GOV who was to protect us relaxed laws 100 years old and set the stage for the very ugliness we now experience.

With CRONIES at every corner, you can plainly see who is making out in this crisis, the very banks who created it.

I don't think the rally will come to a screaching halt, but I DO think a serious comeupins is overdo and some froth needs to come out, the nature and strength underlying ANY pullback will tell us what kind of retracement we are getting....and it usually comes like a thief in the night.

If at some point the economy is shown not to be approaching (most say already IN !) a period of sustainable growth (without gov/fed crutch) and company earnings have gone as far as they can with cost cutting, the market may ALL OF A SUDDEN be seen as VERY EXPENSIVE and will self correct that situation.

Can you imagine all the TRILLION $$$ of bonds sold at 3.5% or so? have we created an even BIGGER BUBBLE we'll have to deal with at some point?

D