General Electric’s big miss has the market spooked. But it says more about the credit crunch than global slowdown fears.
Inflated housing prices are a Western phenomenon. That includes Europe. With the dollar down and out, the euro could be next. Meanwhile, Asian currencies are soaring…

Say it ain’t so, Jeff!Jeff Immelt, that is — the CEO of General Electric (GE:NYSE).

Markets got spooked on Friday when the big daddy of global conglomerates announced “shocking” quarterly results. It was “the worst quarter in five years,” the Financial Times reports. In reponse to full-year forecasts being “slashed,” the market responded by slashing $55 billion off GE’s market cap.

The fresh fear is that global slowdown could be at hand. What the news really means, though, is that the credit crisis is far from over. After giving an “upbeat” outlook just a month ago, CEO Immelt laid much of the blame at the feet of Bear Stearns. The way management portrays it, GE got sucker-punched right in the finance department.

You see, GE does a lot of great things with jet engines, water treatment, wind turbines, medical devices and so on. Real, tangible type stuff you can get your hands around. But they also have a bit of hocus pocus on the books in their “GE Capital” unit. In the past, some have called the company a “hedge fund in drag,” due to the heavy extent of its financial engineering.

A lot of that hocus pocus was the legacy of Jack Welch, GE’s former CEO. His successor Immelt has done a thorough job cleaning out the stables… but apparently not thorough enough.

The broad market’s response on Friday means that traders are likely getting short today… preparing to play Whack-a-Mole and catch a new leg of downside.
Thee Hits Just Keep on Coming

Nor does it help that bad banking news continues to trickle out. The latest is that Wachovia, the fifth-largest U.S. bank by market cap, is looking for $6-$7 billion in emergency capital. Oh, and by the way, Citigroup and Merrill have released another $15 billion in subprime hits this week. (Yawn.)

There are also two examples of accidental humor to report. First up: On Saturday, Treasury Secretary Hank Paulson said that 2008 could be a “more difficult year” than 2007.

Gee, thanks for that, Mr. Paulson. In other news, grass is green and the sky is blue (except in China, maybe).

On the bright side, signs of intelligent life are popping up in the mortgage industry. It’s reported that the ever popular “zero down” mortgage has gone the way of the dodo. It is apparently no longer possible to purchase a home on 100% financing… one of the little quirks that allowed the housing bubble to get so pumped up in the first place.

Hmm. The horse may be long gone, but the barn door had to be closed at some point, right? No use just letting it flap in the wind like that.

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