IBM's 1Q09 Financial Results

Highlights of IBM's 1Q09 Earnings Report:

* Net Income: $2.3 Billion or $1.70/share...down less than 1% from $2.32 Billion in 1Q08

* Total Sales: $21.7 Billion...down 11% from $24.5 Billion in 1Q08 (IBM stated that revenue would have only dropped 4% year over year under constant currency)

* Total Expenses: $6.3 Billion...down 9% from 1Q08

* Effective Tax Rate: 26.5%...down 100 basis points from 27.5% in 1Q08

* Free Cash Flow: $1 Billion...up 80% year over year (yoy) from $550 million

* Stock Buyback: IBM purchased 22 million shares of its own stock during 1Q09 (at 4/26/09's price of $100/share, IBM purchased approx $2.2 Billion of company stock during the quarter)...IBM currently has $3.7 Billion of share buyback authorization remaining

* CASH on hand to end 1Q09: $12.3 Billion

* Service Sales: $13.2 Billion...down 10% yoy (down 2% at constant currency)

* Software Sales: $4.5 Billion...down 4% yoy (up 2% under cc)

* Hardware Sales: $3.2 Billion...down 24% yoy (down 18% under cc)

* 1Q09 Service Bookings: Down 1% yoy to $12.5 Billion (IBM stated that new service contracts revenue would have actually risen 10% yoy under cc)

* Long-Term Service Bookings: Up 14% yoy to $7.0 Billion (up 27% under cc)

* Short-Term Service Bookings: Down 14% yoy to $5.5 Billion (down 5% under cc)

* India sales up 12% year over year

* China sales up 11% year over year


* 2009 Forecast: IBM affirmed its 2009 earnings forecast of at least $9.20/share (...as of 4/26/09, IBM traded at $100.08/share, implying its currently trading at a forward 2009 P/E multiple of approx 11 times earnings)


* 2010 Forecast: IBM affirmed its 2010 earnings forecast of in between $10-$11/share (...as of 4/26/09, IBM traded at $100.08/share, implying its currently trading at a forward 2010 P/E multiple of approx 9-10 times earnings)


http://www.ibm.com/investor/1q09/press.phtml


Data Courtesy: IBM's 1Q09 earnings press release
Full Disclosure: I own shares of IBM.

SOROS - 'Two Moves' And Only A Bear Rally ?

Say what you want about BILLIONAIRE George Soros and what you may perceive his influence on U.S. party politics may (or may not) be, the truth is that few market participants have been as RIGHT (pun INtended) as the founder of Soros Fund Management when it comes to sound investment decision-making post the mid 2007 credit/mortgage bubble collapse. While the S+P 500 market index lost a sickening 39% in 2008, Mr. Soros astutely spent the year mostly betting against the volatile global markets and actually ended 2008 up 8% (FYI, the average hedge fund declined 19% in 2008). Through February 2009, Mr. Soros' management firms oversaw $21 Billion and its Quantum Endowment hedge fund was up 5.3% on the year.

Given his recent high-level of market 'RIGHT-eousness' (a technical term I coined for being right about the markets), Mr. Soros' interviews now approach those starring former Oppenheimer & Co. banking industry analyst, Mrs. Meredith Whitney, when it comes to being officially REQUIRED Viewing Material ('RVM'). In the below twenty five minute segment, Mr. Soros shares his valuable insight on several relevant, pressing financial market TOPICS including: The S+P 500's ongoing rally off its twelve year lows on March 9th, 2009 (the 27% gain is the largest percentage-based rally for the S+P 500 since 1933)...FASB's recent controversial decision to alter the definition of Mark-to-Market accounting (this will effectively allow U.S. banks to have much more accounting flexibility, or 'creative freedom', when it comes to judging the balance sheet value of their own notoriously large securitized asset loan portfolios including those distressed assets levered to residential and commercial real estate)...The current state of the U.S. financial system and the fundamentally insolvent state of affairs surrounding its largest 'zombie banks' including Citigroup (C) and Bank Of America (BAC)...Thoughts on the timing of a potential U.S. housing bottom...Global economic recovery thoughts focused on B.R.I.C. countries Brazil and China, ETC. :






Data Courtesy: Youtube + Bloomberg

Australia's $30 Billion BROADBAND Project

While some of the major details are still evolving (...for instance, whether or not Australia will hire private-sector multinational IT companies like Cisco/CSCO, Siemens/SI, IBM, or even Google/GOOG to help out), Australia's government recently committed to a highly ambitious eight-year, $30.5 Billion Internet infrastructure spending project that will aim to significantly boost the country's current broadband network capacity and also, preserve 200,000 Australian JOBS. Per Australia's Prime Minister, Kevin Rudd, the country's LARGEST EVER infrastructure project to date "will support 25,000 jobs every year over the eight-year life of the project", and will also provide citizens with Internet access 100 times faster than currently available speeds.


Some additional bullet points:
* The Australian government plans to form and temporarily own 51% of the new company that will be responsible for making the initial investments of approx $3.4 Billion in order to build and operate the new high-speed Internet network...The government plans to sell its stake in the company five years after the project's completion


* In order to FINANCE the entire $30 Billion undertaking, the government currently plans to sell up to $16 Billion in BONDS to the public and also plans to raise $14.3 Billion via 'private (equity) investment'


* The plan's seemingly earnest objective is to supply 90% of Australian homes with Internet connections of up to 100 megabits per second and the remaining 10% with speeds of up to 12 megabits per second


* According to JPMorgan's Chase & Company's Internet Investment Guide, about 17% of Australia's population had access to high-speed Internet connections in 2008 (this rate compares to 19% in both the U.S. and Japan...and also to 26% in both South Korea and Switzerland)


* Australia's unique geography (many cities densely located on its coast, the sparsely-populated Outback) has made Broadband advancement a difficult issue in the past


* Kevin Rudd, Australia's Prime Minister, made Broadband infrastructure expansion a priority during his 2007 political campaign...According to Reuters, Rudd's current popularity is near-record levels in domestic opinion surveys


* In addition to the $30 Billion (43 Billion Australian dollars) pledged to stimulate Australia's economy via this massive Broadband plan, Australia's government has pledged approx $57 Billion (78 Billion Australian dollars) in economic stimulus since September 2008 (the now infamous date marking the collapse of the artist formerly known as Lehman Brothers)



bloomberg.com/apps/news?pid=newsarchive&sid=akD14lio0T3k


reuters.com/article/rbssTechMediaTelecomNews



Data Courtesy: Bloomberg + Reuters
Full Disclosure: I own shares of IBM and GOOG.

March 2009 Payrolls - Dude, Where's My JOB?

According to the U.S. Labor Bureau of Statistics' March 2009 payrolls report, the number of unemployed Americans rose to a jaw-dropping 13.2 million people. During March, the country lost 663,000 jobs and the nation's Unemployment Rate rose to a staggering twenty five year high of 8.5%. The last time the unemployment rate was this high was back in November 1983, when the economy was recovering from the 1981-1982 recession that eventually pushed the jobless rate close to 11%. Perhaps even more disturbing is the fact that nearly 1/4 of all jobless Americans have been unemployed for a period of six months or longer - this is also the highest proportion since the above-cited 1981-1982 recession.

Over the past five months, the country has lost an astounding 3.3 MILLION jobs; including a loss of 2 MILLION jobs during the first three months of 2009. For some perspective and per CNN, if no more jobs are lost in 2009 (mind you, this seems to be a VERY unlikely scenario...), 2009 would still be the 4th worst year for job losses since the government began tracking payrolls data back in 1939. In total, since the recession officially began back in December 2007, the U.S. economy has lost a sickening 5.1 MILLION jobs !


In addition to WIDESPREAD job cuts (virtually every U.S. economic sector lost jobs in March except for 'health care and education services' which actually saw an 8K increase in payrolls), employers also cut back on employee hours. The average hourly employee work week fell to 33.2 hours, the lowest level on record going back to 1964.

Lastly, the country's Underemployment Rate also warrants mention as it continued to rise and ended March at a whopping 15.6% ! FYI, the government's underemployment rate attempts to capture 1.) all unemployed Americans already included in the government's unemployment rate, 2.) those job seekers who have recently given up looking for a job, and 3.) those workers currently holding part-time jobs but are seeking full-time work. The amount of underemployed Americans rose by approx 423,000 in March and now total a RECORD 9 million American workers.


http://www.bls.gov/news.release/empsit.nr0.htm


Data Courtesy: The U.S. Labor Department

The Notorious AIG Bonuses And The LAW

Connecticut Attorney General Richard Blumenthal recently sat down with Fox News commentator Glenn Beck to debate the $220 million AIG bonus fiasco. What transpired was an especially lively and spirited debate focused on the United States government's 'legal authority' to take back the bonuses contractually guaranteed to AIG employees.

In terms of background, American International Group (AIG) is the NOTORIOUS U.S. financial products company that foolishly risked and LOST the house on sour, unregulated credit default swap (CDS) investment bets. The only reason AIG even exists today is because of the U.S. government's highly controversial September 2008 decision to intervene in the financial markets and assume the company's gigantic GLOBAL liabilities. To date, the government has essentially taken over the insurance behemoth by infusing it with approximately $180 Billion in U.S. taxpayer funds in return for an 80% ownership stake.


While I most certainly understand and empathize with the public's justifiable OUTRAGE (...there are after all 180 BILLION reasons to be OUTRAGED over these bonus payouts...), I believe Mr. Beck's assessment is fair and share his concerns regarding precedent and the 'Slippery Slope of LAW' issue now facing the country.


Part 1:



Part 2:




Data Courtesy: Fox News

Stewart Vs. Cramer - Media ACCOUNTABILITY

Jim Cramer, arguably CNBC's loudest and most famous stock market commentator, was interviewed on Thursday, March 12th by savvy late night comedy news show host Jon Stewart. In the surprisingly edgy and riveting fifteen minute Daily Show segment, Stewart takes a somewhat uncharacteristically somber approach and demands accountability from the Wall Street media and more specifically, CNBC, the #1 U.S. financial news television network. Mr. Stewart seems especially focused on discussing what he (and perhaps many others) perceived as the TV station's collective 'under-reporting' of the very serious and complex financial system issues that ultimately triggered the stock market's collapse in 2008. Stewart's anger appears genuine and PALPABLE...I repeat, this is riveting stuff :


Part 1:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Jim Cramer Pt. 1
comedycentral.com
Daily Show Full Episodes Important Things w/ Demetri Martin Political Humor

Part 2:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Jim Cramer Pt. 2
comedycentral.com
Daily Show Full Episodes Important Things w/ Demetri Martin Political Humor

Part 3:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Jim Cramer Pt. 3
comedycentral.com
Daily Show Full Episodes Important Things w/ Demetri Martin Political Humor

Data Courtesy: Comedy Central + The Daily Show

IBM + SUN - An $8 Billion Server-OPOLY ?

According to the Wall Street Journal, 'tech conglomerate' International Business Machines Corp. (IBM) is in talks to purchase storage systems industry peer Sun Microsystems (JAVA). While terms are still being negotiated, rumors suggest IBM is willing to pay up to $8 Billion in cash to acquire its one-time rival. If true, the acquisition would easily surpass the company's $5 Billion purchase of Cognos in January 2008 to become the most expensive deal in IBM's near 100 year corporate history (FYI, Sun currently has about $2.5 Billion in cash sitting on its balance sheet so the real/net cost of the deal to IBM would probably be somewhere around $5.5 Billion).

With the acquisition of Santa Clara, California-based Sun Micro, IBM would immediately be adding some 35,000 new employees and about $13 Billion to annual company sales. More importantly though, the purchase of Sun would allow #1 IBM to significantly increase its lead in worldwide server marketshare over #2 Hewlett Packard (HPQ). Per the below pie chart, IBM's server marketshare would increase by 10.1% and total 42% as a result of the acquisition...meanwhile, HP's share number holds steady at 29.5%. Scary as that might be, perhaps an even more daunting prospect for the rest of the server industry would be the potential $8 Billion deal's impact on IBM's worldwide UNIX server marketshare. If the deal were to go through and of course pass regulatory approval then IBM's UNIX share would instantly soar an enormous 28 points to a MONOPOLISTIC 65.3% !




Per the below link, IBM appears interested in doing the deal for several reasons, including:


1.) INSTANT MARKETSHARE - IBM will immediately gain 10 points of marketshare in overall worldwide server sales


2.) 'HOT' END USERS - Many of Sun's customers operate in the telecommunication and government sectors of the economy...two end user industries IBM is explicitly targeting and focused on growing during today's relatively tepid macroeconomic backdrop


3.) LEVERAGE IBM's CORE S + S - IBM will attempt to sell its carefully-crafted, higher margin bundles of server-oriented Software + Services to its newly acquired storage system customers


4.) LEVERAGE SUN's CORE R + D - IBM will seek to leverage the fruits of SUN's widely regarded Research + Development efforts (JAVA, Solaris, SQL, solid state storage drives, advancements in cloud computing, etc.) into its own existing and future products/solutions


online.wsj.com/article/SB123742081606578475.html


Data Courtesy: The Wall Street Journal
Full Disclosure: I own shares of IBM.

Moody's List Of AAA Credit Corporations

Today's Standard & Poors loooooong anticipated downgrade announcement of General Electric's credit rating from AAA to AA+ (the next level down) most likely portends that Moody's Corp (MCO) will be quickly following suit with its own credit ratings downgrade of GE. If Moody's indeed decides to downgrade GE then there will only be 4 companies operating in the S+P 500 UNIVERSE today commanding Moody's HIGHEST Level Credit Rating of AAA:


* Automatic Data Processing (ADP) - a $18 Billion marketcap financial firm


* Berkshire Hathaway (BRKA) - a $130 Billion mcap insurance conglomerate


* Exxon Mobil (XOM) - a $330 Billion mcap oil and gas company


* Microsoft (MSFT) - a $150 Billion mcap technology company


* TIAA-CREF (private...not in the S+P 500) - a not-for-profit retirement organization for 3 million people


FYI, A triple A credit rating is desirable as it essentially allows companies to borrow money at the cheapest interest rates possible (allowing said company to maximize potential returns from that borrowed money). General Electric held Standard & Poor's AAA credit rating since 1956. Per its most recent annual company filings with the SEC, and under the terms of its existing debt instrument guarantees and covenants, GE would have to post additional collateral on its long term debt if its credit ratings were to be cut four more levels to below AA-/Aa3.




bloomberg.com/apps/news?pid=20601087&sid


Data Courtesy: Bloomberg
Full Disclosure: I own shares of GE.

WELCH - Obama Needs To 'CHANGE' + Focus

Highly regarded former General Electric CEO and New York Times best selling author, Jack Welch, was interviewed this morning in an interesting economy-centric segment on MSNBC's Morning Joe. Mr. Welch served as Chief Executive Officer of GE from 1981 through 2001 and under his stewardship, the company increased its sales by some 380% (from revenues of $27 Billion in 1980 to $130 Billion in 2000) !

In the below three minute clip, the highly accomplished and often dynamic Mr. Welch shares some of his candid, proprietary, 'STRAIGHT FROM THE GUT' thoughts on President Obama and the current timetable of his ambitious agenda (FYI, President Obama's 2009 budget currently forecasts $3.2 TRILLION of government spending). Worth the watch:




Data Courtesy: MSNBC + Youtube

GE's $50 B JOKER-Like Real Estate Exposure

Since April 4th, 2008, the stock of U.S-based 'super conglomerate' General Electric (GE) has been in an absolutely vicious, nauseating downtrend falling from $37.56 a share to today's difficult-to-fathom price of just $7.06/share (FYI, please note the fitting JOKER-like portrait of GE CEO Jeff Immelt above). GE, a once near $600 Billion GOLIATH of a company, has been crushed by the simultaneous burstings of the REAL ESTATE and CREDIT asset bubbles and seen its market value shrink a jaw-dropping 80% over the past 11 months!

The reason for the steep, GUT-wrenching decline??? The vast amount of Joker-like UNCERTAINTY surrounding the value of General Electric's ENORMOUS and OPAQUE
$650 Billion GE Capital business, and more specifically, its $50 Billion plus global REAL ESTATE portfolio. For some perspective, the size of GE Capital is roughly equivalent to the size of the U.S's 6th largest bank.

Further complicating matters is the Joker-like accounting methodology GE Capital currently uses to value its holdings. The world's largest maker of jet engines and power turbines told shareholders last week that only 2% of GE Capital Corp's $650 Billion portfolio of assets are being valued today based on current market prices (i.e: marked to market). According to CreditSights Inc, an independent bond research firm based out of New York, the remaining 98% or some $624 Billion of GE Capital assets (most of which are loans or senior secured debt tied to assets like aircraft) are being valued at levels that General Electric established many years ago! Per the bottom referenced Bloomberg link, here are some quick facts related to GE Capital's dubious real estate unit, GE Real Estate :


* GE Capital generated $8.6 Billion or 48% of General Electric's $18.1 Billion of profits in 2008...that compares with about 20% in the late 1980's...General Electric expects GE Capital to contribute $5 Billion of profits in 2009


* GE Real Estate profits fell by $1.1 Billion in 2008 (vs. 2007)...On January 23rd, 2009, GE stated that GE Real Estate will take more than $4 Billion in pretax losses and post an overall loss of about $500 million in 2009


* According to SEC regulatory filings, General Electric's commercial real estate business consists of both property and real estate loans. The company has stakes in or financing on 8,000 different properties scattered in 2,600 cities with an average investment of less than $10 million


* According to Keith Sherin, General Electric's Chief Financial Officer, GE has about $50 Billion of commercial real estate loans and $2.9 Billion of commercial mortgage-backed securities


* GE takes a conservative (...ironic that shareholders should actually read this word as 'DANGEROUS'...) approach in terms of accounting for the value of its real estate holdings as the company's 'mark to market' methodology is similar to the accounting used by real estate investment trusts. GE accounts for its property holdings at the price they paid for them and then chooses to depreciate the values over time rather than actually marking the assets to their current market values. According to GE spokesman Russell Wilkerson, GE's property portfolio currently generates about $1.7 Billion in profits while the company depreciates the assets by about $1.1 Billion per year. GE is currently forecasting loan reserves of (only) 2.5%.


* GE's property includes office buildings, warehouses and apartments...about 71% of GE's properties are located outside of the U.S., primarily in Europe, Asia, Canada and Mexico


* GE owns about $22 Billion of real estate assets in Europe...about 1/3 of which consists of real estate debt and non-performing loans


* In November 2007, GE purchased $2.8 Billion of commercial real estate loans from England's Bradford & Bingley. According to Investment Property Databank, U.K. commercial property values had fallen only 3% from their July 2007 peak at the time of GE's purchase...now prices have fallen 37% from that peak


* In 2006, GE purchased Arden Realty Inc. for $3.2 Billion...at the time, Arden was the largest publicly traded land owner in Southern California


bloomberg.com/apps/news?pid=20601109&sid=ary2g22


Data Courtesy: Bloomberg

IBM's Worldwide IT Labor Force At A Glance

* IBM is the largest Information Technology employer in the United States

* As of year end 2008, IBM employed 398,445 people worldwide including 115,000 people (or 29%) in the United States

* As reported by the company last week, IBM now employs a total of 113,000 jobs in the B.R.I.C. countries (Brazil, Russia, India and China)

* Per IBM's 2007 Annual Shareholders Report (double-click for a larger view):



http://www.cnbc.com/id/29546391/page/2/


Data Courtesy: CNBC + IBM's 2007 Annual Report
Full Disclosure: I own shares of IBM.

14 Million 'UNDERWATER' U.S. Homeowners

According to Moody's Economy.com, an estimated 13.6 million U.S. borrowers ended 2008 UNDERWATER on their home mortgages. FYI, 'underwater' borrowers refers to those individuals being in the difficult and unfortunate position of currently owing more on the mortgage of their property than the actual underlying value/WORTH of the property itself.


Per the above Wall Street Journal chart, this figure is projected to rise in 2009 and is up from the 11.8 million homeowners that were underwater at the end of 3Q08. Lastly, please note that as recently as 2Q07, the number of underwater homeowners was only 4 million. Since then (...ENTER the July 2007 seismic collapse of the U.S. SUBPRIME mortgage market...), this figure has exploded upwards by nearly 10 million or 250% !


Data Courtesy: Economy.com + The Wall Street Journal

PENSIONS - Another TRILLION $ BailOUT ?

According to the Center for Retirement Research at Boston College, PUBLIC PENSION plans in the United States are UNDERfunded by some $1 TRILLION! Per the disconcerting Bloomberg link below:


* By LAW, states must guarantee ALL public pension fund debts


* As of December 16, 2008, public pensions in the U.S. had Total Liabilities of about $2.9 TRILLION vs. Total Assets equalling approx only $2 TRILLION...a 30% shortfall !


* In terms of Asset Mix, public pension funds typically place 60% of their assets in STOCKS, 30% in bonds/fixed income, 5% in real estate and the remaining 5% in 'riskier assets' such as hedge funds or commodities


* A shortfall of $1 TRILLION has been able to occur/go 'unchecked' due to pension funds being allowed to OVERstate expected market returns on their non-bond pension assets


* According to Bloomberg, actuaries consistently allow public pension funds to report artificially high expected rates of return on their non-bond assets - most often 8.0% and as much as 8.75% (fyi, that's more than the 6.9% billionaire investor Warren Buffet reports/assumes for Berkshire Hathaway Inc.'s pension fund)


* For perspective's sake, some rather disturbing, current real world Examples:

- The U.S.'s Largest Public Pension fund, California Public Employees' Retirement System (CALPERS), has been expecting/assuming an annual market return of 7.75% for the past 8 years (and 8% before that)...meanwhile, CALPERS real annual return from the stock market during December 1998-December 2008 has only been 3.32% !

- The Teacher Retirement System of Texas, the 7th largest U.S. public pension fund, reports each year that its expected/assumed market rate of return is 8%...meanwhile, the pension's real annual return from the stock market during the past 10 years has been only 2.6% !


bloomberg.com/apps/news?pid=20601109&sid


Data Courtesy: Bloomberg

JUMBO Lenders + Borrowers Feel The Pinch

While the media continues to focus on the collapse of the U.S. subprime mortgage market, it is also worth noting the recent decline in lending activity and rise of delinquencies for the highest end of homeowner loans - JUMBO mortgage loans. According to LPS Applied Analytics, a mortgage data service based out of Jacksonville, Florida, about 2.6% of the homeowners who took out JUMBO mortgage loans during 2008 are ALREADY at least 60 days delinquent...while this rate pales in comparison to the current 20% delinquency rate affecting 2008 subprime borrowers, it is still significant because this is the fastest pace of Jumbo delinquencies in at least the last 15 years, when LPS began tracking the data.


* The national average for a 30 year fixed rate jumbo mortgage was 6.57% this week compared with 5.34% for a prime conforming loan. According to BanxQuote CEO Norbert Mehl, the spread between Jumbos and primes had been only about 20 basis points (0.2%) "for several decades"...however, since August 2007 + the collapse of the subprime mortgage market, the spread has consistently stayed in between 100 and 200 basis points (1.0%-2.0%)


* A prime conforming loan is a mortgage available to borrowers with top credit scores that is eligible for sale to either Fannie Mae or Freddie Mac...currently the Fannie-Freddie cap is set at $417,000 in most places and up to $729,750 in areas with higher home prices


* JUMBO lending activity slowed in the 4th quarter of 2008 to $11 Billion, or 4% of the mortgage market (vs. 14% in 2007)...the lowest quarterly amount since Inside Mortgage Finance started tracking data back in 1990


* Top 5 U.S. Jumbo mortgage lenders are: Chase Home Finance LLC., Bank of America (BAC), Washington Mutual (aka the artist formerly known as WM), Wells Fargo (WFC) and Citigroup (C)...the Top 5 Jumbo lenders originated a combined $55.3 Billion in jumbo loans during 2008, they lent just $4.3 Billion (less than 8%) of that total during the 4th qtr of 2008


* According to LPS Applied Analytics, the average credit score for a 2008 jumbo loan was 762


* President Barack Obama's Homeowner Affordability and Stability Plan, announced this week, has NO provision to help JUMBO mortgage borrowers


bloomberg.com/apps/news?pid=newsarchive&sid=ab4hyMC6aJf0


Data Courtesy: Bloomberg

CRAMER - Obama's $800B Stimulus Is A FRAUD

Stock market commentator Jim Cramer is EXTREMELY negative ('bearish') on the final version of the $789 Billion U.S. economic stimulus package that is making its way through Washington. According to Cramer, host of CNBC's popular stock market-themed television show Mad Money, Congress and President Obama both deserve an 'F' for the passage of this 'total fraud' of a plan. Perhaps more significantly, Mr. Cramer sees NO actionable stock trades as a result of this package (as a humble fan of CATERPILLAR/CAT, I find this point particularly discouraging). Please find his sobering take below courtesy of TheStreet.com :

Data Courtesy: TheStreet.com

The U.S.'s $9 TRILLION Bailout 'Plan'

Through February 10th, 2009, the U.S. government has pledged a total of about $8.8 TRILLION towards fixing the country's ailing financial system. Of this $8.8 Trillion committed, 'only' about $2 Trillion has been actually spent thus far.

* Please check out the details courtesy of the insightful New York Times link below:

nytimes.com/interactive/business/20090205-bailout-totals

--------------------------------------------------------------------------------

1.) The Government as Investor:

$4.6 Trillion

Spent: $921 billion

Includes direct investments in financial institutions, purchases of high-grade corporate debt and purchases of mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.

2.) The Government as Lender:

$2.4 Trillion

Spent: $666 billion

A significant expansion of the government's traditional overnight lending to banks, including extending terms to as many as 90 days and allowing borrowing by other financial institutions.

3.) The Government as Insurer:

$1.8 Trillion

Spent: $252 billion

Includes insuring debt issued by financial institutions and guaranteeing poorly performing assets owned by banks and Fannie Mae and Freddie Mac.

Data Courtesy: New York Times

Whitney Believes U.S. Bad Bank = Bad Idea

Oppenheimer & Co. financial industry analyst Meredith Whitney is widely recognized on Wall Street as being one of the first individuals to accurately identify and predict the size and scope of the current economic woes facing the U.S.'s financial system. Mrs. Whitney correctly predicted and warned clients (via documented letters of research) of the oncoming financial industry meltdown back in October 2007, a full six months prior to the March 2008 collapse of (the artist formerly known as) Bear Sterns. As a result, her forward-looking financial system and policy thoughts are now officially REQUIRED viewing material...these come courtesy a Bloomberg TV interview aired recently on February 4th, 2009:



In addition to her insightful thoughts on the U.S. government's 'BAD BANK' proposal, Mrs. Whitney also advises investors to continue staying away from investing in the common stock of U.S. banks. Per about 8 minutes into the interview, Mrs. Whitney states: "...What we do know is that the existing banks need more capital for a number of reasons. If you are an existing shareholder, if you are an equity shareholder, then you are at the absolute bottom of the totem pole. Your risk is at the highest...Investors should NOT even consider owning banks at this point on an equity basis because you don't know what you're getting (owning) but you do know that with any change that occurs (due to government intervention), you are at the bottom of the totem pole. So your interests will be considered absolutely last by the government and in many cases, your interests will be 'crammed down'."


Data Courtesy: Bloomberg + Youtube

GROSS - Stimulus Bill Needs To Start With 'T'

During a February 5th, 2009 interview with Bloomberg TV, PIMCO managing director Bill Gross firmly expressed his belief that the U.S. government should be spending TRILLIONS, as opposed to just hundreds of billions, of dollars on stimulating the U.S economy in order to avert a 'mini Depression'.

Please find the complete 20 minute interview below:


* Bill Gross (about 9 minutes into the interview): "I don't think (the current proposed $800 Billion U.S. economic stimulus plan) is enough..there's debate back and forth and $700 and $800 Billion sounds like a lot of money (but) the problem is that there has been trillions of dollars of credit, bank capital and spending power extracted from this economy over the past 6 to 12 months...you can look at it from the standpoint of the wealth effect, you can look at it from the standpoint of lending of banks, or the shadow system, or all of that in combination, but the fact is that this economy requires support from the government, a check from the government in some form or fashion in the trillions as opposed to the hundreds of billions...I think President Obama was right, there's a potential catastrophe if Washington continues to focus on a hundred or two hundred billion dollars, we need something in the trillions."


Data Courtesy: Bloomberg + Youtube