Author: Scott Gurvey, New York Bureau Chief

Wall Street was thrilled that Citigroup cleared its books of much of the debris left by the hurricane which swept through the credit markets. Citi wrote off billions on its holdings of CDOs and auction rate securities and other high risk pools which are now can barely be given away, let alone sold.

But analysts I talked to today warned that Citi still faces the same kind of risk other financial sector companies face in this time of economic crisis. More write-downs are expected for credit, home equity, mortgage and other kinds of retail debt as consumers battle with lower home values and higher prices for food and energy.

By the way, for those of you who saw my Tech Talk segment last night, I got a call today from Verizon. Stay tuned for more.

It’s done. Finished. Complete. Mailed. Yes, mailed. I don’t seem to be able to e-file my tax return, and that’s just one of my gripes. Mind you, I am not a tax protester. Of course, less is always preferable, but in truth my federal income taxes don’t seem to be too bad. Don’t get me started on my property tax.

No, my gripe about taxes is less about the amount and more, in fact, mostly, about the unbelievable complexity. For a few years back in the 80s I had an accountant. But when the accountant’s fee went into 4 digits, I decided to fight back. The government, in my view, may have a right to make me pay a fair share to support government. But it does not have a right to make it so darn difficult to file that I have to spend big bucks for professional help.

So each year I spend under $100 to buy Intuit’s TurboTax program. That includes the fees for two states since I live in New Jersey but work in New York. Then I clean off my desk, pile on the receipts and records (carefully maintained with Microsoft Money throughout the year) and do the best I can with a hopeless task.

I thought it was interesting that Boeing stock went up, even though the company announced today another delay in the development/delivery schedule for the 787 Dreamliner.

The answer is that while Wall Street doesn’t exactly like bad news, it really hates surprise. And Boeing has been doing a good job of keeping the analysts in the news, so today’s announcement was just as expected.

Guess building a new airplane is harder than it looks. And it looks plenty hard.

Robert F. Goheen was a professor of classics when he was selected, at the age of 37, to become the 16th president of Princeton University. When he began his term in 1957, Princeton was a good school. But it was also very much a southern men’s club. When he stepped down in 1972, Princeton was one of the world’s great universities, having grown greatly in size and budget; in research productivity; and in ethnic and racial diversity. And it had become coeducational.

That last change was probably the most traumatic. Princeton’s trustees voted in favor of coeducation in the spring of 1969. The first women to be admitted as freshmen in an incoming class arrived that fall, members of the class of 1973. I was a member of that class, and I remember the turmoil on campus, with television crews running all over asking everyone what they thought of the matter. Since I had attended a coed elementary school and a coed high school which had far more diversity than was found at Princeton in 1969, I didn’t see much novelty. In fact, with only one hundred women and about one thousand men in the class, I found the ratio disappointing!

Today’s numbers on personal spending and consumer sentiment make it clear that the American consumer, who has been supporting the economy through thick and thin for 7 years, has given up for the time being. Davis Wyss, Chief Economist at Standard and Poor’s, told me today that “people are scared.” Faced with skyrocketing prices for food and energy, falling home values, and the general sense of gloom every day in the news headlines, spending as adjusted for inflation is flat for the last three months. And consumer sentiment has turned down sharply. As reported by the Reuters/University of Michigan survey, it is now at a 16 year low.

When does it end? Many economists look to the second half, after the Fed’s latest interest rate cuts trickle down and those tax rebate checks arrive in the mail.

The Bear Stearns meltdown story has been such a rapidly moving target that much of what gets written about it has a shelf life of hours at best. Wall Street insiders had barely finished their high-fives at the self-immolation of their nemesis, New York Governor Elliot Spitzer, when rumors began to circulate that a major investment firm was facing a capital crisis. Bear was quickly identified, and the crisis turned into a good old fashioned run on the bank.

J. P. Morgan Chase stepped up in a move reminiscent of that of John Pierpont Morgan, who led a group of fellow bankers to quell the panic of 1907. In the 2008 remake, J. P. Morgan Chase, backed by a guarantee from the Federal Reserve, loaned Bear the money it needed to honor its commitments.

Demand is down so gasoline prices are up. Go figure.

Seems the decrease in demand, and the continuing increases in the price of crude oil, are cutting into the oil refiners' profit margins. Valero Energy Co., the biggest U-S refiner, said earlier this week it had cut production because of poor margins.

No matter that margins improved this week, they are still 30 percent below last year at this time. So, no profit, no gas.

The Fed is getting credit, in an indirect sort of way, for the sharp drop in commodity prices in the last few trading sessions. Analysts are telling me they think the wide range of actions the Fed has taken in response to the credit crisis will help contain the problem without much more in the way of interest rate cuts. That helps curb the inflation--hedge rush to commodities. It is also good for the dollar, and a stronger dollar leads to lower commodity prices. They also point to the Fed statement indicating it sees a sluggish period ahead for economies world-wide. That would mean lower demand for commodities and, therefore, lower commodity prices.

But volatility, most say, will be the name of the game for the near term. So fasten your seatbelts.

The Fed split the difference with today’s 3/4 point cut in interest rates. Those who see recession on the horizon were pushing for a full one percent cut while those worried about inflation sought a half point or less.

There were two dissents from today’s vote by Open Market Committee members who wanted a smaller cut. And a yellow flag was also waved by the regional bank presidents: Only three called for a corresponding 3/4 point cut in the discount rate.

Analysts say this means the next cut, if there is one, will likely be only 1/4 or perhaps 1/2 a percentage point.

I interviewed Alan Blinder, NBR commentator, Princeton professor and former vice-Chairman of the Federal Reserve, about an Op-Ed piece he wrote for the New York Times. In it he advocates the re-creation of the depression-era Home Owners’ Loan Corporation, which would be able to help homeowners unable to meet their obligations refinance into something they can handle.

This idea was floated in Congress about a month ago and was quickly attacked by Republicans as a “bail-out” and by financial industry representatives as government interference with the free market. Today Chris Dodd, Chairman of the Senate Banking Committee, said he was taking another look and he might like to read the Blinder column as homework.