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Proof Media in Total Moral Hazard When Forbes Compares BP with Goldman
By Static Chaos
When a major mainstream media like Forbes compares BP with Goldman Sachs and recommends investors to buy Goldman stocks, you know the world is in total moral hazard and deserved to be doomed as Marc Faber always said.
Since Forbes is a financial publication, I will refute based on the investment thesis first. Granted both stocks are high risk plays right now, but I'd venture to say compared to Goldman, BP is obviously oversold and a victim of media hype and Whitehouse populist approach.
This conclusion is based on BP dividend yield (currently close to 7%), a strong average annual compound rate of return of 17.9% since 1977 vs. 10.7% from S&P, the growth prospect of crude oil and low forward P/E ratio of 5.64.
The in-depth Chart of Day story of BP on May 6 by Bloomberg (Chart below) should more than confirm my conclusion about BP stocks from a technical point of view.
Throughout its history, Goldman has been shortchanging retail investors by abusing its market position, which by the way, is put in place partly by the taxpayers' money. Sure, there were a few "official investigations" throughout the years, but basically went nowhere most likely due to the Vampire Squid's deep pocket, massive legal team, and far reaching influential tentacles into many related government agencies.
Now, the SEC finally got the ball to bring a civil suit holding Goldman responsible for misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. I will not go into the detail here of how Goldman knowingly contribute to the subprime crisis, which is the closet point of origin of the financial crisis leading to the current "Great Recession" and the 9.5% jobless rate.
This is not to excuse BP for the Gulf oil spill mess. The environmental and economic impact has yet to be fully assessed. But one thing people seem to have chosen to ignore is that BP has paid and will be paying for a long time to come for this mistake ($930 million to date). But where is Goldman on this??
Almost 1,300 vessels are now involved in the response effort. Other oil companies are also helping BP in the Gulf including the world's top supermajor--ExxonMobile--by providing personnel and vessels. The entire oil industry will bear the brunt of the public outrage and is already working together to improve safety and engineering process and procedure to prevent any future similar incidents.
In contrast, posturing aside, Goldman is yet to even formally acknowledge any misdeed. The entire financial industry, instead of looking into self reform, is fighting tooth and nail with Washington on the proposed financial reform. Many are talking about setting up offshore shops to avoid the regulatory "burden".
Meanwhile, the swift regulatory backlash is coming down hard on the oil industry as we speak to "reform" the drilling safety standard, while a meaningful financial reform act is yet to materialize in our life time.
So excuse me for being more than outraged when Forbes dares to compare BP with Goldman, and the biased-agenda-motivated moral hazard the mainstream media have been brain-washing upon the public.
By Static Chaos
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I'd suggest just voting with your wallet and discontinue investing in publicly traded companies altogether. The only thing public stock trading has "democratized" is the ability and scope of people to fuck over other people, and I would additionally suggest that it actually creates market inefficiencies from a macro perspective due to misallocation of capital.
The outrage should be focused on our elected senators and representatives: They have completely sold us out.
They're just responding to incentives. Politicians from essentially the beginning of civilization itself have simply been responding to incentives. It's basic human nature. You don't say a lot of things you probably wish you could say to your boss, because that would get you fired. Who are the politician's boss? It's not "the people", never has been. Just follow the campaign finance. Voting isn't going to get you anywhere either. Does anyone honestly think this Tea Party bullshit is for real? There is no way in fucking hell they're going to give up their power willingly, especially through the mechanisms of a representative democracy. I'll stop there on account of our good friends who monitor this board.
930 million ? Yes in clean up efforts . But our House and Senate critters voted to keep the cap of LIABILITY at 750 million , a pittance . Florida will be an oil soaked mess , coastal property zero value . The east coast fisheries will be devastated . Food prices will rise as low evaporation rates and tainted rain destroy crops and cause scattered unpredictable droughts . Yeah 750 mill ougthta take care of it . Fed , Congress ,Senate, destroyers of the world , with our consent .
TOXIC ASSET RIG (REPOST):
http://williambanzai7.blogspot.com/2010/05/toxic-spill-costs.html
THE GREAT CEO JERK OFF (Hayward vs Blankfein:
http://www.marketwatch.com/story/hayward-blankfein-vie-for-biggest-jerk-...
Bah, two companies whose business models and/or legal liabilities would have caused their failure in any fully accounted, non-government-intervened free market system. Crash and burn. 'Bama Bailout BP. Bay of petro pigs. Burn, baby, burn. <goes back on meds>
Spiru Agneww,
Would not have it any other way.......
FRANKFURT/MADRID (Reuters) - The European Central Bank warned on Monday that euro zone banks face up to 195 billion euros (165 billion pounds) in a "second wave" of potential loan losses over the next 18 months due to the financial crisis, and disclosed it had increased purchases of euro zone government bonds.
Let's all give a nice round of applause to BP and our ignorant ass governement and its superbly stupid agencies.
http://news.yahoo.com/s/nm/20100531/hl_nm/us_dispersant_concerns
They have poisioned the entire Ocean and about to kill us all.
Who benefits?
Buffet thought ahead:
http://www.istockanalyst.com/article/viewarticle/articleid/3095068
Apparently so did Goldman:
http://www.allbusiness.com/business-finance/equity-funding-stock/683074-...
Now if he and Goldman can just keep the leak going a little longer.
Now, lets not over react here. Are the nobility directly affected? No, they can all move to the South Pacific. So, no worries mate.
To ensure that something like this never happens again, our esteemed legislators need to immediately pound their fists on the table in outrage and make statements about how BP will be held accountable. To be certain we get the best possible outcome for cleanup and crafting of future regulations, they will also immediately meet with oil industry executives and their lobbyists. If they really want to get tough, they can call in Christopher Dodd for ideas in drafting regulation. Maybe even some retroactive punishment along the lines of a hellacious slap on the wrist. The slap heard round the world! No sirree, nobody can accuse our legislators of not being tough on their benefactors.
If the comparison to Goldman is valid, then BP should immediately have access to the discount window at just above 0% as well and be given an exemption from any auditing. They should also get a seat at the PPT table while we're at it, and be free from any pesky anti-trust laws, prohibitions on collusion, RICO, etc. National security, you know. Regardless of where BP is headquartered, the stability of the world is at stake! Worked that way with the financial bailouts, so why not in this case?
Better yet, why don't we just transfer all of BP's US assets directly to Goldman Sachs, with the future liabilities being covered by the US taxpayers? It's the new American way. Now that's really Beyond Petroleum! Of course, we'll be sure they're held responsible; that's what the $25 co-pay is for.
"The slap heard around the world!" ROTFLMAO
/irony on/ "Crafting" future regulations. As if the excrescence of bought and paid for regulation was anything other than corruption of the first order. /irony off/
Hear Hear! I'm e-mailing my congressman forthwith! You think we can figure out a way to get AIG involved in this?
Who do you think issued the policy for the GoM cleanup?
BP is a terminal illness for the GOM. Goldman is a terminal illness for America.
BP is too big too fail - I say bail them out.
They have a point:
Union Carbide got off scott-free from the mass murder of over 10,000
people at Bhopul India pesticide plant
I think the people killed in India were officially classified as "those people" then. Of course, some Republicans - and few "libertarians" (wink wink) - would still say there are lots of "those people" where this oil-spill is, but I'm still thinkin' they won't be able to kill 10k of "those people". The US has definately progressed morally in the last few decades, don't ya think?
Big Oil controlled by the WASPS, Big Jews in control of all Global Markets and Government Treasuries and International Finance, Big Catholics running SCOTUS, Big Profits all 'round for all three of them Untouchable.
Three Godzillas throwing their weight around all over the world. "Investing" in two of them is likely going to prove not too poor a move and in the end, it is ALL about the money so place your bets on both. You likely won't be sorry in a year or so. And you can collect 7% secure along the way.
"...and is already working together to improve safety and engineering process and procedure to prevent any future similar incidents."
Yeah, and unicorns are shitting Gold bars all over the US.
Uncle Gordon,
You told me that Lord Blankfiend was pooping Skittles all the colors of the rainbow off his balcony. You didn't say anything about gold bars. (Sigh, so sad.)
Whats wrong with skittles?
it's all just outrageous anymore ........ just outrageous.
Mark me down as not caring what Forbes says about anything.
We have to now say + 1 Billion..no use wasting time with small digits.
By that reasoning, I would be buying into a chop-stick maker.
I concur. Quite frankly I wouldn't want to hold either right now. Besides Chinese Solars I wouldn't want to be holding any stocks right now. Blue Horseshoe loves Chinese Solars.
+1000
Even when Steve Forbes has a good idea his personality makes the idea suck by default.
Mr. Forbes is part of the problem, can you see him as Prez? I never thought about moving to another country but his election could make me do it.
I'm not sure I see the point being made. Forbes is making a buying recommendation, not rendering moral judgement. If Goldman benefits financially from their predatory and amoral business model, which they have so far, then from a practical standpoint they are probably a better investment.
Disclaimer: I despise BP and GS, and don't think much of Forbes or most other financial publications just because of this kind of moral neutrality.
I think you both just made the same point. A society without financial moral judgement become - uh - the US.
What Max Weber called the "iron cage."