Archive - Nov 2009 - Blog entry

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Diane Urquhart's research has wider implications for employees and pensioners of other companies teetering on bankruptcy. If the explosion of CDS and leveraged buyouts is inducing a wave of bankruptcies, then why should taxpayers borne the cost? I say we tax the funds that are wreaking havoc on the real economy with their sophisticated financial "leveraging and hedging".

Reading through the Qs for this quarter, a picture starts to emerge of utter chaos when it comes to how banks are implementing -- or not -- the changes by the FASB to how organizations account for off balance sheet ("OBS") exposures. Let us take two examples:  Wells Fargo and PNC Financial.

Far from having good governance, most of these large funds are governed in an ad hoc fashion which provides the illusion of good governance. The claim that "Canada leads the world" on pension governance is an outright lie which ignores serious governance gaps that still remain in our pension system.

When I first came out with the PPD research (which I released for free as a public service, may I add), many were doubtful as the market was literally manipulated upward. I feel by blog's patrons were confusing the alleged "Ponzi scheme's" fundamental viability over time (and ability to avoid regulatory discipline) with the overall movement of the market and beta. As you can see below, things are not going well for this company. If one had faith in the research and rolled puts and protected shorts over, one should start seeing some decent gains. If I am right and this market is simply in a bubblicious bear market rally, any aggressive action by the SEC will drive this beta driven stock into the ground.

Yesterday, I commented on Goldman's CMBS offering through the government's leverage program known as TALF. I was very nice and diplomatic, yet despite that I still received what I would consider, inappropriate feedback. Okay, let's take the politically correct gloves off - they never fit me anyway. This deal probably flew because Goldman Sachs underwrote it. Goldman thrives off of brand name value primarily. Contrary to mainstream media inspired belief, they are not better than everybody else at everything. I posit, they are probably not better than anybody else at anything other than marketing and lobbying.

Cue loud music which gets everyone up on their feet ...

ECB President Jean-Claude Trichet on Wednesday urged European insurers and pension funds to have sufficient capital on hand, stressing they are "systemically important" to the financial system. I have long argued that insurers and pension funds need to be monitored by regulatory agencies that respond to systemic risks. Unfortunately, the New Normal for retirement benefits looks a lot like the old normal based on chicanery and deceit.

Technical Profiles of Gold vs Silver, the US Dollar vs Gold and the US Dollar with highlights from an interview with the winner of the 2008 Automated Trading Championship

Congressional switchboard: 1-866-220-0044

They're TALKING a good game, but talk is cheap...

October was another loser for the SSTF. We have crossed another critical milestone on the Fund's performance. This problem is at hand, not 20 years into the future. Will it have a market impact at some point? It is only a question of when, not if.

The world's most handsome and charismatic blogger stands outside his beloved friends at Goldman Sachs headquarters at 85 Broad (see pic) to congratulate them on the outstanding CMBS offering made through TALF government leveraging for Developers Diversified Realty (notice the funny looks that I am getting from the women in the background, haven't they seen a handsome and charismatic blogger before???). A few questions still linger, though...

The global affront on pensions continues. The rebound in stocks will offer a temporary reprieve, but the underlying structural problems remain and unless governments take this issue seriously, there will be many more pensions at risk.

Birds are singing, the sun is shining and life is beautiful again. On the surface, the vital signs of our economy are improving with every economic report. In some areas, like unemployment, the rate of decline is decelerating; in others, like GDP, decline is turning into growth. The stock market is behaving as if the history of the last twenty years is about to repeat itself: recession will turn into a robust expansion.