In the first of a series of articles, which could easily become the-rest-of-my-life’s work, I will be examining high-profile lawsuits and indictments, such as—what’s happening with the federal lawsuit against Robert Rubin for insider trading—and others.
On December 4, 2008, the New York Post reported: "A new Citigroup scandal is engulfing Robert Rubin and his former disciple Chuck Prince for their roles in an alleged [CDO-related] Ponzi-style scheme that's now choking world banking. [The two] are named in a federal lawsuit for an alleged complex cover-up of toxic securities that spread across the globe, wiping out trillions of dollars in their destructive paths.” However—and here’s the indictable offense (worldwide Ponzi scheme, although worthy, is unlikely to be one)—before Citi's stock collapsed, Rubin and other top insiders cashed out of more than $150 million in "suspicious stock sales" according to the lawsuit filed on behalf of investors.
On December 11, 2008, this item was picked up by an online news service out of Phoenix, phxnews.com. The only other comment was mine for BlownMortgage.com: Growth Industry 2009: Criminal and Constitutional Law, on December 23, 2008. Not only did these three publications have the scoop, but apparently there was nothing left to be said.
And then . . . on January 9, 2009, Citi announced that Robert E. Rubin retired as Senior Counselor effective that day and he would not stand for re-election as Director. Mr. Rubin would continue to serve as a Director until his current term expired at Citi’s next Annual Meeting. Hadn’t he been on the short list for Treasury Secretary as well?
On that very same day, WSJ’s MarketWatch asked readers: “How will people remember the Robert Rubin era at Citigroup? Right now, the smart money is on "a nightmare." For all of his supposed prowess in financial markets, the former Goldman Sachs Group Inc. banker and U.S. Treasury Secretary presided over an era of scandal and risk overload during his nine years as a director and consultant at Citigroup . . . which ended “after a humiliating 18 months that has seen Citi oust Weill-successor Charles Prince, take $83 billion in writedowns, raise $36 billion in investor cash, take $40 billion from taxpayers, and get the government to backstop more than $250 billion in risky assets on its balance sheet . . . and a 90% decline in stock price.” And keep in mind that this article was dated January 9th. Today is January 21st so the bailout numbers are higher and the stock price lower.
Anyway, it sounds like they could be on to something.
Then, on January 13, 2009, David Weidner wrote a piece about Rubin for MarketWatch pointing out that during Rubin’s time as Treasury Secretary, he and then Fed Chairman Alan Greenspan “oversaw the most sweeping deregulation movement in the history of Wall Street, the pinnacle of which was the elimination of Depression-era laws that made it illegal for a company to have both commercial banking and investment banking on a large scale.” This allowed the merger of Citicorp with Travelers insurance in 1998. Only one year later, Rubin left the Treasury and became Director and Senior Counselor of Citigroup. “There, he made $150 million (not including stock options) and, depending on whose account you believe, was either a tireless worker or a once-a-month visitor to the corporate headquarters.” Weidner sums up with “Robert Rubin is out at Citigroup Inc., and it only cost about $300 billion in committed taxpayer money.” ***Worldwide Ponzi scheme strikes me as tireless worker, but then Weidner doesn't seem to know about the federal suit.***
One more try. Googled the story again today; you’d think by now someone must be on to it. And there it was, on January 16, 2009, an article on Bloomberg by Michael Lewis, author of Liar’s Poker. ***Now you’re talking, he’s the insider’s whistle blower.*** No, it turns out Rubin has published his memoirs and Lewis wrote a book review, although no book title was given. In a very poorly written piece, BTW, Lewis says, Rubin is “an acute and decent man . . . and . . . the world's a better place for having him in it.”
If you say so, Michael.
Friday, January 23, 2009
Thursday, January 8, 2009
Darwin Didn't Say Quite What You Think He Did (1)
(Readers, this is a mess. If you would like to see the article with the pictures and their captions, pls. email me for a copy marygwendungan@hotmail.com)
What Darwin actually said was a lot more inspirational considering where we are now. “It is not the strongest of the species that survives, or the most intelligent that survives. It is the one that is the most adaptable to change.” ***sigh, my hero***
Although I have never worked in retail anything, some of my best friends are retail customers and a few have asked for my opinion on others’ advice, most recently Suze Orman’s.
Ms. Orman’s seminal work "The Dangers of doing nothing in 2009", Costco Connection Magazine January 9, 2009, is available now without charge at the checkout counter. In it she recommends loading up on stocks to be positioned to ride the wave up, which she’s sure is coming, along with the spaceship, I guess.
IMO, her recommendation is irresponsible. However, she's not alone in advising retail customers to stay in stocks, the large brokerage departments (as you remember, all the big ones went bankrupt, were absorbed by banks, or restructured and became banks themselves to get on-going bailout money) are making the same recommendation for 2009. As a matter of fact, it was their recommendation for 2008 too. And this advice was repeated throughout the year so persuasively and with such wrong-headed confidence that I’d cringe at their humiliation if I thought they felt any.
Here's how their advice worked out: (chart of full-year Dow 2008 from Bloomberg)
We see that the market finished the year up off November lows. This could be due to a bear market rally, the fourth wave up according to Elliott Wave Theory, or some other technical pattern that will correct soon. Or, according to retail brokers and advisers, it's because the bottom is in and stocks are about to zoom up because . . . because of what? . . . because corporate profits are about to soar. ***right***
Also, note that each time there’s been a substantial uptick, it’s off lower highs.
Apparently, the Fed and Treasury would like to bail out every entity listed on any of the exchanges, in addition to the foreign banks and central banks they've been slipping money to under the table. They can't save them all, for one, and for two, the money they're giving away has to be paid back at some point. None of this benefits the economy, corporate prospects, or the stock market. After each multi-billion dollar bailout, the stock market stabilizes briefly then resumes its decline. So, stocks will continue trending lower and if prices don’t fall fast enough to reflect reality, the markets will settle things up and crash.
For investors who thought they were well diversified by owning foreign stocks, here's what happened to their portfolios:
Go to Darwin 2 pls.
What Darwin actually said was a lot more inspirational considering where we are now. “It is not the strongest of the species that survives, or the most intelligent that survives. It is the one that is the most adaptable to change.” ***sigh, my hero***
Although I have never worked in retail anything, some of my best friends are retail customers and a few have asked for my opinion on others’ advice, most recently Suze Orman’s.
Ms. Orman’s seminal work "The Dangers of doing nothing in 2009", Costco Connection Magazine January 9, 2009, is available now without charge at the checkout counter. In it she recommends loading up on stocks to be positioned to ride the wave up, which she’s sure is coming, along with the spaceship, I guess.
IMO, her recommendation is irresponsible. However, she's not alone in advising retail customers to stay in stocks, the large brokerage departments (as you remember, all the big ones went bankrupt, were absorbed by banks, or restructured and became banks themselves to get on-going bailout money) are making the same recommendation for 2009. As a matter of fact, it was their recommendation for 2008 too. And this advice was repeated throughout the year so persuasively and with such wrong-headed confidence that I’d cringe at their humiliation if I thought they felt any.
Here's how their advice worked out: (chart of full-year Dow 2008 from Bloomberg)
We see that the market finished the year up off November lows. This could be due to a bear market rally, the fourth wave up according to Elliott Wave Theory, or some other technical pattern that will correct soon. Or, according to retail brokers and advisers, it's because the bottom is in and stocks are about to zoom up because . . . because of what? . . . because corporate profits are about to soar. ***right***
Also, note that each time there’s been a substantial uptick, it’s off lower highs.
Apparently, the Fed and Treasury would like to bail out every entity listed on any of the exchanges, in addition to the foreign banks and central banks they've been slipping money to under the table. They can't save them all, for one, and for two, the money they're giving away has to be paid back at some point. None of this benefits the economy, corporate prospects, or the stock market. After each multi-billion dollar bailout, the stock market stabilizes briefly then resumes its decline. So, stocks will continue trending lower and if prices don’t fall fast enough to reflect reality, the markets will settle things up and crash.
For investors who thought they were well diversified by owning foreign stocks, here's what happened to their portfolios:
Go to Darwin 2 pls.
Darwin (2)
We see that the market finished the year up off November lows. This could be due to a bear market rally, the fourth wave up according to Elliott Wave Theory, or some other technical pattern that will correct soon. Or, according to retail brokers and advisers, it's because the bottom is in and stocks are about to zoom up because . . . because of what? . . . because corporate profits are about to soar. ***right***
Also, note that each time there’s been a substantial uptick, it’s off lower highs.
Apparently, the Fed and Treasury would like to bail out every entity listed on any of the exchanges, in addition to the foreign banks and central banks they've been slipping money to under the table. They can't save them all, for one, and for two, the money they're giving away has to be paid back at some point. None of this benefits the economy, corporate prospects, or the stock market. After each multi-billion dollar bailout, the stock market stabilizes briefly then resumes its decline. So, stocks will continue trending lower and if prices don’t fall fast enough to reflect reality, the markets will settle things up and crash.
For investors who thought they were well diversified by owning foreign stocks, here's what happened to their portfolios:
2008: The year in markets (WSJ)
U.S. indexes
Dow Jones Industrial Average -34%
S&P 500 -38%
Nasdaq -40%
Dow Jones Financials -55%
Amex Oil Index -38%
International indexes
Germany DAX -40%
FTSE 100 -31%
Japan Nikkei 225 -42%
China Shanghai Composite -65%
Mexico IPC -24%
Brazil Bovespa -41%
Currencies/commodities
Gold +5.5%
Crude -54%
Dollar index +6%
Pound vs. dollar -28%
Dollar vs. yen -18%
Also, note that each time there’s been a substantial uptick, it’s off lower highs.
Apparently, the Fed and Treasury would like to bail out every entity listed on any of the exchanges, in addition to the foreign banks and central banks they've been slipping money to under the table. They can't save them all, for one, and for two, the money they're giving away has to be paid back at some point. None of this benefits the economy, corporate prospects, or the stock market. After each multi-billion dollar bailout, the stock market stabilizes briefly then resumes its decline. So, stocks will continue trending lower and if prices don’t fall fast enough to reflect reality, the markets will settle things up and crash.
For investors who thought they were well diversified by owning foreign stocks, here's what happened to their portfolios:
2008: The year in markets (WSJ)
U.S. indexes
Dow Jones Industrial Average -34%
S&P 500 -38%
Nasdaq -40%
Dow Jones Financials -55%
Amex Oil Index -38%
International indexes
Germany DAX -40%
FTSE 100 -31%
Japan Nikkei 225 -42%
China Shanghai Composite -65%
Mexico IPC -24%
Brazil Bovespa -41%
Currencies/commodities
Gold +5.5%
Crude -54%
Dollar index +6%
Pound vs. dollar -28%
Dollar vs. yen -18%
Darwin Didn't Say (3)
Это масло тупоумное.
(It’s the oil, stupid.)
OMG, the humanity . . . I mean, would you look at those skid marks.
(It’s the oil, stupid.)
OMG, the humanity . . . I mean, would you look at those skid marks.
This is the worst performance since the first depression and reflects a very unhealthy world economy. There is no beneficial event of sufficient magnitude within the realm of imagination that could turn this around anytime soon.
The stock market is not the place to be.
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