Goldman charged with fraud over Paulson CDO trade Shares of investment bank drop 13% on news of SEC lawsuit

Posted by & filed under Governments & Regulators, Industry Analysis.

Description:  The Securities and Exchange Commission on Friday charged Goldman Sachs Group Inc. and one of its vice presidents with defrauding investors by misstating and omitting key facts about a financial product related to subprime mortgages.

Source: Marketwatch.com
 
Date: 04/016/2010

Link: http://www.marketwatch.com/story/goldman-charged-with-fraud-over-paulson-cdo-trade-2010-04-16?pagenumber=1

Questions for discussion:

  • Are there any explanations that can mitigate the damage done to the reputations of the firms involved?
  • What effect do you think this publicity will have on other financial dealings between institutions?
  • What can be learned from this article about the concept of risk management?
  • Do you believe the SEC is serious about pursuing legal action against Wall Street firms? Explain why or why not.

Abacus Allowed Goldman to Shuffle Mortgage Risk Like Beads

Posted by & filed under Governments & Regulators, Industry Analysis.

Description:  From July 2004 through April 2007, as credit markets boomed, Goldman Sachs Group Inc. created 23 financial transactions called Abacus, the word for a relatively crude counting tool involving the shuffling of beads. Yesterday, the Securities and Exchange Commission sued the bank for securities fraud in what would be the penultimate offering in the series, according to Bloomberg data.
Source: Bloomberg.com
 
Date: 04/017/2010

Link: http://www.bloomberg.com/apps/news?pid=20601103&sid=aFsmwaue4PZo

Questions for discussion:

  • What can be learned from this article about the concept of risk management?
  • Do you believe the SEC is serious about pursuing legal action against Wall Street firms? Explain why or why not.

Dow 12,000 next? Or new record 14,165? Commentary: Wall Street’s happy talkers making fools of 95 million investors (again)

Posted by & filed under Industry Analysis.

Description: Yes, we hit 11,000. Propaganda. Yes, we’ll quietly sneak past 11,722 (Dow’s 2000 peak). Yes, we’ll happily climb to 14,164 (Dow’s 2007 peak). Maybe. But you’re being conned: Even a new record of 14,165 barely equals CPI inflation the past 10 years. Get it? Wall Street’s lost more than 20% of your money the past decade. Now they’re blowing a new bubble, filled with more toxic costly hot air.

Source: Marketwatch.com
 
Date: 04/13/2010

Link: http://www.marketwatch.com/story/new-dow-high-ahead-happy-talk-feeds-sheep-2010-04-13?pagenumber=1

Questions for discussion: 

  • Do you agree with the analysis presented?
  • Are there explanations for investors’ “herd-mentality”?
  • What strategy would make sense for an investor if the scenario presented is valid?
  • How do you think corporate financial planners will behave over the next few years?
  • How should they behave, given this analysis?

Top tech companies 5 years from now

Posted by & filed under Growth & Valuation, Industry Analysis.

Description: Now that 2010’s Fortune 500 list is out, Techmate debates which companies are likely to rise or fall on the list in 2015.

Source: CNNMoney.com – video report

Date: 04/16/2010

Link: http://money.cnn.com/video/technology/2010/04/16/tm_fortune_500_5yrs.fortune/

Questions for discussion:

  • Do you agree with the analysis presented?
  • Which other companies do you think offer good chance for capiatl growth?

Whitney: Housing set to fall again

Posted by & filed under Governments & Regulators, Industry Analysis.

Description:  Bank analyst Meredith Whitney predicts more foreclosures are on the way and the housing market will not rebound smoothly.

Source: CNNMoney.com – video report
 
Date: 04/08/2010

Link: http://money.cnn.com/video/fortune/2010/04/08/f_sl_meredith_whitney_housing.fortune/

Questions for discussion:

  • Do you agree with the predictions made by bank analyst Meredith Whitney?
  • What investing strategy would make sense if she is right?
  • How should bank stocks and other businesses that are highly associated with the housing market be played by investors?
  • How should corporate financial managers of these firm deal with her prediction if they agree? or disagree?

Housing bubble: Who’s to blame?

Posted by & filed under Economic Analysis, Governments & Regulators.

Description:  Alan Greenspan defends keeping interest rates low. Readers of ‘The Buzz’ weigh in on who they think is responsible.

Source: CNNMoney.com – video report
 
Date: 04/07/2010

Link: http://money.cnn.com/video/news/2010/04/07/n_bz_housing_bubble_blame.cnnmoney/

Questions for discussion:

Summarize the arguments for who is to blame for the crisis.

  • How would you apportion blame?
  • Present arguments in defence of each target of blame.
  • Going forward from our understanding of the effects of a low-interest policy, what lessons are there here for corporate financial planners?

China now widely expected to move on yuan

Posted by & filed under Governments & Regulators.

Description: Signals from the two capitals of Beijing and Washington have convinced experts that China will ease its currency’s peg to the U.S. dollar, although the timing of the move and the details of new regime remain unknown.

Source: Marketwatch.com
 
Date: 04/08/2010

Link: http://www.marketwatch.com/story/pboc-advisor-urges-managed-float-for-yuan-2010-04-08?siteid=nwtwk

Questions for discussion:

  • Summarize the explanations offered for changes to the future value of the Yuan?
  • What is your prediction? Explain your thinking.
  • How should currency traders respond to the information presented in this article?
  • How should corporate financial managers dealing with the Yuan respond?

Merrill Units Win Dismissal of Some MBIA Claims in Lawsuit

Posted by & filed under Governments & Regulators, Management Issues.

Description: Merrill Lynch & Co. units now owned by Bank of America Corp. won dismissal of claims in a lawsuit filed by MBIA Inc. last year over protection sold against mortgage-debt defaults.

Source: Bloomberg.com

Date: 04/10/2010

Link: http://www.bloomberg.com/apps/news?pid=20601208&sid=ac_igSnXiHDw

Questions for discussion:

  • What is the significance of the judge’s decision in this case?
  • What are the broader implications for financial institutions?
  • What does this article suggest to you about the use of the courts as a means to enforce regulated practices?
  • How might financial managers be expected to react to these legal procedures and outcomes?

Innovation, by Order of the Kremlin

Posted by & filed under Governments & Regulators, Management Issues.

Description: AROUND the time that Apple Computer was making it big in California, Andrey Shtorkh was getting a first-hand look at the Soviet approach to high tech: he guarded the fence keeping scientists inside Sverdlovsk-45, one of the country’s secret scientific cities, deep in the Ural Mountains.

Source: NYTimes.com

Date: 04/10/2010

Link: http://www.nytimes.com/2010/04/11/business/global/11russia.html?ref=business

Questions for discussion:

  • What does this article suggest about changing attitudes towards business investment and entrepreneurialism in Russia?
  • Do you believe the movement described here is genuine and sustainable?

A futures exchange for Hollywood

Posted by & filed under Governments & Regulators, Industry Analysis.

Description:  Armchair investors may soon be able to bet real money on how films perform at the box office.

Source: CNNMoney.com – video report
 
Date: 04/02/2010

Link: http://money.cnn.com/video/news/2010/04/02/n_hollywood_futures.cnnmoney/

Questions for discussion:

  • How is this market similar to a conventional futures market such as one for gold?
  • What risk is at play for investors?
  • How can this risk be quantified?
  • Would you recommend this sort of investment? Explain your reasoning.
  • Should government regulatory bodies be concerned with this market?