Thursday, October 29, 2009

GE looks to bring new profits to life :Obamanomics

It seems to blatantly obvious that GE and their media outlets NBC, MSNBC, CNBC etc. are incestuously in bed with the Obama Administration’s Socialist Agenda and Obamanomics.

But look a little deeper and even a casual observer would notice that not only are GE’s media properties propping up the Obama administration but GE Capital has received billions in bailout money , GE alternative energy and GE carbon trading units will benefit from Cap and Trade and GE’s medical technologies unit will benefit massively from Obamacare .Even GE’s Defense Units look to benefit when President Obama signs a defense bill approving funds to build a second GE engine for the F-35 Joint Strike Fighter Program .On foreign Policy GE received an invite to site down with Vladimir Putin after the abrupt foreign policy change made by President Obama on the European Missel Shield.

Jeffery Immelt, Chairmen of GE is a member of Obama's Economic Recovery Advisory Board. Mr. Immelt is not only an Obama supporter and financier but he has become a big proponent of “Global Warming” with GE being one of the prime beneficiaries of the proposed “Cap and Trade “ legislation.

GE is building major businesses in a lot of industries that should benefit from an Obama presidency ,wind power and other sustainable energy sources, healthcare technologies, railways. Power generation, aviation and clean water technologies.

GE looks to gain from virtually every aspect of the Obama agenda weather its nationalized medicine ,cap and trade, bank bailouts and perhaps with all their falling ratings a main stream media bailout. After all FOX News now has higher ratings than all its competitors combined and one wonders if the their current war with the white house has more to do with Obama’s attempt to prop up his media buddies and help GE.

General Electric (NYSE:GE) is the parent company of the major media conglomerate NBC Universal, which owns media outlets NBC, MSNBC and CNBC. At times that has led to the lines between corporate advocacy and journalism being blurred. While NBC is now the mouth piece for the Obama administration MSNBC and CNBC continue to front for the socialist agenda unfolding in Washington. Over and over again Immelt has used his platform at CNBC to make the case for a cap-and-trade program to curb emissions something Obama has called for and the one a Congressional committee is debating this week.

So this all begs the question : does GE own the Obama administration?

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Sunday, October 25, 2009

Democrats and the Big Lie : Health Insurance's "obscene profits."

Democrats and the Big Lie : Health Insurance's "obscene profits."

"I'm very pleased that (Democratic leaders) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years." House Speaker Nancy Pelosi, D-Calif.

Once again the Democrats in Congress are looking for a fall guy to cover their attempt to Nationalise Health care through the "Goverment Option". This time to no ones surprise its Health Insurance companies. Contrary to popular media driven misconceptions Health insurance profit margins typically run about 6 percent. However burdened by huge state mandates and anti-competitive regulations profits barely exceeded 2 percent of revenues in the latest annual measure.2% profits are anemic compared with other forms of insurance or a broad array of industries, even some very beleaguered ones. Credit ratings of some of the largest insurers have been downgraded to negative from stable heading into this year.Investors are looking at stagnant if not a shrinking market for private health plans. Investors also fear the health care surcharge in the latest health care bill will have a devastating affect of penalizing private plans and making private Health Insurance unaffordable, forcing millions into the government run plan.

Congressional Democrats are looking to add another notch in their belt after regulating the private mortgage market into crisis and pushing the US into one of the worst recessions since the great depression.

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Wednesday, October 21, 2009

"Net neutrality" : I am from the Government and I am here to help.

Once again big brother is here to protect us from ourselves and we are told that Regulation is needed “to preserve Internet openness, helping ensure a future of opportunity, innovation and a vibrant marketplace of ideas,” says Julius Genachowski head of the FCC.Leading the push for new regulations for "Net neutrality" . This all sounds very nice ,but an administration that openly attacks Private Citizens for expressing views contrary to there own such as Joe the Plumber ,FOX News and Rush Limbaugh is going to be put in charge of openness on the Internet?

One look at the history of innovation suggests that innovation has happening despite Government intervention and in reaction to Government intervention (getting around it) not because of it . Once again the gang in Washington seems to be living in the 1970's with so many unresolved issues from that decade. The insecurities of the generation that never made it continue to manifest them self's in more regulatory over reach ,Government controls and a virulent anti private enterprise mentality..

Opponents say net neutrality rules could interfere with management of their networks, risking slowdowns when applications such as peer-to-peer file-sharing hog limited bandwidth. They also say they may pull back from investing billions of dollars in more network capacity. Network providers feel the FCC is threatening restrictions on the ability and flexibility to manage traffic. Managing traffic is clearly and underhanded way to gain Government control of the Internet access.Turning networks into one big Government monopoly . We are already seeing in the EU blocking peoples Internet access as a punishment. How much longer will it be before content is controlled under the ruse of "not limiting access" or certain IP profiles come under surveillance ?

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Monday, October 19, 2009

Recent moves in the market continue to indicate that the move left will not have the lasting impact some claim and many fear.

Maket rallies as Federal drug agents told not to pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.

REPRINT FROM 5/07/2009 Major indexes still are not indicating anything more than a very oversold rally at this juncture .New bank "stress tests" seem to be reassuring the market as regulators finally seem to be getting there hands around the problem .Bank stocks have continued to recover as the need for massive mounts of capital seems to be subsiding .Commodities have begun their long slow some would say inflationary climb upward were over regulation and scarcity policies are already putting upward pressure on prices. While at the same time a slow economy exerts a contrary influence .

Recent moves in the market continue to indicate that the move left will not have the lasting impact some claim and many fear.The transitory nature of the current situation continues to push the market slightly higher .Though the main stream media continues to "hero worship" the new administration ,huge increases in many of the contrary news sources such as Fox News or Rush Limbaugh in both earnings and audence size indicate that much of the public simply is buying .

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Friday, October 16, 2009

A sign of things to come : Massive layoffs of government workers in Puerto Rico

A sign of things to come : Massive layoffs of government workers in Puerto Rico

Facing a deficit of $3.2 billion ,the island paradise of Puerto Rico announced that it would lay off 16,000 public employees on top of the 2,500 layoffs enacted earlier this year. The unemployment rate already a staggering 16% will be pushed further to 17% .While the layoffs looks to save the government $2 billion , despite howling protests from most of the islands major unions.

Puerto Rico know more as a tourist destination, and for its sandy white beaches and beautiful women is a case study and a warning on what happens when a population becomes all too dependent on subsidized government employment. In the past four decades, the commonwealth's government became the island's largest employer. The payroll represented 70 percent of the government's budget.

While other “Latino” cultures have long prided themselfs on strong family ties and entrepreneurs the island of Puerto Rico with its generous tax benefits and union pay packages have long favored government work .Perhaps we maybe seeing a historic change taking place. First because there is simply no money left and raising taxes looks to have reached the point like in many other places of diminishing returns ,while Uncle Sam is clearly taped out and second maybe perhaps because the “Latino” culture with its strong family ties lends itself more to ownership and the entrepreneur lifestyle.

As a frequent visitor to the island I have often noticed what seems to be enormous opportunities for the self employed and risk takers ,yet given the generous benefits of living on the island there is little or no incentive. Many businesses on the island are owned by outsiders ,who have long raved on the virtues of living and working in Puerto Rico . Yet except of the tourist trade there is little local involvement in business creation.

With the current strikes taking place protesting the layoffs ,my heart goes out to anyone who has lost their job ,but perhaps the painful process of transforming Puerto Rico into a vibrant entrepreneurial environment is underway. And perhaps the ground work is being done to change the culture and create a more opertunistic and self sufficient Puerto Rico.

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Monday, October 05, 2009

Jon Corzine: the man,the myth and the Goldman Sachs Years

Many of my readers have asked me to look into Jon Corzines days at Goldman and this is what I found:

In 1975, Jon Corzine moved to New Jersey, having taken a job as a securities trader at Goldman Sachs in New York. By 1980 he became a partner at Goldman. Jon Corzine rose rapidly through the ranks, to become chairman and CEO in 1994.

As CEO, Jon Corzine has been credited with engineering the transformation of Goldman Sachs from a private partnership to a public company. Smoothing out the volatility of Goldman’s earnings and producing a “kinder and gentler” company . Corzine had worked for nearly two years to transform the legendary partnership into a public company. Fighting significant resistance from many of the skeptical partners. Finally he succeeded in secret ballot,
However, Corzine was not universally popular as CEO, and was forced out in 1999

With the IPO approved Corzine took his family on a vacation. While he was away, three members of Goldman’s five-member executive committee, led by, Hank Paulson (the man he appointed ), staged a palace coup, stripping him of his CEO title and his power. The initial public offering (IPO) of Goldman went forward with out a hitch ,the stock created a huge windfall for the partners, including Corzine and made him a very wealthy man.

Mounting evidence has come to light that during Corzine's reign the firm may have manipulated the market and inflated stock prices through a controversial practice know as “laddering”,which was investigated by the SEC .Mr. Corzine is also considered by many the “architect” of ENRON. And the Center of the ENRON scandal and the Wall Street practices that led to the NASDAQ meltdown at the beginning of this decade

The two big issues that occurred on Corzines watch were the perceived facilitation of the ENRON debacle and the IPO bubble machine using a hybrid of “pump and dump” called“laddering” .


In 1993, Goldman Sachs “invented” a security called MIPS that offered ENRON Corp. and other companies an irresistible combination. It was designed in such a way that it could be called debt or equity, as needed. It resembled a loan, so that interest payments could be deducted from taxable income. For shareholders and rating agencies, who look askance at over leveraged companies, it resembled equity.

Officials at the Clinton Treasury Department, were skeptical of the so-called Monthly Income Preferred Shares, or MIPS. To them the MIPS looked like a charade ,a way for companies to hide the size of their debt while cutting their federal tax bill. CEO Corzine lobbied the treasury and eventually, the regulators acquiesced and Goldman and MIPS were off to the races. It has been alleged that Corzine’s used his lobbying activities, during that time , “benefitted him personally as an executive at Goldman Sachs.” It is claimed that Hybrid preferred shares helped mask the huge debt burden carried by companies like ENRON.
Goldman creates a new type of “Pump and Dump” called laddering.

According to Nicholas Maier, who was syndicate manager of the Wall Street firm Cramer & Co. from 1996 to 1998, Goldman Sachs routinely forced him to buy stocks at inflated prices if he wanted to purchase shares of an initial public offering (IPO). “Goldman, from what I witnessed, they were the worst perpetrator,” Maier said. “They totally fueled the [market] bubble. And it’s specifically that kind of behavior that has caused the market crash.

Maier told the SEC that Goldman Sachs would offer him shares of a new company’s IPO at the initial, low price of $20 per share only if he agreed to purchase “aftermarket” shares of the same company at $100 each. In turn, he would unload the shares of the higher-priced stock on small investors. Maier said. “Goldman created the convincing appearance of a winner, and the trick worked so well that many speculators were seduced into participating in this gold rush. The general public had no idea that these stocks were actually brought into the world at unnaturally high levels through illegal manipulation.”

In August 2000, the SEC issued a warning against aftermarket sales, also known as “laddering.” While Jon Corzine said ,“I’ve never even heard the term ‘laddering’ before”.Maier said it happened on Corzine’s watch. “For Corzine not to know of a common practice being utilized to generate and manipulate stock prices would be surprising,” Mr. Maier said. “He was obviously there during this time.

Trading profits are just too good

For some time Goldman Sachs has been accused by Wall Street insiders of employing sophisticated high speed computer programs to siphon of illegitimate profits from the New York Stock Exchange under the radar of regulators. Recently a former Goldman computer programer was arrested for allegedly stealing software codes used in the firms electronic trading operations .Federal prosecutors claim the codes were used to”manipulate the market in unfair ways”.

Government Sachs

Goldman has also been accused by many of taking advantage of so many X Goldman employees working in high level government positions. These allegations can also be traced back to the Corzine days ,more recently however the focus has been on alleged favoritism during the Wall Street and banking bailout as well as the TARP funding. Its hard to imagine with so many high profile former executives that Goldman hasn’t received preferential treatment and information exchanges.

This is not to claim that Jon Corzine was directly involved or that there is some vast Goldman conspiracy at work but the fact of the matter is that he was there in there in the thick of it and that if you know anything about Wall Street you know that investment banks are one organization were the people at the top are directly involved in the most intimate details of day to day operations of their firms.

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Friday, October 02, 2009

Unemployment Rate surges to 9.8 % as Obama’s stimulus package is pronounced failure

The Labor Department said the unemployment rate was the highest since June 1983 and payrolls have now dropped for 21 consecutive months.U.S. employers continue to cut a jobs in September, ballooning the unemployment rate to 9.8 percent, raising fears that the weak labor market is continuing to undermine the economy.

It seems obvious now that the government lead stimulosus package has been a complete and utter failure. Businesses continue to postpone key decisions while congress and the president debate ever higher taxes for health care ,and cap and trade . It seems no one wants to make a decision when the air of uncertainty is so heavy.

Both consumers and business face the specter of significantly higher taxes, higher energy costs, more regulation ,higher healthcare cost and significantly lower demand as the US Government continues to expand and control ever increasing pieces of the economy.

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