EGGBEATER

Banks Take a Cue from Ford's Capitalism

I THINK IT DOES NOT SEEM TO BE PROBABLE THAT FORD WILL GO BANKRUPT IN THE NEXT 18 MONTHS. THERE IS AN ATTRACTIVE INVESTMENT OPPORTUNITY IN CHEAP "FORD CAPITAL" BONDS (ALBEIT NOT "INVESTMENT GRADE") WITH A 9.5% COUPON, WITH THE UPSIDE RISK THAT AT MATURITY -JUNE 2010- ONE WILL GET BACK THE FULL FACE VALUE OF THE BOND, WHILE HAVING ENJOYED NICE INTEREST PAYMENTS.

FASB Statement 159: A Big, Fat Legal Scam

IF SOME THE DISHONEST, AND GREEDY, INVESTMENT BANKERS (e.g. MERRIL-L EX-CEO) WHO BROUGHT DOWN THE U.S. ECONOMY (AND ENDED UP COLLECTING OBSCENE BONUSES) WOULD HAVE BEEN CHINESE GOVT. OFFICIALS LIVING IN CHINA, THEY WOULD HAVE BEEN SENTENCED TO DEATH IN FRONT OF A FIRING SQUAD. AND THE COST OF THE BULLETS WOULD HAVE TO BE PAID BY THEIR IMMEDIATE FAMILY.
I'VE SEEN THIS HAPPEN IN 2000 WHILE DOING CONSULTING WORK FOR A GLOBAL COMPANY.

The Curious Case of Goldman’s Disappearing December

CUTTING SHORT A FISCAL YEAR BY THE LAST MONTH No.12 IS ANOTHER CONVENIENT GIMMICK TO HIDE REAL LOSSES BOOKED IN MONTH 12, (AND TO MISLEAD THE SHAREHOLDERS).
THE CURRENT (SHORT) YEAR (2008) WILL COVER 11 MONTHS THROUGH NOVEMBER 2008. THEN THERE WILL BE A ONE-MONTH "FISCAL YEAR" I.E. DEC. 2008 IN WHICH THE LOSSES ARE BURIED FOREVER. WELL ... NOT REALLY BECAUSE SUCH LOSSES WILL END UP IN "STOCKHOLDERS EQUITY" UNNOTICED ON THE BALANE SHEET (SWEPT "UNDER THE CARPET").
THEN THERE WILL BE A NEW AND FRESH FISCAL YEAR STARTING JAN 01. 2009 - ENDING DEC 31, 2009.-
THIS GIMMICK, PLUS THE "MARK-TO-MARKET" DISCRETIONARY FREEDOM, CAN SWING THE P&L FROM A REAL LOSS, TO AN ALLOWABLE PROFIT THAT WILL BE USED AS A BASIS TO HAND OUT OBSCENE EXECUTIVE BONUSES.

Mark-to-Market Changes: Looking Ahead

MARKET ACE, I AGREE WITH YOU 100% !
THE MINUTE WELLS FARGO ANNOUNCED THEIR SURPRISE 1ST QUARTER "PROFIT", I KNEW THEY MUST HAVE APPLIED THE "MARK-TO-MARKET" ACCOUNTING CHANGE. THIS IS PLAIN COOKING THE BOOKS IN A LEGAL WAY BECAUSE FASB HAS AUTHORIZED IT (UNDER POLITICAL PRESSURE).
FURTHERMORE, BANKS ARE ALSO ABLE TO HIDE THEIR LOSSES ON TOXIC ASSETS BY PARKING SUCH LOSSES UNDER "OTHER COMPREHENSIVE INCOME" ON THEIR BALANCE SHEET. THAT WAY SUCH LOSSES DO NOT SHOW ON THE P&L STATEMENT (BECAUSE THEY ARE BURIED IN "STOCKHOLDERS EQUITY"), THUS REPORTING A MISLEADING (HIGHER)EPS NUMBER. ANOTHER GIMMICK OF "CREATIVE ACCOUNTING".
THE RIGHT SCHOOL OF THOUGHT SHOULD BE THAT "ACCOUNTING IS NOT A SCIENCE, IT'S AN ART", IN SPITE OF GAAP.
REMEMBER ENRON ? WITH THEIR "HYPOTHETICAL FUTURE VALUE" ACCOUNTING OF ASSETS?

Quantitative Easing: The New Fad in Banking

DOES ANYBODY KNOW IF THE WELLS FARGO SURPRISE PROFIT ANNOUNCEMENT WAS ATTRIBUTABLE TO THE "ACCOUNTING GIMMICK" OF ABONDONING THE "MARK-TO-MARKET" RULE AND ARTIFICIALLY BOOST THE VALUES OF ITS TOXIC ASSETS (AND THEREBY INCREASE ITS CAPITAL BASE) ?

Pfizer's New Structure: Has The Company Learned From Past Merger Mistakes?

WE DON'T KNOW FOR SURE AS YET IF THE PFIZER/WYETH MERGER WILL TURN OUT TO BE A SUCCESS OR A FAILURE. IT'S TOO EARLY TO TELL.-
PFIZER'S ACQUISITION OF WARNER-LAMBERT BECAME A SUCCESS THANKS TO THE W-L BLOCKBUSTER DRUG LIPITOR, WITH SALES OF $ 12+ BILLION LAST YEAR.-
PFIZER'S ACQUISITION OF PHARMACIA BECAME SOUR DUE TO THE SUBSEQUENT FAILURE OF PHARMACIA'S 2 BLOCKBUSTER DRUGS CELEBREX AND BEXTRA THAT HAD TO BE, OR WILL BE, DISCONTINUED.-

A PHARMA COMPANY WILL EVENTUALLY HAVE TO DOWNSIZE (OR PERHAPS EVEN DISAPPEAR) IF: 1) IT HAS NO SIGNIFICANT/PROMISING NEW COMPOUNDS IN ITS R&D PIPELINE, AND, 2) ITS BESTSELLING PRODUCTS GO OFF PATENT PROTECTION, WHICH IMMEDIATELY BRINGS IN THE GENERIC WOLVES WHO HAVE BEEN WAITING TO FLOOD THE MARKET WITH SIMILAR PRODUCTS AT A FRACTION OF THE ORIGINAL PRICE.
CAVEAT: GENERICS NOT ALWAYS PROVIDE THE SAME STANDARD QUALITY AS THE ORIGINALLY PATENTED PRODUCT.

Wall Street Already Back to Its Criminal Ways?

ML/BOFA LEGALLY ENGAGED IN "CROOKED CAPITALISM", JUST LIKE THE MAFIOSI MOB, EXCEPT THAT INSTEAD OF KILLING PEOPLE WITH A WEAPON, THEY ARE KILLING THE ENTIRE ECONOMY WITH THEIR DEALINGS AND STARVING THOUSANDS OF HONEST SAVERS. THAT'S WHY WE ARE SEEING STREET RIOTS IN LONDON AND STRASBOURG BY WAGE EARNERS WHO HAVE LOST THEIR SAVINGS AND ARE JOBLESS BECAUSE OF SIMILAR BANKING CROOKS IN THEIR COUNTRY. DIDN'T THE COLLAPSE OF AIG ORIGINATE AT ITS LONDON OFFICE WITH THEIR GREEDY CREDIT DEFAULT SWAPS? HOPEFULLY THE G20 (PARTICULARLY THE U.S.) WILL ENACT NEW REGULATIONS THAT WILL PROVIDE JAIL SENTENCES FOR SUCH CROOKS.

China's First Step Towards Bilateral Currency Swaps

PAPER CURRENCIES NOT BACKED BY SOLID GOLD BARS WILL ALWAYS BE EXPOSED TO DEVALUATION RISKS. THE USD, EURO, YUAN, YEN, GBP, - NON ARE BULLET PROOF AT THE END OF THE DAY.
GOVERNMENTS CAN EASILY PRINT CURRENCY BILLS; NOT SO WITH GOLD BULLION. THE WORLD SHOULD GO BACK TO THE GOLD STANDARD.

"It's a bluff," WSJ's Holman Jenkins writes about lip-service to a GM (GM) bankruptcy. "Even a 'prepackaged' filing runs too much risk of a judge imposing more 'sacrifice' on the UAW than the administration is prepared to tolerate."

TIME TO BUY GM BONDS AT 15CTS TO THE DOLLAR, AND HOLD ON TO THEM UNTIL MATURITY WITHIN THE NEXT 18 MONTHS.
UNLIKELY THAT GM WILL GO INTO BK.

As Mortgage Rates Plunge, 30 Year Fixed Rate of 3.5% Seems Likely

CURRENTLY I HAVE A 30-YR 7% FIXED MORTGAGE SINCE JUNE 2008. THE LENDER (GMAC) IS NOT WILLING TO REFI AT A LOWER RATE UNTIL THE LOAN HAS RUN FOR 2 YEARS. I GUESS I'LL HAVE TO FIND ANOTHER LENDER WHO IS MORE COMPETETIVE.
ANY SUGGESTIONS?

An Investor's Guide to Hyperinflation

HYPER INFLATION 40%+ ??
I'VE READ OTHER ECONOMIST SAYING 50+%.
UP TO NOW THERE IS NO FIXED RULE ON DEFINING "HYPERINFLATION"/

UNDER SFAS-52 A COUNTRY'S ECONOMY IS CLASSIFIED AS "HYPER INFLATIONARY" WHEN ITS CPI IN 3 CONSECUTIVE YEARS, COMPOUNDED, BECOMES 100%, I.E. AN AVERAGE OF 26% PER YEAR.
IN THAT CASE THE COUNTRY'S "FUNCTIONAL CURRENCY" IS NOT CONSIDERED ITS OWN LOCAL CURRENCY. ITS "FUNCTIONAL CURRENCY" BECOMES THE U.S. DOLLAR FOR A U.S. MNC. OR THE EURO FOR A EUROPEAN MNC.
CHECK IT OUT !!