Knowing Yourself Well

More 'mini-Madoffs' surfacing with losses ranging from $25M-$100s of millions.  Other than the India Company, I mentioned in a previous post, the latest stock fraud outside this country that I have seen is Spain authorities arresting 6 people for a $600M loss.

I learned a new word this week called anosognosia.  It has to do with denying reality by seeing through distorted perception.  As I have reiterated, use this time of contraction in the world to scour yourself and see if there is denial anywhere in you.  We all experience this at different times in our lives. Enlightenment of understanding removes that energy.  

In watching the market these last few days, it is moving up and down on an emotional basis, which means investing is full of uncertainty and sudden moves in either direction.  Be prudent and know there is substantial risk.  What has gone up fast, an example being Iceland's financial system (they amassed major debt during years of rapid expansion), can collapse suddenly, taking the government with it.  

There is controversy over whether former President Bush and Mr. Rumsfeld should be held accountable for torture.  My vote is yes because our forefathers set us up as a 'Republic' and the law rules, not majority opinion.  It is very important that we keep acting in this manner to keep our government structure strong.

Banks and the Wilkins Shelf in Antarctica

The markets are doing quite well given the continuing 'fall' of the banking industry.  I think the intangibles of  good will and optimism toward President Obama is holding up the world markets. Did you  imagine that the biggest banks; Bank of America and Citigroup could be bought for $5 and $3, respectively, per share?  The financial results coming out on the regional banks reflect the 'bite' of bad loans too.  In addition to the U. S., other countries are reducing interest rates, and pouring hundreds of billions into their financial institutions without uplifting results.

Countries, like China, dependent on exports are contracting so fast that it shows how steep their economic growth has been in the last few years.

Additional smaller examples of Madoff are surfacing for public view.  Mr. Shrenker who tried to fake his own death, and Mr. Nadel, from Florida, who has disappeared with what appears to be hundreds of millions of his clients' investments.

Also, the British Antarctic Survey team said that the Wilkins Shelf in Antarctica, about 15k square kilometers in area, is 'hanging on by a thread' and is expected to break free soon.  How does this relate to the other subjects mentioned here?  It symbolizes that evolution continues as humanity uses 'ant' energy to try and control the uncontrollable.  What has been frozen is now melting so we can see more clearly.  Our financial system is experiencing a wave in the cycle that is repetitious since it was originally established.  The difference now is that the size of this wave is still unknown compared to the past.  I look at this as an opportunity for a huge collective shift where we learn to live within our means which includes savings too, versus the mentality of using debt to fill our insatiable desire of buying the latest and greatest.

Arrival

Momentum seems to be underway to take the market below 8000.  Having the bad news being greater than the analysts' estimates only encourages the drop.  We are experiencing a time when forecasts do not carry much accuracy.  The bear did not hibernate this winter.  Be more risk averse.  I recommend that everyone be objective and stand back, knowing that what is occurring today on a global scale is a necessary purging.  Use your personal involvement to see inside yourself and what needs purging there.  

In continuing the behind-the-scenes viewing:

*  Russia and the Ukraine continue to deprive Europe of the gas that they rely on to fill 25% of their needs.  Ukraine faces economic collapse as Russia tries to squeeze this country by charging much higher prices per cubic meter.  Russia's monetary reserves are dissolving because of lower oil prices.

*  Will Israel go it alone and air strike Iran's nuclear facilities?  The news came out that they talked to President Bush last year and he said no.

*  Moody Investor Services estimates 300 global junk bond issuers will default; that's 15% versus 12% during the 1991 recession.  This environment creates a severe challenge for companies to raise capital to survive, let alone grow.

*  Citigroup is 'too big to fail,' yet that is what is happening even with $45B given to them from the $700B bailout.  They will break up in an attempt to save the pieces.

*  Bernanke said that more government investment in financial institutions are essential to maintain stability.  How much money is enough achieve this?

What looks unconnected is part of the same puzzle.  Like Chief Seattle said, we are all connected in the same big web.

One final note:  anyone who owns a home should consider appealing the value used by the state assessor's office in determining property taxes.  In my past, I did that once in California.  It took 3 appeals to be accepted.   

Continue Looking Behind the Scenes

To continue what I discussed in my December 1 blog, I want to point out these observations:

*  Like Madoff's fall, am Indian company called Satyam Computer Services (SAY) announced that it has a fraudulent '$1B sink hole.'  Management, including the founder, has decided to stay in their positions and keep the business afloat.   It's stock price dropped 90%.  The story is different than Madoff's but the outcome is the same for the investors.

*  Lebanon is striking Israel.  I am wondering if this setup is going to expand in a way that the 

U. S. and U. N. will be unable to contain.

*  Russia's monopoly on gas sent to Europe shows the vulnerability when the flow is interrupted.

I am  pointing out what I consider behind the scenes activity that we need to make ourselves aware of.  It is like a puzzle; the pieces are accumulating.