Santelli, Don Harrold on Rick, MSNBC, Hardball
– After being attacked by the White House
– Another take on it
– Shock!!! MSNBC atacks anyone who questions Obama policy…SHOCK
– Barnacle makes Matthews irrelevant
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Dow Chemical (DOW) won a ruling in court Friday vs Rohm & Haas (ROH).
Dow Chemical / Rohm & Haas Depositions
My take on this is Dow will attempt to get the founding family on record saying they wished for the combined entity to survive. If Dow can then cast doubt on that should the merger be forced immediately, then they now have a huge continent of shareholders in essence wanting the merger to be delayed (not canceled).
Either way, it will be interesting..
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Davidson has a very thoughtful pieces on markets, the government’s roles, investors and traders vs value investors.
Under the Bush Administration it would appear that “Fair Markets” which was the theme of Securities Act of 1934 and other responses to the events that produced the Great Depression became “Free Markets”. Free Markets which have little restraint become dominated by the avarice of the marginal investors who are bright enough to skirt all the laws then enforced to take undo advantage of all other investors who being responsible and in the view of these few operate within the doctrine of “Fairness”. The “Free Market” syndrome simply missed the fact that there are always individuals who will “game” the system and because they have greater resources manipulate markets for their own advantage knowing that most will follow a sense of “Fairness”. These few are not stupid people. They are very bright. Bright enough to understand the system, see its flaws and acquire the means by which to enrich themselves at the expense of others who believe in the concept of “Fairness” as originally conceived.
It would appear the April 28, 2004 SEC regulatory meeting much discussed today at which investment banks were freed to lever up to 40-50X was simply part of a general belief that “Free Markets” self-correct and self-monitor. Unfortunately what was missed is that this is only possible in a medium of complete and utter transparency. In fact, while we gradually forced Warren Buffett to expose his holdings thus taking away some of his freedom to move about the market place, we gave HF’s invisibility. We also gave these folks invisibility as to the new securities contracts they created with the incredibly wrong belief that they would self-monitor. Many including Alan Greenspan supported this construct.
“Free Markets” will never be completely transparent as individuals will always find a means to game the system dishonestly. This is why rules are necessary to make markets “Fair Markets” to all with the individual investors who are the fundamental base of all investing through their daily effort, their labor and creativity, to produce GDP. We lose sight that our economy and the stock and bond markets rest on the efforts of people earning a living. We lose sight of the fact that the investment markets are not a world unto themselves that can be mathematically analyzed and thrown in to formulas by which to create wealth. The investment markets are simply a representation of the productivity of our society. I like to think of the markets as a console full of dials. It simply measures the results of all the inputs to society as it pertains to our productivity. The markets reflect our hopes, our generosity, our legal system and our political system. The markets reflect our entire value system and how we organize our efforts to self improve.
Markets need to be “Fair” not “Free”. Transparency of every contract, every levered position, every trade and every association of one contract holder with another should be paramount. If there is an ability of one investor to gain advantage over another with secrecy, then there should be rules that forces this into the light of day so that we can determine if it is “Fair to Individual Investors”.
There should also be a “Recourse Rule”. If you buy a house today it is non-recourse to the buyer. It is up to the bank to have performed the underwriting to the level that assures safety of principle and interest. This lets single buyers own multiple homes to speculate without personal risk. We are all suffering today from the fallout of housing speculators who have walked away from recent transactions leaving our financial institutions with the losses. All obligations should carry some form of recourse to the parties involved. It would add personal risk to speculation and reduce the risk to us all. How this can be done regarding investment contracts and investment firms can be left up to them to develop a fair solution. The concept is that there should be some recourse to the individual who created the contract till the contract has terminated.
“Fairness” should be the rule-personal responsibility of behavior should be the goal. “Free Markets” leads to avoidance of responsibility. I liked Pres. Bush, but he simply got it wrong. This mess will be his legacy.
We have Traders and Value Investors. The former believes that price accounts for all information, Efficient Mkt Hypothesis. The latter believe in understanding a business and buy with cash flow, Owner’s Earnings and etc.
First, the Traders support Mark-to-Market while the Value Investors scream that it is a bogus benchmark. The Traders sell stock and if it goes down they say, “See!! If it goes down, it was meant to go down to find its real “value”!!” It is an amazing set of mental gymnastics that Traders use to convince themselves that “emotional pricing” of securities represents a valid method of “fair value accounting” for which Mark-to-Market was designed to effect.
Second, there are many, many more Traders with their simplistic approach and strong self belief/confidence than there are true Value Investors. It is easy to see that Value Investors do not by their selling create tops nor by their buying create bottoms. It appears to be more a factor that Traders simply exhausted their fire power. Where this level is I do not know. Unfortunately, “Mark-to-Market” is a destructive feed-back device. It supports erroneous contention reinforcing it’s own effect. It goes in the wrong direction till you reach such a silly level that eventually some percentage of Traders see the folly and an apparent “Value” becomes obvious. The snap back becomes very sharp.
I don’t know where that level is. Obviously this past week was not that level.
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My disdain for our former Fed Chair grows daily..
Found this interesting post this morning.
By Mark Mitchell, Published: February 21st, 2009 9:44 PM EST
Charles Gasparino, the CNBC reporter, published an op-ed in The New York Post yesterday.
Here’s a part of what he had to say:
Earlier this year, high-flying hedge fund Paulson & Co. retained [former Federal Reserve chief Alan Greenspan] for its “advisory board.” The firm is a noted “short seller” of banks and financial stocks – meaning it makes money when these companies’ shares fall.
The thing is, Greenspan is making public comments that inevitably influence public policy and the markets – and some of those comments may well have led to his clients making a nice profit.
In a recent speech to the Economic Club of New York, Greenspan said the recession would likely “be the longest and deepest” since the Great Depression and that Congress might have to allocate more money to save the beleaguered banking system on top of the billions already gone for the Troubled Asset Recovery Program.
Then he told the Financial Times: “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring” of their troubled balance sheets.
Such a move would wipe out stockholders, sending shares of banks even lower – thus likely benefiting Paulson. It would also protect bondholders, helping another Greenspan client, the large bond-firm Pimco.
The question is: Why didn’t Gasparino, or anybody else, say this on CNBC?
Hedge fund manager Paul Kedrosky appeared on the network to criticize Greenspan’s relationship with Pimco, but there was no mention of the former Fed chairman spewing negativity for Paulson’s short selling operation.
More importantly, no proper journalist at CNBC has reported that short sellers use many other tactics (such as planting false stories on CNBC and manufacturing phantom stock) to demolish public companies and crush the markets.
At our nation’s leading business network, only Jim Cramer reports on this scandal. Only Jim Cramer tells America about one of the most important causes of the worst financial crisis since the 1930s.
He does so with funny sound effects while prancing around the Romper Room set of a program that is called “Mad Money.”
These days are surreal, to say the least.
Now, I’m all for free speech like the next guy. I am also for full disclosure. If Greenspan is going to give a speech on the economy, he must be required to tell us the negativity he is espousing directly benefits his clients.
He already did the historical revisionist thing last year when his book came out. He attempted to put a nice face on the mess he left Ben Bernanke with. Folks did not buy it.
Now Greenspan, “the advisor” is giving speeches as the “former Chairman of the Fed” and the opinions he is giving just happen to parrot those of his clients.
Can anyone get him to be the least bit honest….anyone??
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This site is so funny I had tears coming down my face. I think we could all use a laugh now..
It is called F$%& My Life…
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Auto’s, Mortgages, Stim broken down, Ross
– Bull, let them go
– Duh…
– The big “rip off”
– A buyer?
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When I first read this press release, I was left wondering what I was missing. How could Hotchkis & Wiley, as a Dow shareholder as intimated in this letter want a merger now? So I did some digging and guess what I found?
Here is the press release:
LOS ANGELES–(BUSINESS WIRE)–Hotchkis and Wiley Capital Management
today announced the firm has contacted Rohm and Haas Company (NYSE:ROH –
News) to express support for the closing of the acquisition of Rohm and
Haas by The Dow Chemical Company (NYSE: DOW – News) under the
contractual terms of a definitive agreement entered by Dow and Rohm and
Haas on July 10, 2008.
A large shareholder of Rohm and Haas, Hotchkis and Wiley addressed CEO
and chairman Rajiv Gupta in the following letter today:Mr. Rajiv L Gupta
CEO and Chairman of the Board
Rohm and Haas Company
100 Independence Mall West
Philadelphia, PA 19106Dear Mr. Gupta,
We are writing to express Hotchkis and Wiley’s support for your efforts
to close the Dow Chemical transaction on its contractual terms. As a
recent top ten shareholder of Dow Chemical and current large shareholder
of Rohm and Haas, we are intimately familiar with the assets of both
companies. Additionally, we have undertaken a thorough analysis of the
merger agreement and Dow Chemical’s ability to finance this transaction.Regarding the merger agreement, our conclusion is that specific
performance is warranted. We view the contract as strong and unlikely to
be improved. It is our view that Dow Chemical should honor their
commitment. However, in the event that the agreement continues to be
breached, we want to affirm your resolve to seek specific performance
along the original terms laid out in the contract. Any change to the
original contract would merely expose shareholders of Rohm and Haas to
unnecessary risks.Dow has a variety of options available to honor the agreement on its
original terms. These options include drawing down the bridge loan,
divesting certain assets, obtaining long-term debt financing and issuing
equity. While the current financial crisis has made financing terms less
favorable than they have been in the past, options are nevertheless
available. Any one or combination of these options would provide the
capital needed to close the transaction.The most obvious solution for Dow Chemical is to undertake an equity
offering. This option has been available to Dow since the signing of the
agreement and continues to be available today. We believe that the
current uncertainty regarding the transaction has obscured the value of
the combined entity. We have expressed to Dow Chemical our interest in
participating in an equity offering to accommodate the transaction.Hotchkis and Wiley has a 28 year history of investing in US equity
markets. As of December 31, 2008, we managed $10.8 billion in client
assets. We look forward to being of any help possible. Please contact me
with any questions or follow up discussion.Sincerely,
Stan Majcher
Principal and Portfolio Manager
One problem, Hotchkis and Wiley Capital Management is no longer a shareholder in Dow chemical acording to theirrecent 13H-R SEC filing.
At no time does Hotchkiss admit they no longer are Dow shareholders. Isn’t this is violation of some SEC disclosure law? Sure they say “recent top ten holder” but at no point do they admit they are “no longer a shareholder”. One could assume they were a recent top ten holder and now own a lesser percentage or recently became a top ten holder. It is open to interpretation and I think was done so on purpose.
If we look at the SEC filing Hotchkiss is in Rohm at about $69 a share. That means they are underwater in their holdings at current prices by about $15 a share. This press release is a stunning attempt to manipulate public opinion and the market through a lack of transparency….
Anyone at the SEC working today????
Disclosure (“none” means no position):Long Dow , None
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Here is the speech:
Mark Selllers Speech to Investors
For those who think Sellers may not know what he is talking about, here is his track record.
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Fairness, Krugman, Gold,
– This is at least good news
– Calling out the fraud
– More on it
–
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So, yesterday I got an email from a friend while I was out with the kids. “Did you see Santelli on CNBC?” he asked. When I inquired what he meant he told me to watch it ASAP.
After I watched it, it got posted to YouTube and wow, what a reaction. As I write this is has been less than 12 hours since the video went up and already over 105,000 people have viewed it and the less than 5 minute video has received over 1,300 comments. For those who missed it, here it is:
A less than scientific look through the comments says that they are trending 10 to 1 for the sentiment expressed by Mr. Santelli. If we put aside the discussion of whether he is right or wrong, one cannot deny that he clearly touched a nerve with a ton of angry people.
If we watch the nightly news on any network we see story after story of people about to lose their homes essentially through no fault of their own. The clear implication is that were is not for extraneous factors, everything would be ok. I am sure that there is a certain segment of the population for whom that is true, of that there is no doubt. BUT, it is impossible to have a collapse in any market like we have had in housing unless there was extreme excess from all parties, banks and buyers. The larger the fall, the more froth and irresponsibility involved in the bubble phase. There are very few “innocent victims” here. While I am sure we can all dig to find one, I am just as sure with very little effort we can find 50 who aren’t.
Back in October of 2007 I wrote about the following story:
Wilbur Ross, a self made billionaire and his son were playing golf a few weeks ago. As they finished up, their caddy approached them and wondered if he could ask them a personal finance question.
“Sure” Ross replied
“I bought 5 condo’s in Scottsdale, Arizona,” said the caddy “I was able to flip the first 3 but I am stuck with the last two. Should I keep making the payments on them or just walk away”?
Ross thought about it for a minute and asked “Well, were are they? Is the area nice? What else is around the complex that may be of eventual value”?
“I do not know” the caddy replied, “I’ve never been to Arizona”
That, is a nice neat summation of what a “bubble” in a market looks like. When your caddy thinks he is Donald Trump, it is time to take a close look at what is going on.
Where are the heart-breaking interviews on the nightly news with folks like Wilbur’s caddy? Where are the “lesson learned” pieces about gamblers who rolled the dice on housing? See, we know they are out there. We also know they are the majority, not the minority in this scenario. This is why the frustration on people’s part when it comes to the hundreds of billions of dollars being thrown at the “problem”.
The common argument for doing it is “we have to stem the tide and save people”. Well, the FDIC did that already with its first mortgage modification plan and after six months over 50% of those loans were again delinquent.
Of course the criticism of Santelli is coming. The Columbia Journalism Review was the first that I saw. It is the typical stuff. It focuses on the tone and anger of Santelli rant, and yes, that it what it was, rips a few sentences and extrapolates much more from it that what was there.
The author of the piece denigrates his knowledge of Santelli and the network with this one sentence. “Of course, he didn’t get himself into nearly this much of a lather over the trillions of dollars we’ve given to Wall Street welfare cases and the busted banks.” Now, anyone who has seen Santelli or watch even just a few days of CNBC over the past two years has seen an almost daily diatribe from Rick opposing EVERY bailout that has come down the road.
To make it simple, go to Youtube and watch any video of Rick at ramdom, the thought proces is the same, government needs to stop the bailouts, all of them.
He then says that “this bailout isn’t even designed to bailout homeowners but the banks”. Umm… somebody might want to tell President Obama that because he has told us “this is designed to save 9 million people from losing their homes”. Ooops..
Since the author of the Columbia piece clearly does not even begin to know his subject (Santelli or the bailout plan), further discussion of the “every homeowner was screwed by the banks” piece bear little more mention.
I am sure there will be others, but that is all I have now near midnight.
What is far more important that an erroneous crtisizm is the emotion Santelli has unleashed. Read the 1,300 plus comments on Youtube, read the page after page of Twitter commentary on it (here is the RSS feed for the topic and see how the blogshere lit up with the “Chicago Tea Party” Santelli suggested.
Now, personally I do not watch much CNBC (too much yelling at each other all day, gives me a headache). But what we do enables events like this to spread like wild fire. What gets me about this one is the total one-sideness of the response from people. Those who would object to Santelli are outnumbered by a gargantuan number by those who are practically throwing their arms in the air yelling “finally” as if Rick expressed everything they have been feeling but not seeing in the MSM.
Politicians may want to look at this before they do something else, people are not happy out there and it isn’t just because we are in a recession. It is because we feel the most aid and help is going to those people and institutions who got us in this very mess. that is infuriating for people who have behaved responsibly.
It should be noted that isn’t because of what they aren’t doing in Washington, but what they are and that is a huge difference.
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This is a great call. Bruce Berkowitz, who runs the Fairholme Funds (FAIRX) is frank and very honest..
Fairholme Nov. 2008 Conference Call
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The first video is getting about 100 comments an hour over on YouTube. I think it is pretty clear Santelli struck a real nerve with people…
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Another great guest. Wilbur is now my favorite investor……I love honesty. Wilbur takes JP Morgan’s (JPM) Dimon and Citigroup’s (C) Pandit to task for their blatant intellectual dishonesty..
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Finally someone in the MSM says what everyone else is thinking….if there is a God, this will resonate in Washington …please pass this along..
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More bad news for those who think we may have a rebound coming soon. Key point, this takes into account world travel also so the results in Asia are noted.
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