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Monthly Archives: April 2012

U.S. Perfecting Formula for Budget Failure, Says Bowles

Bowles, a Democrat, says that the U.S. faces the most predictable economic crisis in history, but it is avoidable.

Bowles continued, “I think it’s clear, if you do simple arithmetic, that the fiscal path that the nation is on is simply not sustainable.”

Read the rest here.

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China Manufacturing Improving

HONG KONG (MarketWatch) — China’s manufacturing activity improved for a fifth straight month in April, signaling that economic conditions at factories were stabilizing, according to the result of an official survey released Tuesday.

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FORWARD: New Obama Slogan Has Long Ties to Marxism, Socialism

Obviously or purposefully the Obama administration did not bother to check Wikipedia before choosing the new campaign slogan:

The Obama campaign apparently didn’t look backwards into history when selecting its new campaign slogan, “Forward” — a word with a long and rich association with European Marxism.

Many Communist and radical publications and entities throughout the 19th and 20th centuries had the name “Forward!” or its foreign cognates. Wikipedia has an entire section called “Forward (generic name of socialist publications).”

Read the rest of the rest of the article here.


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Killer Charts: Sell in May?

Ritholtz posted a fantastic set of charts covering the historical tendencies of the month of May.

See the charts here.

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SEC Charges Mother, Daughter, and Their Attorney in Illegal Penny Stock Scheme


Washington, D.C., April 30, 2012 — The Securities and Exchange Commission today charged a mother and daughter along with their attorney in a scheme to unlawfully acquire and sell billions of shares of penny stock in unregistered transactions.

Additional Materials

The SEC alleges that Christel S. Scucci and her mother Karen S. Beach, who live in Florida, used alter ego companies (Protégé Enterprises LLC and Capital Edge Enterprises LLC) to make more than $1.5 million from selling approximately 3.3 billion shares of purportedly unrestricted stock that they acquired in so-called debt conversion “wrap around” transactions. They were able to sell most of this stock only because Florida-based attorney Cameron H. Linton issued baseless legal opinions for them stating that the stock could be issued without restrictive legends and that their re-sales were exempt from the registration requirements of the federal securities laws.

“This case shines a spotlight on unlawful profiting from transactions designed to circumvent the registration requirements of the federal securities laws,” said Stephen L. Cohen, an Associate Director in the SEC’s Division of Enforcement. “This should alert transfer agents, securities attorneys and other industry gatekeepers to closely scrutinize efforts to lift restrictive legends by ‘tacking’ onto delinquent debt through wrap around agreements.”

According to the SEC’s complaint filed in federal court in Orlando, Fla., this scheme involving the illegal use of wrap around agreements lasted from January 2010 to October 2011. Under the wrap around agreements, affiliates or others purportedly owed money by certain microcap issuers for more than one year assigned from the issuers to Protégé or Capital Edge the right to collect the debts. The wrap around agreements also purported to amend the initial debt agreements thereby allowing Protégé and Capital Edge to convert the money owed to them by the issuers into shares of the issuers’ common stock at a deep discount (usually 50 percent) to the prevailing market price. Protégé and Capital Edge almost always elected to receive stock from the issuers shortly after execution of the wrap around agreements. None of the transactions were registered with the SEC.

The SEC alleges that Protégé and Capital Edge paid Linton to write attorney opinion letters for them stating that their sales of the stock acquired under these wrap around agreements lawfully could be issued to them without a restrictive legend and immediately sold to the public. Protégé and Capital Edge regularly sold the stock into the public market, often for large profits, merely days or weeks after they acquired the shares through the wrap around conversions.

According to the SEC’s complaint, Linton’s legal opinion letters lacked any basis. The premise of Linton’s opinion letters was that – through the wrap around agreements and debt conversion – Protégé and Capital Edge were able to “tack” the period that had elapsed from the initiation of the original debt at least one year earlier to claim a registration exemption relying on Securities Act Rule 144(d)(3)(ii). When Linton wrote the opinion letters, he lacked an understanding of the applicable legal principles and failed to substantiate the factual predicate for his opinions. Furthermore, in mid-2010, Linton became aware of an injunction issued in a separate SEC enforcement action (SEC v. K&L International Enterprises) in which two of his letters were used in a similar scheme. Without Linton’s opinion letters, Protégé and Capital Edge couldn’t have acquired most of the stock without a restrictive legend and quickly turn around and sell it publicly.

The SEC’s complaint alleges that Protégé, Capital Edge, Scucci and Beach violated Section 5 of the Securities Act. The complaint further alleges that Linton violated, or aided and abetted the violation of, Section 5 of the Securities Act. The SEC seeks disgorgement, penalties, injunctions, and penny stock bars against the defendants.

The SEC’s case was investigated by Daniel Rubenstein and Adam Eisner under the supervision of C. Joshua Felker, an Assistant Director in the Division of Enforcement. Kenneth Guido will lead the SEC’s litigation.

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Gold to $7000 Before It’s All Over??

JC Parets posts a chart and reports on last week’s presentation from MacNeil Curry, Rates and FX Strategist for Bank of America Merrill Lynch. Curry has evidently made some very bullish calls on gold.

Read Parets’s commentary and see the chart here.

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Experimenting on Human Subjects: Did Obama’s EPA Relaunch Tuskegee Experiments?

New examples of junk science and incompetence in government:

Which do you find more shocking: that the Environmental Protection Agency conducts experiments on humans that its own risk assessments would deem potentially lethal, or that it hides the results of those experiments from Congress and the public because they debunk those very same risk assessments?

Read the rest of the article here.



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Solyndra Not Dealing With Toxic Waste At Milpitas Facility

“MILPITAS (CBS 5) — Three months ago, CBS 5 caught Solyndra tossing millions of dollars worth of brand new glass tubes used to make solar panels. Now the bankrupt solar firm, once touted as a symbol of green technology, may be trying to abandon toxic waste.

It’s a tedious process. Slowly but surely, the shattered remains of brand new solar panel tubes head to a recycling plant in Hayward.

Meanwhile the next phase of the company’s liquidation is under way. It involves getting rid of all the heavy metals left inside the building that were used to make the panels…”

Watch and read more

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BlackBay’s Schoenberger: Stocks Still Set to Plunge 35%

Essentially T.S. is not impressed with earnings, worries over Europe, and says the first quaters rally was based on QE hopium…

“Late last year, Todd Schoenberger, managing principal of The BlackBay Group, a money management firm, predicted stocks would plummet 35 percent in 2012.

He’s not backing off that projection, despite the fact that the Standard & Poor’s 500 Index has rallied 11 percent year-to-date.”

Full article

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Al Armendariz Resigns From EPA Post Over Comments

A top EPA official has resigned after coming under scrutiny for 2010 remarks in which he compared the agency’s enforcement strategy to Roman crucifixion.

Al Armendariz, the top environmental official in the oil-rich South and Southwest region, resigned in a letter to EPA Administrator Lisa Jackson on Sunday, saying he did not want to be a distraction for the agency. The resignation is effective Monday .

“As I have expressed publicly, and to you directly, I regret comments I made several years ago that do not in any way reflect my work as regional administrator. As importantly, they do not represent the work you have overseen as EPA administrator,” he wrote. “I take great pride in having built a career based on integrity and hard work. These are the principles that guide me personally as well. While I feel there is much work that remains to be done for the people of this country in the region that I serve, after a great deal of thought and careful consideration, I have come to the conclusion that my continued service will distract you and the agency from its important work.”

Read the rest here:

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Will the FDIC Crush Small Business in America ?

The FDIC provides an important insurance element that helps small business lend. Currently that insurance is set to expire later this year. The consequences could be huge for lending and employment.

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Goldman Sachs: US Jobs Report to Fall Far Short of Estimates

“The United States likely added only 125,000 net jobs in April, a Goldman Sachs report finds, far less than calls from Reuters for a gain of 170,000, and an average of 177,250 jobs created every month from December to March.

The Bureau of Labor Statistics will release the official number Friday, about a month after the March jobs report came in well below expectations with 120,000 jobs added.

“Real income growth remains soft, partly because of higher energy prices, wealth effects are not yet particularly positive, consumer confidence remains modest, and again some of the recent strength in retail sales probably reflects weather effects,” says Goldman Sachs chief U.S. economist Jan Hatzius, according to CNBC…”

Full article

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