There's an article in today's New York Times that just about set my hair on fire.
Concise explanations of complicated wheeling and dealing make this a must read. It translates this latest news of Goldman Sachs investing $450 Million dollars in Facebook, valuing the company at $50 BILLION dollars.
New York Times article <--read here
William Cohan describes this as having "a front row seat to the process by which Wall Street creates and initiates financial bubbles."
All of the social networking companies are soaring in valuation, reminding us all too soon of the Internet bubble fiasco of 1999.
The gist of it is that when Facebook goes public, Goldman and other underwriters take fees of at least $140 million. And Goldman can use its muscle to make sure that the value of Facebook at time of offering exceeds the $50 Billion valuation at which it invested. Apparently there's also a deal that Goldman can offer 1.5 Billion of the company stock to its private-wealth clients, and then charge them a special 4% fee, PLUS 5% of any profits they make. (!!)
All of this adds up to the kind of backroom dealings that have made Goldman a target for reform in the past and likely so in the future. But they know how to work the system, using taxpayer money (borrowed) at near zero interest to perpetuate their deals for the rich. Is it any wonder that the rich get richer and the middle class of America is disappearing? Nothing has changed, Mr. Obama.
I recently deactivated my Facebook account (long before Goldman Sachs showed up with their offer). I am happy about that. If I get involved at all in this madness, it will be with the only means I have to partake in this get rich scheme and that is by buying some Goldman Sachs stocks or options, take profits and get out quick before the bubble bursts! Mind you, this will be a penny in the cup compared to what the real investors will be gleaning.
Wednesday, January 5, 2011
Saturday, January 1, 2011
Finally, finally, finally 2010 is over. I am ecstatic. Since November I've either
been having surgery or suffering some stupid sinus or head cold or chest cold problem. It's as if the world just caved in at the end of 2010. I am thrilled that a new year is starting today and determined that it will go better. (Don't I say this every year? That's worrisome. Is life so bad? Or I just yammer too much?)
Over Christmas, while really really sick, I decided that I was moving to either Chile or Ecuador. I just couldn't stand the idea of one more winter like last year and this one is looking to be more of the same. I didn't move here for bitter winters! I signed up for Spanish lessons and started researching everything imaginable on the internet. Why? Because the cost of living is unbelievably lower. But it didn't take long for me to discover that I was not cut out to be an expat after reading enough blogs and many, many websites. I'm not anti-American; I'm not rich; I'm not willing to settle for the kinds of things that can happen, like dishonesty and fraud, when dealing with business matters, real estate, etc. I'm too old and it's too scary all by myself. I just watched a TV show called "House Hunting International" where a couple was looking for an apartment in Santiago, Chile. They found a place for $150K in a good neighborhood, right in the city, but just seeing the actual places was enough to turn me off. The house I have here in Asheville is close to perfect for me. Anyway, I'm a very crazy old lady and now my new plan is to visit South America on vacations instead, and get out of town every Christmas!
And two days ago, the work began on my house to replace very old and dirty carpeting with Pergo laminated floors. They have completed the kitchen, dining room, and hall. Monday they will return and finish the office/dogs' kennel room. What is finished looks fabulous and it's really money well invested.
Hit a low spot on the stock market. Lost some dough while I was sick. Rule #1, try not to trade when you're sick. But I'm still over 12% ahead for the year, even with these big losses, so I'm not all that upset. Rule #2 You can't win all the time.
The rain came last night and this morning ALL the snow was gone! Thankfully!!
I was able to finally walk the dogs without fear of falling on slick ice. (I still have a huge bruise on one knee). And it warmed up too. About 50 degrees today, which was just so welcome. Since the whole country got this bad storm, maybe this is not the new normal but just an anomaly.
Anyway;, hope everyone had a happy new year. I'm feeling better already!
Posted by BAJ at 7:54 PM