SeeTheLight

A Summary of Q1 Bank Earnings: World, You Just Got Hustled

Excellent article. One of the best I've read on Seeking Alpha. I don't see anyone refuting your facts of how the banks managed record profits one quarter after posting record losses. Clearly accounting shenanigans as you so eloquently described. So, the world was hustled again. Surprise surprise. Nothing new there, GS has been doing that since the 20s. With the inevitable Watergate like investigations still years in the offing, the question is how to respond now to protect and capitalize off this situation. The reality is I think we are faced with a great depression scenario. If you look at some of the charts of the 30s and 70s it is amazing how closely they align, and yes there was a massive extended bear rally right about this time in both of those before the final slow multi-year descent. I bought in a bit over the past 6 months and now I'm getting some stops in. I'm happy to miss the first few days of the pendulum switch because who knows how high and far this thing can go. I suspect the next downward swing will be slower and more drawn out, unlike the quick shocks in Oct., Nov., and January. The repercussions from those wounds are only now beginning to set in and that is the next challenge for the global economy. Yes, the patient was rushed to the hospital and was saved, but while the world hurrahs that disaster was averted, the truly insidious effects of those strikes is only now beginning to show up in the body. The hangover will occur, the only question is when will the patient notice.

Paying the AIG Bonuses - The Alternative Is Worse

Mark, the fact is that you are dead on. People will hire these AIG specialists. Do people think companies don't hire hackers or other miscreants. Just think about it like this. If someone built a nuclear bomb and accidentally blew it up, do you think people would hire this person (assuming he didn't kill himself). Absolutely, and at a massive salary, the guy is smart enough to build a nuclear bomb, and now he knows what not to do to set it off again.

Who is stupid enough to think that all these deratives are going away. They are not, they'll just be replaced with better and hopefully safer versions, by the same people who made them the first time. Funny enough, smart people understand that other smart people make mistakes. They are humans. And guess what, people will be lining up to hire these AIG people at the same wages, because they made AIG billions of dollars before the house of cards fell in. Do people think others won't want to try again. Of course they will.

If you don't pay these people, they will leave and go and do this work elsewhere for the same (or more) pay. What the masses don't understand is that the top people will get hired regardless of a recession. They are always in demand, even the ones that are shysters, someone is always greedy enough to give them another chance. If you need an example, see Donald Trump, who's casino biz is Chapter 11 for the third time in just over a decade, and yet someone will fork over to him more money.

People are the value in a company. If the top people go, then the company is worthless. That's all AIG has left, smart people who made a costly mistake. Now the US government is forcing out the smart people. If you want to talk about a worthless organization, look at Congress. But then again I'm Canadian, so this debacle is not on my tax dollar.

(Note: I am not specifically calling out the US gov't, Canada's is no better, well except for our anti-lobbying rules and tight limits on campaign dollars, but still corrupt and ignorant).

Good Luck All