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Archive for the ‘Merger Review’ Category

President Obama’s best chance for turning around the economy is to make sure that Paul Volcker, Federal Reserve Chairman prior to Greenspan, is in charge of needed economic reforms.   Although Tim Geitner showed promise when nominated Treasury Secretary, he looked more like Michael (Katrina) Brown than a competent leader in his first press conference.   He may indeed be nothing more than a figure head for unregulated hedge and private equity funds.  After all, the Chairman of the New York Federal Reserve Bank– where Geitner came from– was formerly with Goldman Sachs, and now works for a leading private equity fund.

Geitner actually proposed that these unregulated hedge and private equity funds could be a key part of the solution to the current financial mess, a mess they created.   While Volcker is calling for immediate registration of hedge and private equity funds with the SEC, Geitner and Summers, both of whom have strong ties to these funds, are silent on the issue.

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On November 18, 2008 I gave a presentation to the local chapter of the American Association of Individual Investors (AAII) at the Multnomah Athletic Club here in Portland, Oregon regarding the overall state of the financial markets.  The talk focused on how we arrived where we are and what to look for going forward.  Also included were what I believe to be the six most important regulatory reforms– all of which could be implemented immediately– that would collectively turn around the economy.

aaiitalkatmacnov08

VIEW EXCERPTS FROM AAII PRESENTATION

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This week Bloomberg disclosed that Warren Buffett, the man who has called derivatives a weapon of mass destruction, has himself afterall leveraged his fund Berkshire Hathaway by making a $40 billion bet in derivatives.

Little known to most investors is that Buffett’s primary source of revenue is his 50 insurance companies, including General RE, his company in which top executives are going to jail for accounting fraud associated with transactions involving AIG. The derivaties revelation was accompanied by a sharp drop in the fund price and the downgrading of Berkshire Hathaway bonds.

It is probably also time that Buffett divest himself of Moody’s, he is the bond rating company’s largest shareholder.  Moody’s played the key role in the subprime mortgage debacle and later claimed that it mistakenly overrated subprime debt due to a computer error.

It has been a tough month for Buffett in which the old expression “walk the walk” comes to mind.

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Today is Columbus day, a day that celebrates Columbus discovering America.  Perhaps it is ironic that over the weekend America discovered Europe when it comes to guidance in dealing with our financial crisis.  The answer to the crisis is not to have the Treasury purchase vast amounts of worthless securities from troubled banks but rather to invest in non-dilluting bank stock to help weakened banks re-capitalize.

Thus far it appears that Paulson is still lost at sea because he is advocating purchasing preferred shares, which if done, need to pay interest, be convertible to common and also non-dilluting.  Non-dilluting means that if top execs issue more shares and the govt takes a 25 percent stake, the govt gets 25 percent of all new shares.  Absent this the stock market will clearly plunge again due to becoming overcome with exhaustion at the abject incompetence of Treasury Secretary Paulson.

Secretary Paulson and Christopher Columbus

Secretary Paulson and Christopher Columbus

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See two related videos by searching for parishinvestments at youtube.com.

The first video is titled “Clinton Tax Scheme” and the second is titled “Missing Clinton Financial Disclosure.” The purpose of this comment is not to disparage the Clinton’s but rather draw attention to the most astonishing tax loophole in 25 years.

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As the Presidential race narrows, it is worth examining the key economic advisers to each candidate. While John McCain and Hillary Clinton have both enlisted advisors who are largely the source of current market turmoil, Barack Obama is instead supported by a beacon of financial integrity, former Federal Reserve Chairman Paul Volcker.

McCain’s choice of John Chambers and Carly Fiorina is most unusual since they are the “poster children,” for abusive executive compensation and financial engineering, in particular that related to stock options and costly mergers that result in significant job losses and minimal long term benefit.

Hillary Clinton made the surprising choice of Robert Rubin, who waltzed within months from being Treasury Secretary to Vice-Chairman of Citigroup, making a $50 million signing bonus. Rubin was the primary advocate of deregulating the banking sector and is fondly known as the godfather of hedge funds in investment banking circles. Enough said perhaps? See related video at http://www.youtube.com by searching for parishinvestments.

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NOTE: See chart of Buffett Oregon Lineup at end of this post.

Oregonians have a great choice for Secretary of State this year. Her name is State Senator Vicki Walker and she is a proven courageous leader and advocate for both ordinary Oregonians and businesses alike. Although a Democrat, Walker is also popular with many Republicans based upon her ability to get things done for ordinary Oregonians.

vicki walker

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