-- Posted Monday, 3 August 2009 | Digg This Article
| | Source: GoldSeek.com
Rick’s Picks
Monday, August 3, 2009
“Phenomenally accurate forecasts”
Assuming Americans still have the capacity for outrage, they should soon be rioting in the streets following last week’s reports that nine big banks paid out $33 billion in bonuses in 2008. The Wall Street Journal put this travesty in perspective, noting that the bonuses were a third larger than California’s budget deficit. “Six of the nine banks paid out more in bonuses than they received in profit,’ the Journal reported, and “one in every 270 employees at the banks – [a total of 5,000 employees] --received more than $1 million.”
Compare these princely sums to the paltry numbers associated with the government’s “cash for clunkers” program, which provides a tax credit of up to $4,500 for motorists trading old gas guzzlers for new vehicles. Cash-for-clunkers ate through $1 billion of funding in its first four days, prompting the Wise Men on Capitol Hill to approve yet another $2 billion, presumably before things started to get ugly on the dealers’ lots. Talk about bread and circuses! If the cash-for-clunkers giveaway enjoyed the kind of backing the banks have gotten from the federal government through TARP, thousands of Americans who don’t have two nickels to rub together would soon be driving Bentleys, Ferraris and Lamborghinis.
No Shame
Lest you think the banks are embarrassed by it all, it has been reported that Goldman Sachs, for one, is on course to pay $20 billion in bonuses in 2009 -- an average of $700,000 for each and every employee. Over at Morgan Stanley, bonuses are up 30%, to an average $340,000; and at J.P. Morgan, the incentive pool for the first quarter alone has swelled to $3.3 billion, or 175%.
The data were brought to light in a report issued by New York Attorney General Andrew Cuomo. Within the hour, New York Rep. Edolphus Towers, chairman of the U.S. House investigative panel, pronounced the news “shocking and appalling.” He promised hearings into the matter, but we’re not holding our breath. It other times in history, there would be scaffolds going up in the town centers, and kangaroo courts convened at midnight to condemn the offenders. Instead, we are being asked to believe the brazen falsehood that the banks are leading us out of recession. In fact, as a report issued recently by Matterhorn Management makes clear, “none of the problems in the banking system have been resolved. The system still has a leverage of 25-50 times, it is still full of toxic debt and derivatives, loan books are deteriorating daily, it still has worthless paper assets valued at fantasy prices and most banks are run by the same bankers who created the problems in the first place. For a typical bank, a 4% drop in asset value wipes out the equity. This is what we call a recipe for disaster.”
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Midnight Briefing
There’s good news for traders who were unable to attend the Morning Briefings that Rick held in June before the opening bell. To gauge demand for a late-hours briefing, especially from traders in Europe and Asia, Rick will hold a Midnight Briefing on three successive days his week: Tuesday, Wednesday and Thursday, August 4,5 and 6, starting just after midnight EDT. Click here to sign up.
These 20-minute sessions will begin at 12:01 a.m. EDT (GMT-5:00). During this time, we will attempt to identify timely trading opportunities mainly in the E-Minis and Comex Gold. Last month’s briefings were enormously popular, drawing as many as a thousand traders on some mornings. To reserve a place, register now.
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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 3 August 2009 | Digg This Article | Source: GoldSeek.com
