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-- Posted Monday, 19 April 2010 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Monday, April 19, 2010 “Phenomenally accurate forecasts” We’re too cynical to believe that the mere unmasking of Goldman Sachs & Co. on Friday as a corporate swindler caused U.S. stocks to weaken. Iceland’s ash-spewing volcano is where the real economic threat lies, we’re convinced. Granted, Goldman is the Government’s poster boy for the global banking system’s supposed recovery, and it won’t help appearances that the firm stands accused by the SEC of being, to put it colloquially, a bunch of double-dealing scumbags who would cheat their own clients to make a buck. But who doubted that to begin with? It is only in the eyes of newspapers, network news anchors and CNBC interviewers that Goldman’s officers are corporate royalty. For the rest of us, meaning the newsletter world, the firm is about as trustworthy as someone who has done hard time for murder or buggery. Goldman has been getting away with the financial equivalent of both for years, although it has always been assumed the company was too well connected to be formally accused of wrongdoing. While we sincerely applaud the SEC for taking them on (perhaps bidding to make amends for dropping the ball on Bernie Madoff), we’re concerned that the regulators may not know just who they’re messing with. Not that it took Deep Throat to tell them where to look. While the charges brought by the SEC concern Goldman’s sale of some esoteric financial instruments to investors, the crime itself is not difficult to understand. Here’s an account from the Associated Press that manages to divulge the juiciest part of the story in the opening sentence: “The government on Friday accused Wall Street’s most powerful firm of fraud, saying Goldman Sachs & Co. sold mortgage investments without telling the buyers that the securities were crafted with input from a client who was betting on them to fail.” A Goldman spokesman called the SEC’s charges “completely unfounded in law and fact,” but even Joe Sixpack can see that the bank has been caught with a holdout device and some aces up its sleeve. If Goldman is smart, they will not ask for their day in court. Regardless, it is inconceivable that any sanctions that may result will constrain Goldman and its ilk from conducting business as usual. Only a Second Great Depression can do that, although we can only pray that our children and grandchildren will have reason to believe someday that purging corruption from “the system” – from our way of life, to be blunt about it -- was worth the pain. Concerning Iceland’s catastrophically prolific volcano, it may be more obvious in a month that it, and not the dog-bites-man story concerning Goldman, caused stocks to fall (though not to plunge). It is already apparent that the problems of volcanic ash spewing over Europe are significant enough to bring airborne business nearly to a halt. The timing couldn’t be worse, coming as it did after Germany and the IMF had just finished lacquering the veneer of a Greek bailout that can only drag the rest of Europe -- meaning Portugal, Italy, Ireland and Spain -- down with it. For our part, we told subscribers to buy put options on the Diamonds on Friday after raising the possibility the night before that the stock market was in danger of collapse. Although shares have been defying gravity for more than a year, the mood change on Friday evinced the kind of queasiness that we have come to associate with important turning points. *** 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. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. 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, 19 April 2010 | Digg This Article | Source: GoldSeek.com
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