Justice Prevails

I'm breaking a record with two posts in one day. :) I just saw the news that Judge Rakoff ruled against the $33M settlement agreement between the SEC and B of A regarding accelerating $3.6B in executive bonuses before closing the deal to acquire Merrill Lynch. B of A paid these bonuses despite a record $27.6B loss and being a recipient of one of the largest federal bailout funds. The judge said, "the proposed settlement suggests a rather cynical relationship between the parties: the SEC gets to claim that it is exposing wrongdoing on the part of B of A in a high profile merger, the bank's management get to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth." He said it will go to trial on February 1, 2009.

I am so elated to hear this ruling. May the jury set a standard that will make banks and regulators think more than twice before trying to sweep something this large under the rug for such a small amount. The word 'truth' stands out and once it has cut a path in the darkness with the help of this judge, this one individual, it naturally lights the way to expose that which does not want to be seen.

Now I'm waiting for justice to prevail in the case of the Treasury Department trying to prevent us from seeing how the money was divided up between the banks. It will be interesting to see what the judge rules after seeing their appeal.

On the healthcare subject, when I heard that the President had the backing of the pharmaceutical industry, I saw that as a huge red flag of politicking and rubbing shoulders behind the scenes versus an honest agreement that puts the citizen first. That industry is very profit motivated and whatever transpires between the two continues their profit goals.

Also, regarding justice, I firmly believe that tort reform is necessary when it comes to suing doctors and hospitals. I don't see it in the current plan that is in writing. Perhaps that is in the plan that is still in the ethers being discussed.

Sign of the Times

The DOW has reached 6821 as I write this, exacerbated by AIG losing $61B, the largest company quarterly loss in history.  The company insures 30 million U.S. policy holders, operates in 130 countries, and provides insurance for 100,000 companies.  The federal reserve and treasury still maintain that they have to rescue them because of the 'systemic risk' to the global financial system.  In addition to the $150B invested, another $30B is on its way. This is a deja-vu with more to come.  The share price is $.48; last year it was close to $50.  This company should be broken up into several companies, giving it less power to disrupt the financial world when there are earthquakes like what is occurring at this time. Citi is trading at $1.40 as a result of the latest government intervention.  BAC is trading at $3.31.  Even though the president said the banks are going to remain private, the action taken with Citi still crucified the shareholder, also diluting his intention. 

Also, companies like GE who are part of the DOW 30 is being hammered with a price of $7.64 this morning, one that Mr. Buffet has invested heavily in.  It's a sign of the times; solid companies being traded at prices not imagined before.  And there are so many firms trading as penny stocks now that the SEC is looking at altering their procedures in terms of the requirements of companies falling into this group.

I do see a pinpoint of light.  We went to Redding yesterday, visiting 5 different stores, to look at big ticket items, and noticed  movement in this area.  In conversation with the employees, we heard that people are using their tax refund to purchase big ticket items.  This is a sign, in my opinion, that Mr. Bernanke may be right in saying that the worst will be over in 2009.  For those of us who are invested, I think the prudent action is to stay the course as long as the company or fund appears to be managing in a way to come out intact.

Destiny?

Interesting that the DOW is getting ready to touch 7000.  Citi bank will have to be nationalized. The government doesn't want to call it that, but if it is going to buy 40% of the shares, then what would you call it?  Words are especially powerful now, and if the government shows any sign of changing direction with the banking sector, it will be the leader in pulling the DOW down to levels we haven't experienced in this lifetime.

I saw an interesting statistic.  100 years ago, 90% of the workers were self-employed.  Today, 90% work for a company or organization.  Imagine the ramifications of this kind of change, and 100 years is really a short period of time.

I have been traveling since February 12, visiting my children and their families.  I'm currently in Portland.  In experiencing this city almost yearly, this is the first time I have been here with no rain except this morning.  The norm is rain daily.  

If you are curious about the title, I selected it to emphasize my belief that what we are experiencing with the world is cyclical in nature, as we are individually, and also part of the great pattern set in place, beyond our limited thinking, to help all of us evolve.