Government Sachs

government-sachsIt is almost redundant to post this story, but I suppose for “piling on” purposes there is a major story in Rolling Stone by Matt Taibbi on ‚ÄúGovernment Sachs‚Äù. This goes to the larger thesis of the financial oligarchy that has emerged in the US in the past 2 decades, recreating similar conditions in the 1920s. (Right before another crisis I believe?)

The amazing thing is after this fallout almost all of Goldman’s major competitors disappeared or were damaged severely. Many of the markets they serve now have far fewer players which means … wait for it… higher profit margins. In the first quarter, their trading desk only lost money 8 days… which is like a baseball player hitting .600+ for 3 months. But our knee jerk market is one based on information flow and if you (a) have much greater access to information and (b) now dominate much of the volume flow – I suppose you have an advantage or two.

Or it could all be smoke and mirrors and the folks at this company simply are that much better than all the other bright financial minds in every other firm across America. If you’ve ever seen some charts showing the inter-exchange of humanity between Washington and GS, you’d think otherwise.

Other examples – Goldman and friends across the Street claimed naked short selling is not a problem and would be expensive and difficult to stop. This was when their traders and their largest clients (hedgies) made small fortunes shorting smallish companies with no chance to fight back, with shares created out of thin air. Then once Goldman (and Morgan Stanley) were the last 2 standing last summer in the financial implosion of investing banks, calls were put into Washington and … shorting of financials was banned. Oh yes, and naked shorting was also banned – and it worked effectively. Amazing isn’t it.

If you have qualms with anything coming out of Rolling Stone of value in regards to finance – the writer Taibbi is someone I’ve read many pieces from over the years and could write for the Wall Street Journal just as easily as RS. The March piece from Taibbi on AIG on the “Wall Street Revolution” is a masterpiece.

Writer Felix Salmon has some nice outtakes and his opinion on the Goldman piece…
• Suffice to say that in the second sentence of the piece Taibbi describes Goldman as “a great vampire squid wrapped around the face of humanity”; later on, he calls it “the planet-eating Death Star of political influence”.
• Taibbi makes the case that it’s not just wheat futures which have been overrun by index speculation, but commodities in general and oil in particular. Indeed, Taibbi puts Goldman, Zelig-like, at the center of no fewer than four speculative bubbles: one in the 1920s in which Goldman-controlled entities ended up losing an astonishing $475 billion in today’s dollars; the tech bubble; the housing bubble; and the oil-price bubble ending in 2008. He calls the US “a gangster state, running on gangster economics”, and is very explicit about exactly who he thinks the gangsters are. (Clue: they paid just $14 million in tax on $2 billion in 2008 profits.)
• I don’t agree with all of Taibbi’s article, but I’m surprised at how much of it I do agree with, especially when it comes to the subject of regulatory capture. Taibbi spends no little time looking at Goldman subsidiary J Aron, and the semi-secret letter it was issued by the CFTC in 1991, the existence of which wasn’t even known to Brooksley Born, who was then the chair. The letter allowed Goldman to ramp up its activities in Chicago by orders of magnitude. When Congress asked to see the letter, the CFTC was careful to ask Goldman first if that would be OK.
• The chances that the Fed, or any other systemic risk regulator, will be able to rein in this powerful organization are probably slim. The best we can hope for, I think, is that Goldman will unilaterally decide to be a force for good in the world, rather than an inflator of bubbles and profiteer in busts.
This is not conspiracy theory stuff…… when so many people from so many places talk about all the smoke coming out from the crevices Рeither everyone is in a state of delusion OR jealous OR there is a lot of truth to what is happening in dark corners where we are not allowed to see. Sadly it appears there is no changing it Рjust part and parcel in living under financial oligarch.
Goldman Sachs (GS) will post incredible profits this quarter. ‚ÄúWe just raised the most money in secondary offerings ever in any quarter‚Äù‚Ķ.. as we diluted the pants off almost every major financial firm in America, and Goldman had its hand in almost every one. Not to mention all these bond offerings to keep the US borrowing machine going…. not to mention … well, expect a blowout quarter. And many more in the future… it’s Goldman’s sandbox.*
Find Matt’s article, The Great American Bubble Machine and devour it
• subject from a blog by Trader Mark

Getting Revenge on a Bad Financial Advisor

revengeA group of German investors is accused of kidnapping and torturing their financial advisor. The advisor, James Amburn, is alleged to have lost a fortune investing in Florida real estate. Police reports claim Amburn was beaten with a walker (aka Zimmer frame), burned with cigarettes, and chained up like an animal.

You’ve got to hand it to the Germans: They make great cars… and they don’t suffer bad financial planners lightly. Here’s one way to get back at a terrible financial advisor!

Steal From the Rich and Give to the Poor

robin-hoodAccording to IRS data, the bottom 50% of wage earners paid a total of 2.99% of all taxes, almost none. The top 50% paid 97%. With Obama’s new scheme to pay out cash to people who pay little or no taxes (so-called refundable tax credits), more than 50% of American citizens will pay no net federal taxes starting next year.

This revenue policy spells big trouble for America down the road. Why? When more than half of the people in the country aren’t paying for any of the costs of government, it becomes impossible to win an election by promising to reduce the size of government, even when doing so becomes critical (like when there’s a huge budget crisis or a runaway deficit).

And that’s how democracies have always fallen apart historically: The moment the majority is allowed to tax the wealth of the minority away from them, the society falls apart.

End of the Week Market Report

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Despite all the bad data out this week – new and existing home sales, GDP, jobless claims – only one has given the Street a jolt: Durable goods. Orders for items meant to last a few years increased 1.8% from April to May, smashing Wall Street’s expected 0.4% growth. Never mind that orders in the first five months of 2009 are down 27% compared to 2008… May’s number is another green shoot! Hooray! “‘I get figures on 70-odd businesses, a lot of them daily,’ said Warren Buffett yesterday. ‘Everything that I see about the economy is that we’ve had no bounce. The financial system was really where the crisis was last September and October, and that’s been surmounted and that’s enormously important. But in terms of the economy coming back, it takes a while. There were a lot of excesses to be wrung out and that process is still underway and it looks to me like it will be underway for quite a while. In the [Berkshire Hathaway] annual report, I said the economy would be in a shambles this year and probably well beyond. I’m afraid that’s true…”‘I had a cataract operation on my left eye about a month ago and I thought maybe now I’ll be able to see green shoots. We’re not seeing them. Whether it’s retailing, manufacturing, or wherever. We have a big utility operation. Industrial demand is down like we’ve never seen it for a simple thing like electricity. So it hasn’t happened‚Ķ.‚Äù The stats for Friday are‚Ķ‚Ķ The Dow Jones industrial average .DJI dropped 34.01 points, or 0.40 percent, to 8,438.39. The Standard & Poor’s 500 Index .SPX fell 1.36 points, or 0.15 percent, to 918.90. But the Nasdaq Composite Index .IXIC gained 8.68 points, or 0.47 percent, to 1,838.22. Trading volume was heavy on the New York Stock Exchange, with about 2.35 billion shares changing hands, far above last year’s estimated daily average of 1.49 billion, while on Nasdaq, about 3.87 billion shares traded, sharply above last year’s daily average of 2.28 billion.

Insiders Unloading Stocks

dump_truckExecutives at U.S. companies are taking advantage of the huge market rally to unload stock… Insiders at S&P 500 companies are dumping their shares at the fastest pace since June 2007 (two months before the credit markets froze) and have been net sellers for 14 straight weeks. So far this month, insiders at S&P 500 companies have sold $2.6 billion in stock… more than 22 times the number of purchases.
The message these executives are sending is clear… They do not believe their companies’ fundamentals merit the current, inflated share prices. Buyer beware…

The Fed said Economy not to Recover Soon

stock-market‚ÄúThe Fed is a little more downbeat than the market has been … that they’re emphasizing the weakness is a touch disappointing to me and to the markets,” said Jim Awad, managing director at Zephyr Management in New York. That‚Äôs Wall Street speak for lookout below. The Fed flat out said the economy is not going to recover anytime soon. The market makers were running up the indices this morning until the reality hit one more time in the afternoon. The Dow fell for the fourth day and other indexes ended well off the day’s highs on Wednesday. The stats are‚Ķ‚Ķ.The Dow Jones industrial average .DJI was down 23.05 points, or 0.28 percent, at 8,299.86. But the Standard & Poor’s 500 Index .SPX was up 5.84 points, or 0.65 percent, at 900.94. The Nasdaq Composite Index .IXIC was up 27.42 points, or 1.55 percent, at 1,792.34. Swim at your own risk.

Include a Photo Booth at Your Next Event

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Photobooths can spark economic activity in an event

Consider including a photo booth at your next event. Your guests are all dressed up for a wedding, bar or bat mitzvah, a sweet 16 party, a graduation, a corporate event, a seasonal party or any other celebration; so why not get their picture taken in a fun way that will make great memories for everyone?

Our niece got married in Tucson, Arizona, and during the reception we noticed a photo booth. Just like you see at the mall, the photo booth took a series of photos then spit out a strip of four photos for one low price, but at a gathering, the photos are paid for by the party host. There was a box of props that included hats and boas, and an attendant was there to make sure everything ran smoothly.

After the pictures were developed, there was a scrapbook station. With textured scissors and colorful markers, each guest that had their photo taken was asked to use one or all of the photographs and make a scrapbook page. There were no limits, so themed pages were made and guests were also welcomed to take some photos home with them. The attendant kept the station supplied and was available to answer any questions.

The photos were developed quickly and the kids loved grabbing a friend and taking as many pictures as they wanted to for free. Normally, the booth rental includes unlimited pictures with no additional charges, but some companies charge after a certain number of photos is reached. Be sure to read your rental contract carefully. Grandparents with grandchildren, a booth full of cousins, and a booth full of sorority sisters were popular shots at the wedding we attended.

When you book a photo booth you may be offered many different choices, but no matter which one you choose, your guests are going to ham it up for the camera and your memories and those of your guest’s will be perfect.

Do Not Stop Shopping, Change Where You Shop

shoppingDo not stop shopping, change where you are doing your shopping. Fernandina Beach, Yulee and Amelia Island are full of classy consignment shops. With the struggling economy these are businesses that are doing well. People looking for extra cash are dropping off clothing, shoes, purses and accessories in record quantities. And those looking to save a few dollars are shopping these bargain racks, first.

The economy today has everyone tightening their belts and saving every way they can. I talked with a friend the other day and she was telling me how much she loves to shop, especially for clothes. Today she does not visit the malls and high end stores as before, but she now shops at “chic” consignment shops and can’t believe the deals she finds. High dollar name brands can be purchased for a fraction of the original cost. Often the clothing and other items found in consignment shops are barely used and some are even new. Like all shopping, you should inspect the item carefully and try them on in the store because different shops will have different return policies.

So if you have the Spring Fever Shopping Bug, do not stop shopping. Consider changing where you are shopping by venturing around your own hometown and discover some of our local consignment shops. You can even find furniture on consignment! Be sure to check the SearchAmelia Business Directory. Local stores with Web sites will be found in our business directory for your shopping convenience!

Reduce Your Utility Bills

hot-water

We all want to know how we can operate our homes comfortably, yet still find ways to trim a few dollars from our utility bills. Utility bills are always rising, so you have to learn how to reduce your household consumption.

I am sure you have heard of many ways to reduce your bill, but there is one area that is a mega drain on your wallet, your hot water heater. If you have an electric hot water heater there are a couple of things you need to do that will reduce your utility bill significantly. First turn the thermostat down, most people want to turn it wide open and that is not necessary.

You can reduce your water heating costs by simply lowering the thermostat setting on your water heater. For each 10F reduction in water temperature, you can save between 3% – 5% in energy costs.

Although some manufacturers set water heater thermostats at 140F, most households usually only require them set at 120F. Water heated at 140F also poses a safety hazard scalding. However, if you have a dishwasher without a booster heater, it may require a water temperature within a range of 130F to 140F for optimum cleaning.

Keep the money in your pocket instead of giving it to the utility company.

From Real Estate to The American Buffalo

From Real Estate to The American Buffalo

Gold rush likely to expedite

By: Nick Deonas

The US Mint is temporarily halting sales of its popular American Buffalo 24-karat gold coin because the Mint can’t keep up with soaring demand as investors seek the safety of gold amid economic turbulence. The reason for the suspension is because of the overwhelming demand for the coins. They were first introduced in 2006, but now the Mint’s inventory has been depleted. The Mint has sold 164,000 of the coins this year, up 54 percent from same period last year. Once should be cautious however, just as gold has risen, it can also fall. The old saying holds true here, don’t put all your eggs in one basket.

Times have changed dramatically in the past twelve months. Remember when everyone was seeking out a piece of real estate to invest in. Buying up everything in site, nothing was too scary if it was dirt. Then the big down turn, or as the news media started calling it, “the real estate bubble” and all of a sudden no one wants real estate any longer as an investment. So where do people go to invest their money these days, those who still have some money to invest, that is. When the economy gets bad people have always turned to Gold. In this economy there is a stampede going on.

No Back to School Tax Break

No Back to School Tax Break

If you were waiting for the ten day sales tax holiday to shop for school and hurricane supplies, forget it. Florida lawmakers have chopped the popular event that saved consumers a whopping $41 million during the 2007 tax holiday.

Almost all of the state’s money comes from sales tax and this year the state just cannot afford the holiday for residents. Expect retailers to advertise sharp discounts to get consumers into their stores to attract more shoppers.

Watch the ads, shop with a list and look for items on clearance racks to get your best deals.

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