Friday, May 25, 2012

Wall Street’s Endless Crimes Against Democracy Continue - Facebook CEO and Wall Street Underwriters Sued For Looting

While the hysteria was almost obscene on Wall Street and in the mainstream media about the most hyped IPO in the last decade, it was just days before the Facebook IPO we discussed on here that Facebook executives and investment bankers were using this IPO to loot society.  A far different reality.  That is exactly what they did.  The financial system is completely rotten.   Too many people want to pretend the issues of corruption our nation faces aren’t as deep and systemic as they really are.  Predation is and always has been the Wall Street game.   The art of the con is more systemic than ever.  Leading up to the IPO I had to snicker while watching a Bloomberg contributing editor who used a lot of large sounding words, you know, like delicatessen, to conclude that  Facebook would have a strong day on the IPO open.   We truly do have an economic system where cronyism and incompetence rises to the top.  That is very much a common factor in society’s run by Soviet-style bureaucracy rather than freedom and democracy.  Incompetence becomes the norm as paper-pushing bureaucrats squelch freedom of ideas and superior solutions vetted by civil discourse in favor of control.   

These lawsuits or a falling Facebook stock should really be no surprise.  Taking firms public in modern America is most often a guaranteed form of looting.   The entire business model of modern-day investment banking is a criminal racket.  Investment?  By the way, I could list a dozen hyped IPOs in the last two years that were high profile looting fests.  Groupon and LinkedIn being two that immediately come to mind.   Groupon?  Are you kidding me?  Talk about vaporware.  It’s already down 55% in five months.  LinkedIn will soon follow.  As we have noted ad nauseam, 2008 was not a housing crisis as was so widely reported.  This is the collapse of capitalism as it has been practiced since its inception.  And, it was a collapse of a fraudulent financial system that has been looting society blind for thirty years.  While I have remarked about pointed issues regarding  capitalism in the past, I’ll put up a detailed post on the technicalities behind my concerns at some point.  In other words, my perspective is not based on opinion.  There is substantial fact of concern with systemic, possibly unrecoverable crises that literally no one is talking about.  Obviously, none of this means we are doomed.  Wall Street may be doomed.  But all it means is the future will most certainly look nothing like today.  And, people who are hawking simple-minded solutions like gold money are likely to be very, very wrong.

Investors of means are suing Facebook and its underwriters: Morgan Stanley, Goldman Sachs, JP Morgan, etc because they were left holding the bag.   All I can say after the Dotcom bubble is shame on you for trusting anyone in the Wall Street racket.  It is a racket as defined by the organized crime RICO statute. 

Alternatively, individual investors, who are generally as deluded by the Gamblers Anonymous dream of nailing at 20 bagger as institutional investors, don’t have a legion of lawyers and the financial means to protect themselves from Wall Street’s endless duping, looting, victimization and predation.  So they simply get to bend over and take it.  No kissing allowed.   That’s too personal for the Wall Street psychopath.  Depersonalization is a common trait of predators who victimize people.  Labeling those you are preying upon as Muppets most certainly fits the trait of depersonalization.  I don’t say any of this trivially or jokingly, as I appreciate the horrors of rape, murder and other violent and psychotic attacks against individuals, but the  depersonalization and victimization of a psychopath’s violent predation  comparative to Wall Street’s endless violent predation seems little different from a psychological profiling perspective.

If we had a public banking system that served democracy and a merit-based economy, be it capitalism or some other form of a market economy, and we truly had public capital markets,  the Facebook or Dotcom bubble or housing crisis or derivatives messes or commodities manipulation or other forms of looting would never happen.  Public finance would have an intent to serve democracy and human development of our citizens.   As far as public banking and Facebook, first of all, there would be a rule of law and hurdle regarding what companies qualified to receive public funding.   That would not be determined by for-profit investment bankers who use IPOs to loot democracy.  Secondly, the Facebook offering price would have been about $1 at the number of shares priced, that is, if they even qualified to receive public funding.  And, thirdly, the company’s executives wouldn’t be cashing out aka looting as they are under the current criminal financial racket.  The investment of public capital received by companies going public would have regulations on how it was spent.   ie For the benefit of democracy and the expansion of democracy’s economic opportunity.  Not so senior company executives could loot society by dumping overvalued shares with savers, pensions and retirement accounts.   When senior executives use public funds for private gain, it is essentially a form of corporate raiding - think Mitt Romney and private equity - and democracy is left holding the bag.   You are left holding the bag.   

Our pensions, retirement accounts and savings have been and continue to be looted by Wall Street as they have for decades.  Our society, our government, our public institutions, our social safety nets and much of the world has been and continues to be looted by Wall Street.   That was the whole dynamic behind the Dotcom Internet Bubble.   IT WAS NOTHING MORE.    Facebook is a reminder of that fact.  Facebook is priced at Dotcom levels. 

Every single technology company brought public in the mid to late 90s in the Dotcom bubble was a result of looting.  Bar none.  Thousands of IPOs.  Even the five or ten firms that eventually had something sustainable to offer were massively overpriced in their offering and were sold to the public at bag holder prices aka looting.  Just like Facebook.  Bringing an endless supply of worthless and marginally worthless companies public with no earnings and no chance of sustainability and dumping them onto retirement accounts, savers and pensions is looting.  The Dotcom bubble was a massive transfer of wealth from pensions, savers, retirement accounts, etc to the criminal financial racket of Wall Street, investment banking and IPO senior management.  That’s how investment bankers bribe corporate executives into coming public.  They reward them with riches to cash out and leave our retirement accounts, pensions and savings holding the bag.   It’s a virtuous, self-reinforcing cycle of bribery and looting.

Remember, that all happened under Clinton.    Regulatory agencies under Clinton did nothing to stop the looting.  In fact, the taxes raised by the government as part of the massive profits minted by the Dotcom looting bubble were hailed by Clinton.  We still hear today that George Bush destroyed the balanced budget Clinton left him.   A balanced budget created through Wall Street’s looting and the destruction of our pensions, capital markets,  jobs base, etc.  One of the greatest political cons of my lifetime.   Bill Clinton left George Bush holding the bag.  Not that Bush then didn’t leave Obama holding an even bigger bag.  He most certainly did.

I would just about bet my life Facebook is going to lose 80% of its IPO value in the next five years.  I would bet your life that it could lose 97.5% of its value.  97.5% would take the price to about what it should have been at offering - $1.   Being priced at $40 as it was places it as 60-80x the average stock price in 1929; before the market fell 90+%.  $1 fair value is more than generous.   Most people will laugh at this next statement but then they laugh at everything that sounds preposterous, even if true.  And, mind you, this is a preposterous world ruled by preposterous people.  How many people would have laughed were someone to tell them in 2006 that just two years later,  the most successful 100 year old financial firms in our country would collapse and Wall Street would disappear were it not for a massive $20+ trillion bailout?   That is much less probable than  this next statement - I would bet both of our lives that Facebook is gone within a decade plus or minus a few years. 

There are three major factors Facebook will face in coming years that will make their road a rocky one.  The popping of the massive ad bubble that funds their entire existence, the slow death of PCs with our youth culture and a return to local economics that has been heretofore destroyed by the corporate state.   There are many, many more factors including new competitors, major advances in technology, changing social trends, etc but let’s focus on three. 

Youth in western cultures have more in common with Japanese culture than their parents in their use of technology.   In my experience, I was surprised how low the penetration rate of home PCs is in Japan.  Facebook’s penetration is a rounding error in Japan.  A major reason is that the internet in Japan is accessed by mobile devices.   Ads on mobile devices don’t work.  It’s not the technology.  It’s the user experience that doesn’t work.  Additionally, grandparents won’t be using Facebook to keep in touch as often.  Yes, that’s hyperbole and I mean people in general.  In the not too distant future we won’t be moving all over hell’s creation to fight for the small number of jobs that are available thanks to corporations controlling our money supply, subverting new business creation and destroying our economic determinism.  ie, Most people will once again start to live local to their upbringing as we start to rebuild the social fabric of our communities and our nation.  A fabric destroyed by the Godless corporate state and its rigging of economic markets.   We are already seeing this dynamic unfold in the more than half of college graduates living with their parents because there are no jobs.  And even more who didn’t go to college living with their parents because they can only find a job at Wal-mart for slave wages.

You may like Facebook.  You may derive great appreciation from Facebook.  But Facebook is a fad driven by exogenous and unsustainable factors coming together to create its temporary economic and social success.  It’s success belies the bubble economy of an unsustainable system run amok.  

I have talked before about how people foolishly investment in technology because they are always drawn to the next new thing.  Of hitting the home run of gambling.  It is gambling.  It most certainly is not investing.  Technology is an awful investment choice that investors only delude themselves into believing they understand.  Almost without exception, they don’t.  Facebook is no different.  And, not only do they not understand the technology, but they don’t understand how Wall Street uses IPOs to loot society.  But, gambling runs deep in the investor’s class’ veins because they still dream of a return of the once-in-a-one-hundred-year bubble that was the massively fraudulent Dotcom fiasco. 

The top 50 Nasdaq technology companies from the 1970s are all gone except for one.   The top 50 Nasdaq companies in 2000 are either gone or languishing 50-90% below their peak valuations with dim future prospects for growth.  Many are on their way to irrelevance.  Facebook won’t last long as a darling stock.  It’s business model is already obsolete at the IPO.    The chances it can be radically transformed are not good by any measurement.    Who knows.  Maybe Facebook will pull a rabbit out of the hat.  Not likely.  History and odds are not with them.  99.999999% of all future innovation will not be within the walls of Facebook.  It had a time and served a purpose.  That purpose was not to go public at $40 a share.

Would you like something to put in your bag?  Maybe you can take your bag on a picnic.  How about some fried chicken and coleslaw to put in your bag?  If you own Facebook, regardless of the daily gyrations, shares could rally in June and July, you most certainly are holding a bag.   Is this really any surprise.   The IPO of Facebook is just a small piece of the endless schemes used by Wall Street to bilk democracy.

Title link here.

Facebook IPO faces regulatory scrutiny here.

posted by TimingLogic at 11:23 AM