Monday, April 23, 2012

Only on Wall Street

Over the weekend I came across a piece from Pam Martens entitled MF Global: The Untold Story of the Biggest Wall Street Collapse Since Lehman. I want to share 2 items from Pam's fantastic piece. Her opening and her closing which pretty much sum up everything this rotten, perverted diseased crony capitalist system of ours is all about.

 Her opening:

"Only on Wall Street can you bankrupt a company; misplace $1.6 billion of customers’ money; lose 75 percent of shareholders’ money in two weeks; speed dial a high priced criminal attorney and get a court to authorize the payment of your multi-million dollar legal tab from the failed company’s insurance policies; have regulators waive your requirements to take licensing exams required to work in the securities and commodities industry; have your Board of Directors waive your loyalty to the firm; run a bucket shop out of the UK; and still have the word “Honorable” affixed to your name in a Congressional investigations hearing."

 and her closing:

"There is an old saying by Wall Street cynics: “Where are the customers’ yachts?”  Today, the public can’t even find out where are the customers’ funds."

The mainstream media will repeat on this only when their masters allow them to which most probably equates to the expiration of the statute of limitations. I want to thank the numerous individuals like Pam (She has a great site Wall Street on and countless others on the net and blogosphere who have the backbone to stand up and report and document this lawlessness. Just as Matthew Lee the whistle blowing accountant at Lehman did regarding their fraudulent book cooking and was summarily terminated. I know not which is more disheartening, the fact Mr. Lee was fired for having integrity or that he remains unemployed to this day as all around him the thugs, thieves and go-along-to-get-along yes men and women have "landed on their feet" unscathed.

These developments around us are so preposterous as to almost defy credulity. I realize Tacitus quote "Crime once exposed has no refuge but in audacity" but this is getting ridiculous now. I have said it before and will repeat it here again, the history books will not be kind in what they have to say about us and what has transpired. The only thing I wonder is whether they will be more critical of the audaciousness of the criminal class oligarchy or the apathy of the masses who stood for it.

Monday, April 16, 2012

Glass Theatre Analogy Revisited.

While on the topic of market volume some of you may remember the Glass Theatre Analogy piece I came across last summer and shared in my piece So Where Do We Go From Here? Here is is below as it bears repeating again.

“The biggest problem, getting back to Galbraith, is that in the process of facilitating sellers, all the new technology does not produce any buyers. I know most will disagree with that, but keep in mind that demand is a state of mind. It runs away at the first sign of trouble. Put another way, the same emotions that motivate sellers cause potential buyers to hold off. Sell is preordained, but buying requires a complex greed analysis. Which leads me to my “glass theater analogy.” We are all familiar with the most common analogy for panic: when someone yells “Fire!” in a crowded theater. The problem, of course, is that there are 50 rows of seats, but just two aisles leading back to two doors on the back wall. Grown men and women may trample small children to escape getting fried.

There are a couple of problems extending that analogy to the stock market, so I made some changes in my “glass theater analogy”. The biggest problem in the market is that, even if you choose the aisle seat, last row, you can’t escape unless you can find someone to take your seat. As Galbraith pointed out so many years ago, you can’t be a seller unless someone else will buy. (What a dirty little secret!). Another big problem, considering the speed of the technology today, is the basic transparency. It’s as though the back wall of the theater were made of glass, and all the potential patrons can see what’s happening inside. It’s right there on their screen! Who is going to take your seat when they can see the carnage going on in there? Which leads me back to last week’s mysterious plunge. First of all, remember that reading Alan Abelson the Saturday before the 1987 Crash, he indicated we had already had it with the 230-point drop the week before. The newspapers last weekend sounded a bit like a post mortem too. “The SEC is trying to get to the bottom of it.” I can save them the trouble. What do you expect when your weapon has a seven cartridge magazine in the butt compared to a single load, wad and ball. You get 1000 points in 15 minutes. Wait until the human nature kicks in again someday, in a big way. It might become 5000 points. You could retrace this bear market rally in a hurry."

Caveat emptor.

Tuesday, April 10, 2012

Earnings: Reported vs Operating?

Its earnings season again. Regular readers know my antipathy for 'operating earnings' as opposed to the reported variety. Previous posts such as Cheaper Than They've Been In Two Decades huh? outline the lengths Wall St. will go to paint a rosy picture. Wall St. loved reported earnings until the late 90's when it stopped justifying their bullish stance on stocks so they switched to the more favourable operating. Wall St. loved GAAP (Generally Accepted Accounting Principles) until the housing bubble popped and very few of the banks were left solvent using its time honored rules so the banks bought a few more congressman and senators and had the rules altered (remember FASB 127 aka mark to market?)

Just as reported was switched to operating, mark to market was switched to mark to fantasy or as the boys over at Comstock are wont to say GDAP or Generally Deceptive Accounting Principles.

Please take a moment and read this latest piece from Comstock Why Valuation Doesn't Insure Against a Significant Market Decline. If anything it might help you sort through the garbage spewing from the mouths of the shameless shills on the pom pom network (CNBC).

Monday, April 9, 2012

In Need of an Education

I want someone to pinch me so I can wake up from this terrible nightmare. I dreamt that thousands and thousands of young men and women of our military- you know, other people's children the ruling elite in this country are so eager to send off to die in wars of profit and empire building - are all on prescription meds.

Take a minute and check out the eye-opener LA Times piece by Kim Murphy entitled A Fog of Drugs and War. Maybe someone out there can educate me on why I should not be scared to death of this development.