OK, call me a conspiracy theorist. It is tough not to be one these days. In fact, the Obama administration is a conspiracy theorist”s dream. These days it doesn’t take much digging to come up with a theory. The politicians are blatantly doing everything out in the open.
On March 16th, I had the opportunity to speak at a conference at Christ for the Nations. I spoke about God’s provision during a financial crisis, where we are now, and how we got here. During that talk, I made the statement that Goldman Sachs was so intertwined with the Federal Government that nothing would ever happen to them (as a reference to companies that might fail). I said that they would always be protected by the government because of all of their ties.
I got in the car after the presentation and the breaking news on CNBC was that the Federal Government was filing charges against Goldman Sachs for securities violations. Wow, I didn’t see that coming. Initially, it didn’t make sense to me at all. Why would the Government go after its own partner in crime? It didn’t take long to figure it out. Within hours, Barack Obama was telling the American people that this is why we need financial reform and this is why the politicians need to pass his financial reform regulatory bill (aka huge Washington power grab/control bill).
In a May 3rd client newsletter, I wrote the following:
The timing of this is very convenient for the politicians. They are trying to pass financial regulation and reform legislation (read: power grab for the politicians). So vilifying Wall Street helps create the reasons why we need financial reform. The Republicans will get a lot of backlash for not supporting financial reform when Goldman Sachs looks so bad. Once again, this is most likely a PR nightmare for Goldman Sachs and probably nothing else.
Last week the politicians passed the financial reform package. Within hours, the SEC and Goldman Sachs reached a settlement with Goldman Sachs not admitting any wrongdoing. What’s even better, they had to pay a settlement of 550 million dollars. In 2009, they had over 13 billion dollars in earnings. Do you think that they are going to miss a measly little $550 million?
Vilify the biggest investment house/bank on Wall Street. However, make sure that you don’t hurt them too much. Make the acquisitions strong. Push the need for financial reform using that bank as the reason we need it. Pass financial regulation. Then let them off of the hook with a slap on the wrist. You scratch my back and I continue to scratch yours.
There are tons of ties between Goldman Sachs and the Government. Just read this article and you will get the idea.
What no confidence?
The market took a tumble at the end of last week the consumer sentiment numbers released. Personally I think that these surveys are somewhat of a joke. However, Wall Street pays attention to them. I don’t think that we need a survey to tell us the consumer isn’t really positive. The indexed showed a decline to an 11 month low. Barrons reported over the weekend that this type of drop has only occurred 6 times in the last 32 years that this survey has been around. Risk is still high in this market. Check your risk levels!
Read Full Post »