Saturday, October 31

Rest in Peace - Ken Jessup

I lost an old friend today and don't much feel like talking about finance.

Monday, October 26

Is Your Bank Doomed?

This list will tell you. Any number greater than 100 in the column labeled "Texas Ratio" means the bank is --uhm-- "less than healthy". How's that for politically correct?

Wednesday, October 21

If you consent to it, its not a crime

Interesting juxtaposition of headlines in the WSJ yesterday:
Rising unemployment. Big banks making tons of money and paying huge bonuses. Does this make any sense?

The U.S. Government is bought and paid for by the NY bankers. The government operates for the benefit of these banks. The bankers are raping us, and the government is the one providing the rope and duct tape.

The most profound insight on the nature of government comes from the Declaration of Independence: ...all government derives its just powers from the consent of the governed.

If you continue to consent to this type of government, then it is not rape, it is merely kinky, consensual sex.

Friday, October 16

Why the SEC will never rein in Goldman Sachs

Seriously, do you still believe this is a government "of the people, by the people, blah blah blah"?

From Bloomberg: The U.S. Securities and Exchange Commission hired Adam Storch, a 29-year-old former employee in Goldman Sachs Group Inc.’s business intelligence unit, as the enforcement division’s first chief operating officer, according to people familiar with the decision. The COO, who started Oct. 13, has “a great deal of background” in technology and managing processes and the pace of work, Robert Khuzami, head of enforcement, said yesterday in Washington. Storch, who worked since 2004 in a unit at Goldman Sachs that reviewed contracts and transactions for signs of fraud, will be charged with making the unit more efficient. Storch, reached by telephone at the SEC, declined to comment.

That's right - the chief enforcer for the SEC is a wet-behind-the-ears Goldman Sachs puppy. He worked at G-S since 1984 which means "since they hired him out of college." Yeah, that is some serious experience there.

I continue to assert that Goldman Sachs owns the government and runs things for their own benefit. How else to explain the fact that this time last year, the big banks - led by G-S - were begging for a government bailout and this year G-S is set to pay their biggest bonuses ever?

Remember: government derives its just powers from the consent of the governed. As long as "We the People" continue to assent to this government, then the crime syndicate that runs the biggest banks and by proxy the government will continue stealing from us and say it is for our own good.

Thursday, October 15

What Happened to Global Warming?

That bastion of reactionary, luddite, head-in-the-sand hyperconservatism - the British Broadcasting Company, (yes, I am attempting to be sarcastic) - wants to know what happened to Global Warming.  Good story and worth your time.

Have you noticed that the Do-Gooders who always worry about things that cannot be changed have switched the object of their worry to Climate Change and away from Global Warming? Back in the mid 70s, the same nincompoops were up in arms about the coming New Ice Age but they had to change their tune in the late 80s because the Ice Age they predicted with such confident certainty was manifestly failing to... well, manifest.

That's when they changed to worrying about Global Warming.

I suppose after another 20 years of the Climate not Changing, they'll worry about The Sky Falling, or something equally unlikely and unpreventable. These people would be objects of pity and derision if they didn't wield so much power to harm the rest of us with their baseless schemes.

Wednesday, October 14

DOW at 10000? Whoop Tee Doo

The Dow Jones Industrial Average closed above 10,000 today for the first time in a while. It first crossed the 10,000 in 2000.

What does "Dow 10000" mean today?

In 2000, you'd need more than 30 ounces of gold to buy the Dow. Today, you'd need less than 10 ounces.

In 2000, your dollar would buy almost 30% more than it will today. (Check out the Bureau of Labor Statistics Inflation Calculator linked here on my site.) That's what inflation does to you.

In other words, the Dow at 10,000 today is equivalent to the Dow at about 7500 in 2000.

Whoop Tee Freakin' Doo.

Imagine how bad it would be if STUPID people were in charge..

The date is July, 2005. Can you guess who is answering the questions?

Q. "Can you give us your view of whether there is a housing bubble out there?"
A. "I don't know whether prices are exactly where they should be but I think they are supported by the strength of the economy."

Q. "So tell me, what is the worst case scenario, if in fact we were to see prices come down substantially across the country? "
A. "I don't buy your premise. It is a pretty unlikely possibility. We've never had a decline in house prices on a nationwide basis. I'm confident in the fact that the bank regulators will pay close attention to the kinds of loans that are being made, making sure that underwriting is being done right... I do think this is mostly a localized problem and not something that impacts the national economy."

In hindsight, it sounds like this person was not very well informed, doesn't it? But who could blame him?

You'd need to actually know what was going on inside the banks to realize that they were making loans they knew couldn't be repaid - and the only people who knew that were the bankers themselves.

And you'd need to know what was going on with the bank regulators to realize they weren't doing a thing about it - and the only people who knew that were the Bankers responsible for watching over the banks. No, the only possible way you could expect someone to know what was really happening with the banks would be the people in charge of the Federal Reserve. They were really the only ones who could possibly know, right?

So you could hardly blame this guy for being so completely clueless.

Good thing we have really well informed, intelligent and ethical individuals deciding how to save the economy.


Friday, October 9

S&P 500 now trading at 140 Times Earnings

Greetings readers,

I will be away from my computer over the weekend for a much-needed vacation, so my "Weekly Update" will not be published. But I do want to pass along this news to you:

As of September 30, the S&P 500 was trading at 140 times earnings. Here's the link to the Standard and Poors website confirming this information.

The S&P 500 is an index of the 500 largest public companies in America. It is considered the most reliable proxy for the overall state of the entire stock market.  For comparison, over the last 80 years, the S&P 500 has traded at an average of 15 times earnings.

What does this mean to you?

It means that the rise in values in the stock market since March is not the result of improvements in business; it is the result of the government dumping a little over a trillion dollars into the five biggest banks. The banks were supposed to use that money to lend, but they have instead used it to speculate in the market. (Goldman Sachs is the worst offender. The others are Morgan Stanley, JP Morgan Chase, Bank of America and Citigroup.)

This is NOT the time to be putting money into the market. It is time to make sure your investments are protected from a stock market reversal. It is also time to be saving and getting out of debt.

See you all next week.

Tuesday, October 6

Mid-Week Update

Hello faithful readers,

Just a brief note to let you know why you have not heard from me in the last month. I am hard at work changing this update from a text-based to a video-based update. It's taking longer than I anticipated, but we will get there.

In the meantime, I want to share with you a couple of things:

The first is a video I just found today. This is from Dylan Ratigan's show on MSNBC back in July. (Don't know why it took me so long to find it.) Dylan is one of the very few people in the MSM who asks good questions and doesn't kow-tow to his corporate masters. I have the utmost respect for him. (When he left CNBC, I quit watching it.)

This video is the clearest, simplest explanation of what happened with the banks and the Fed in the last year. If you're not angry, you're not paying attention.

Of particular interest is the presence of Eliot Spitzer, the disgraced former governnor of New York who was forced to resign in March 2008 when it was discovered he had paid for sex. Spitzer was the most powerful public figure fighting corruption on Wall Street. His forced resignation occurred exactly one week prior to Bear Stearns being forced to sell itself to JPMorgan Chase. This was no coincidence.

The second is to recommend to you Matt Taibbi's article in the most recent issue of Rolling Stone. Taibbi is an investigative journalist of the highest quality. He has authored two of the best pieces I have read on the banking crisis. (Link is here.) It actually amazes me that he is still walking around, because he exposes malfeasance at the highest levels of our government and banking system. Please do yourself a favor and read it either online, (once it is posted) or pick up a copy at the newsstand today. It is the issue with U2 on the cover.