Tuesday, August 14, 2012

Facebook Shareholders: See Your Future

The internet mini-bubble Round Two:

I mentioned to someone just yesterday that I think the Facebook IPO may be the biggest Wall Street pump-n-dump fraud I have ever seen or read about.  Largest in terms of the dollar size and visibility.  In that context, it was fraudulently marketed with willful and determined violation of the SEC new issue regulations (SEC Act of 1933) by both the underwriter, Morgan Stanley, and the upper management of Facebook; and it was fraudulently dumped on the unsuspecting - albeit greedy and ignorant - retail stock customers of Morgan Stanley and of the entire underwriting syndicate.

Not only are the above-mentioned players guilty, the Obama Government, specifically the SEC and the Justice Department are guilty for lack of enforcement of the SEC laws designed to protect the investing public from the predatory practices of Wall Street. 

“When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see money flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self sacrifice - you may know that your society is doomed.” (Francisco D'Anconia, "Atlas Shrugged")


  1. Malaysians protest against changes to internet law

    Critics say revisions to the new law restricts free speech online
    Malaysian activists and bloggers are staging an online black-out for one day to protest against changes to a law they say restricts free speech online.

    They have replaced their home pages with black screens critical of the Evidence Act, revised in April, for Internet Black-out Day.

    Critics say the law makes people unfairly liable for content published from networks and personal devices.

    Officials deny the change is meant to silence critics ahead of an election

    Online media has also exposed corruption scandals among the governing parties, who have been in power for nearly 55 years, our correspondent adds.

  2. Neil Barofsky on the On-Going Bailout of Wall Street and the lack Criminal Prosecutions

    The legacy of the financial crisis and the response from the government is still making headlines. It has turned into a legacy with taxpayers footing the bill and Wall Street paying less for its crimes. Today the SEC charged Wells Fargo’s brokerage firm, as well as a former Vice President, for selling investments tied to Mortgage-Backed Securities without fully understanding their complexity or disclosing the risk to investors. Wells Fargo agreed to settle the charges. However, a fine of $6.5 million, no admission of guilt, and a 6-month suspension of the Vice President sounds like a handslap playing on a broken record. We talk to Neil Barofsky, the man who helped prosecute the CEO and President of Refco, and the watchdog for TARP — the government-sposered bailout of Wall Street.

    Neil Barofsky discuses the costs associated with the taxpayer funded bailouts of wall street doled out through tarp and the false promises made under the pretense of bailing out main street. He provides an in-depth account of his experience behind the scenes, as he tried to negotiate what he initially believed, was a program designed to save main street, but that he later discovered was really created with the full intention of bailing out wall street. That man is Neil Barofsky, the former Special Inspector General for TARP and author of “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.”


  3. Legalize Competing Currencies

    Allowing individuals and business to use alternate currencies, especially currencies backed by gold and silver, would expose the whole rotten system because the marketplace would prefer such alternate currencies unless and until the Fed suddenly imposed radical discipline on its dollar inflation.

    Sadly, Americans are far less free than many others around the world when it comes to protecting themselves against the rapidly depreciating US dollar. Mexican workers can set up accounts denominated in ounces of silver and take tax-free delivery of that silver whenever they want. In Singapore and other Asian countries, individuals can set up bank accounts denominated in gold and silver. Debit cards can be linked to gold and silver accounts so that customers can use gold and silver to make point of sale transactions, a service which is only available to non-Americans.

    The obvious solution is to legalize monetary freedom and allow the circulation of parallel and competing currencies. There is no reason why Americans should not be able to transact, save, and invest using the currency of their choosing. They should be free to use gold, silver, or other currencies with no legal restrictions or punitive taxation standing in the way. Restoring the monetary system envisioned by the Constitution is the only way to ensure the economic security of the American people.

    After all, if our monetary system is fundamentally sound-- and the Federal Reserve indeed stabilizes the dollar as its apologists claim--then why fear competition?


  4. Hey Dave,
    I know you stray away from timing predictions, but I can't believe the performance of my mining stocks this year. I continue to bleed money and the overall sector is suffering. It is so discouraging to see how much in the red I am, yet I hear the King World News crew (sure you know what I mean) and others continuously saying a turnaround is imminemt. I ask myself why I bother with this when I can just buy the real stuff. Do you see anything changing soon, or are we stuck in the Comex price pattern that can last for quite awhile? (considering where PMs were at the start of the year, I never thought in Mid August we would be at about the same price level considering everything that has gone on...) The cartel controls it all and I wonder what will break it, other than a total collapse. Thanks in advance. I appreciate your nonhype and non-slanted perspective.

  5. Citadel’s E*Trade Exit Still Seen Blocked by Mortgages:

    While E*Trade has cut the principal balance for its home- equity loans and mortgages by 61 percent since the end of 2007, the company still had $10.7 billion of loans outstanding as of June 30. In its last annual report, E*Trade said: “there can be no assurance that our allowance for loan losses will be adequate if the residential real estate and credit markets deteriorate beyond our expectations.”

    “E*Trade’s focus right now is more about how we clean up the capital structure,” Nomura’s Murray said. “If E*Trade can execute on what I call the two albatrosses -- the loan book and the capital structure -- and figure out a way to clean up the debt and continue to shrink the loan book, I think you’ll have more value get unlocked there.”

    E*Trade’s $14.1 billion in debt is more than 10 times its earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. TD Ameritrade’s leverage ratio is 3.1, while Schwab’s is 1.9.


    not pretty

  6. Well the Miners haven't been any better - so pointing a finger at FB and Groupon.

    1. Correct. But the miners are not fraud stories. I can point out several stocks that have cash + asset values worth much more than the value of the stock. FB is quasi-ponzi scheme

    2. And in the next bull run in gold and silver, the mining stocks as a whole will - once again - hit news highs. FB would require Weimar-magnitude money printing to ever get back to its previous high.

  7. What about people who need cash in the crash? Will they be selling their stocks, gold, silver, and other such commodities, and what will that do to the price of those things?

  8. The disappointing growth figures announced today show that the UK economy is unlikely to revive any time soon unless the government admits its failings and starts to change course.
    Dirk Kettlewell