Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20
AMD is KILLING Intel as Ryzen Zen 3 Takes Gaming Crown, AMD Set to Achieve CPU Market Dominance - 13th Oct 20
Amazon Prime Day Real or Fake Sales to Get Rid of Dead Stock? - 13th Oct 20
Stock Market Short-term Top Expected - 13th Oct 20
Fun Stuff to Do with a Budgie or Parakeet, a Child's Best Pet Bird Friend - 13th Oct 20
Who Will Win the Race to Open a Casino in Japan? - 13th Oct 20
Fear Grips Stock Market Short-Sellers -- What to Make of It - 12th Oct 20
For Some Remote Workers, It Pays to Stay Home… If Home Stays Local - 12th Oct 20
A Big Move In Silver: Watch The Currency Markets - 12th Oct 20
Precious Metals and Commodities Comprehensive - 11th Oct 20
The Election Does Not Matter, Stick With Stock Winners Like Clean Energy - 11th Oct 20
Gold Stocks Are Cheap, But Not for Long - 11th Oct 20
Gold Miners Ready to Fall Further - 10th Oct 29
What Happens When the Stumble-Through Economy Stalls - 10th Oct 29
This Is What The Stock Market Is Saying About Trump’s Re-Election - 10th Oct 29
Here Is Everything You Must Know About Insolvency - 10th Oct 29
Sheffield Coronavirus Warning - UK Heading for Higher Covid-19 Infections than April Peak! - 10th Oct 29
Q2 Was Disastrous. But What’s Next for the US Economy – and Gold? - 9th Oct 20
Q4 Market Forecast: How to Invest in a World Awash in Debt - 9th Oct 20
A complete paradigm shift will make gold the generational trade - 9th Oct 20
Why You Should Look for Stocks Climbing Out of a “Big Base” - 9th Oct 20
UK Coronavirus Pandemic Wave 2 - Daily Covid-19 Positive Test Cases Forecast - 9th Oct 20
Ryzen ZEN 3: The Final Nail in Intel's Coffin! Cinebench Scores 5300x, 5600x, 5800x, 5900x 5950x - 9th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Banksters Remain Firmly in Charge of the "New" Wall Street

Politics / Market Manipulation May 21, 2009 - 12:31 PM GMT

By: LewRockwell

Politics

Best Financial Markets Analysis ArticleWall Street wants to regain your trust. Mutual fund managers, stockbrokers, Wall Street executives, and the Securities and Exchange Commission (SEC) want Americans to keep the faith that buying and holding stocks, for the long term, is a key to building personal wealth. This is a tough sell considering Americans have watched their 401(k)s become 201(k)s. Not to worry says the laughable SEC, they’ve got your back covered.


Here is what is stated in the SEC’s 2008 Annual Report: "Today, as more and more investors turn to the markets to help secure their futures, pay for homes, and send children to college, our investor protection mission is more important than ever. And as the nation’s securities exchanges mature into global for-profit competitors, there is even greater need for sound market regulation." Of course, this is nothing but hot air from a worthless bureaucracy. If the SEC was going to help Wall Street turn over a new leaf, it would immediately investigate why Goldman Sachs recently issued a "buy" recommendation regarding Ford Motor Company’s common stock. I promise this investigation will not transpire as the Wall Street banksters are in control and will continue to rip off anybody foolish enough to trust them.

Today, conventional wisdom asserts that Ford remains the only sound domestic automaker as Chrysler is in bankruptcy and GM will likely follow suit. Ford, moreover, has not taken any bailout funds, from the Federal government, and this is viewed positively by the buying public. Along these lines, there are Americans who refuse to purchase a car from GM or Chrysler due to their acceptance of bailout funds. Of the "Big 3" U.S. automakers, Ford has the most positive image.

So why did Patrick Archambault, of Goldman Sachs, recommend buying Ford stock on April 22, 2009? Here are some key reasons conveyed in his recommendation:

  • Goldman Sachs does not foresee bankruptcy at Ford as the automaker has sufficient liquidity to make it through 2010 without additional funding.
  • Ford’s earnings will improve by $9.3 billion from this year through 2012.
  • It is estimated that Ford will pick up about 25 percent of the market share GM and Chrysler will lose as they reorganize in bankruptcy and shed brands.

Based upon these factors, and others, Patrick Archambault predicts that Ford’s stock may climb by "…58% percent to $6 within six months."

Mr. Archambault, Goldman Sachs, and Wall Street are depending upon something very important. They are counting on the fact that business analysts on television and in the print media will not question this recommendation. These Wall Street charlatans also know Americans are financially illiterate and can’t read a balance sheet – I’m certain the same holds for members of the aforementioned mainstream media. For if someone actually analyzed Ford’s 12/31/08 fiscal year-end audited financial statement, it would be painfully obvious Goldman Sachs recommended the stock of a company that is insolvent.

Ford Motor Company, indeed, possesses cash and marketable securities totaling $15.7 billion. Yet, this does not overcome the facts that Ford has a deficit working capital position of $15.1 billion and a deficit equity position of $17.3 billion. Plain and simple, Ford is broke and will not survive, intact, America’s current economic depression. For those who own Ford Motor Company stock, be assured it will head to $0 when Ford goes into bankruptcy; and most likely becomes another state-owned automaker.

Why in the world did Goldman Sachs recommend buying Ford stock? The answer came nearly three weeks after Goldman’s recommendation. On May 12, 2009, Ford announced it had raised approximately $1.4 billion in a stock offering consisting of 300 million common shares. Shortly before Goldman made its buy recommendation, Ford’s common stock was selling for $3.80 per share. Immediately after Goldman’s recommendation, Ford’s stock zoomed up to $4.33 per share. By May 12th, Ford was able to price its 300 million share offering at $4.75 per share. I’d say Mr. Archambault’s recommendation netted Ford an additional $285 million in proceeds, from this stock offering, due to his recommendation (this is the difference between offering 300 million shares at $4.75 vs. $3.80). One could also argue this stock offering may not have transpired at all had a heavyweight, such as Goldman Sachs, not put out a prior buy recommendation on Ford. Is there, nevertheless, a more sinister motive behind this recommendation?

In my opinion, Goldman Sachs was doing the bidding of the Obama administration. We know there is a cozy relationship between the White House and Wall Street; in which the Working Group on Financial Markets (aka: the Plunge Protection Team) exists specifically to serve the President of the United States. Members of the working group have close ties to Wall Street – and especially to Goldman Sachs. With the messy situations President Obama is dealing with at Chrysler and GM, perhaps it would be best to deal with Ford’s looming failure (and subsequent rescue) later rather than sooner. Hence, it would make sense to help Ford raise some cash, on the capital markets, in order to give it some additional cash to "burn" – thereby putting Ford’s financial collapse further into the future.

To strengthen my hypothesis, and to deepen the plot, it is important to bring Ford’s top executive into the picture. Ford’s press release, about this stock offering, states the following: "Net proceeds to Ford from the offering are expected to be used for general corporate purposes, including to fund with cash, instead of stock, a portion of the payments the company is required to make to the Voluntary Employee Beneficiary Association (VEBA) retiree health care trust with the United Auto Workers." The press release further states:

"We are pleased with this equity offering, which is another key step in our plan to transform Ford into an exciting, viable enterprise poised to return to profitability," said Alan Mulally, Ford president and CEO. "By issuing equity now and potentially funding a larger portion of our future VEBA obligations with cash, we are able to further improve our balance sheet and significantly reduce the potential dilutive impact of the VEBA obligations on existing shareholders." (Italics added)

This is a smokescreen in which Ford’s president and CEO must feign excitement in that part of the newly raised capital is being diverted from operations and given to the UAW’s retiree health care trust. Alan Mulally, most definitely, would have preferred for the entire $1.4 billion to be used for working capital purposes. With unions being a significant voting block for Barack Obama, I have little doubt Mr. Mulally was informed this stock offering had strings attached. If Ford was going to get the Working Group’s assistance in raising capital, via a stock offering, some of the funds had to be diverted to President Obama’s powerful ally – the United Auto Workers. After all, UAW executives are smart enough to understand that Ford’s stock may become worthless so it is better to put cash in the retiree health care trust rather than the stock of an insolvent company.

Does the chairman of the SEC, Mary Schapiro, even care about stock manipulation at all? Does it not pique a modicum of curiosity when a major brokerage firm puts out a buy recommendation regarding the common stock of a company which is broke and has bleak prospects due to atrocious economic conditions? And shortly after the buy recommendation this company is able to raise over $1.4 billion – via a stock offering – with a percentage of the funds being diverted to the grubby hands of President Obama’s major ally, the UAW. This certainly looks like manipulation and payola to me. Rest assured, there will be no stock-manipulation investigation launched by the SEC. To be sure, there is no "new" Wall Street. It remains the same old playground for corrupt, wealthy elites to find ways to separate you from your money. Ford Motor Company’s successful stock offering is just another glaring example.

May 21, 2009

Eric Englund [send him mail], who has an MBA from Boise State University, lives in the state of Oregon. He is the publisher of The Hyperinflation Survival Guide by Dr. Gerald Swanson. You are invited to visit his website.

Copyright © 2009 Eric Englund

http://www.lewrockwell.com

    © 2009 Copyright LewRockwell.com - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules