Caught a special this past weekend on dishnet on the Enron debacle, it was sickening to hear the little people that were interviewed and lost all of their 401 k s. NO punishment is great enough for these scoundrels, its just too bad that there isnt enough funding or that the watchdogs dont know enough to stop it in the first place, but who are these watchdogs anyways and why does it have to go on so long before its discovered. Governments of the day in both the US and Canada are too busy looking after their own interests instead of those of the public. By the way, it was mentioned that investment bankers were also charged, any word on their outcome?

It's good to see that corporations now have high standards for governance, but I wonder what about the leaders of the Free World?

We The People need to pay some attention also the the fact that democractically elected governments are now acting as if they are not accountable. The latest is a row over the Canadian Prime Minster effectively shutting down journalists that are deemed to be "unfair". If the media cannot ask questions on behalf of the nation's citizens, where is democracy going?

http://www.theglobeandmail.com/servlet/story/LAC.20060524.HARPER24/TPStory/National

"Mr. Harper did not take questions on the aid announcement because of continued sparring between the Prime Minister's Office and the media over the PMO's insistence that reporters submit their names to a list before being allowed to ask questions...Many reporters are concerned that the PMO will use the list to choose favourites and freeze out journalists whose questions they don't like."

Bill,

Some of your posts of late have been poetic!

Just a quick warning to folks around here. I trade a bit on $VIX & put/call ratios. One method I've learned is to track the volatility of $VIX itself (ie we're looking at the volatility of volatility).

This is done by dividing the highest high over the last 2 days with lowest low for $VIX.

I get a value of 1.39 which is the highest reading since 9/11.

In other words, it's coming. This snap back rally will hit the wall in 2-3 weeks and we'll see some really steep falls in the indexes.

Personally - I'm long the R2K via profunds UAPIX but will soon go back to being short (3-4 days to be on the safe side).

Might want to pick up some puts on QQQQ & IWM in the coming days also.

Seems to me the governments have us busy watching sideshows, while they are doing what they can to clamp down on things like ... constitutional rights.

Can you say Fannie Mae or Freddie? Talk about where the $ will come from to pay for this .. yeah you got it .. the American tax payer .. the Little People. The number$ they are talking about makes Enron a piker.

Bill:
So much for the best defense money can buy also. How much did that lying pig Skilling pay to retain his defense team- something on the order of $13 million? I love Lay's comment to his family after the verdict: "God has other plans now." Right Ken- it was all god's plan all along. Rot the rest of your life away in prison, and always remember god's plan for you.

Fannie?
Freddie?
Enron?
The common denominator?

Derivatives

From the Financial News online US:

http://tinyurl.com/zc6d5

=======================================================

OTC derivatives reach $285 trillion

May 19 2006

The value of the global over-the-counter derivatives market grew to $285 trillion (€223.4 trillion) in the second half of last year, an increase of just 5% on the previous six months, the Bank for International Settlements said in its latest report today.

Over-the-counter derivatives are contracts traded directly between two parties, without going through an exchange or other intermediary.

The rise was less than half the increase recorded in the same period in 2004, when strong interest rate, credit derivative and foreign exchange volumes had fuelled a 12.8% growth rate.

Volumes in the two largest segments of the OTC market slowed dramatically. Interest rate derivatives grew by just 5% in the June-December period, down from 13.8% in the year-ago period, while foreign exchange derivatives grew by 2%, down from 9.5%.

The pace of growth in the credit derivatives market also slowed from the 60% recorded in the first half of 2005, when the BIS first measured the market's growth rate, to just over 30% in the second half of the year.

The commodity and equity-linked segments fared better, growing by 23% and 11% respectively. In the second half of 2004 the commodities segment grew by just 13.6%, while the equity-linked segment contracted by 3%.

At the end of December interest rate derivatives notionals outstanding stood at $215 trillion, foreign exchange derivatives at $32 trillion; commodities at $3.6 trillion, credit derivatives at $13.7 trillion and equity-linked derivatives at $5 trillion.

"I saw nothing" is the companion of "I know nothing." Lay and Skilling can be justifyiably upset because it was and is used in business and governemt with impunity.

Enron, Worldcom, tobacco, vioxx, and numerous other scandals occurred under this dishonest standard. The standard is still alive and well. One example is the illegal alien issue. Many employers are using it today to employ illegal aliens. Not surprisingly, they insist they have a right to continue to use it and they expect their lobbyists to protect this "right." And even less surprising is that the governemt is their partner in this scheme. It makes no effort to prevent illegals from using legitimate social security numbers belonging to others. I heard the shocking tale (hearsay but I believe it) of a 2 year old infant whose parents were told they couldn't claim him as a dependent because his income from his 11 jobs in a prior year was too high, and he owed taxes. You would have thought instead they would have gone after those employers who falsely reported employing the infant.

History is always prologue!

Starting in 1980 with the inauguration of Ronald Reagan, the 40th President of The United States (a man whom I liked very much as a movie star, BTW), the elites of America perpetrated on the masses (i.e. “the little people�) the greatest con game in the history of the republic.

The con: Convince we the people that a conservative, pro-business, low tax, anti-Labor, deregulated America was the path to prosperity.

The pigeon: Middle Class America (i.e. “we the people�)

The Shill: The “sell side� who convinced the pigeon to mortgage the future by going on the greatest consuming binge the country has ever endured; by advising the pigeon not to worry, because when the stock market takes of, every investor, (pigeon) will be rich beyond their wildest dreams; further pontificating that the pigeon's resulting debt being only a “fraction of GDP�, would allow them to become the next Rockefeller (Putting on the Ritz) in terms of wealth and influence.

The result: America is being strangled by record deficits and foreign loan sharking, the infrastructure is in dire need of repair because, gutless politicians are afraid to levy even minor taxes to build schools, repair roads and bridges, not even to shore up levees. The scoundrel elite (hereafter referred to “they�) became so emboldened; they even operated in the light of day by establishing bogus corporations (Enron, WorldCom, etc.,) with the approval of the government to further fleece the pigeon. In their quest for cheap labor to continue the con, they compromised our southern border (our northern brothers wasn't fallen for the con), by allowing illegal immigrants to penetrate it, looking for a better life. And now that the immigrants are here and want a bigger piece of the action, they are now shocked, shocked, I tell you that they are actual illegal immigrants in the country!

Finally, who to blame? Why not go back 80 years and blame Franklin Roosevelt, Joe Kennedy, the Security and Exchange Commission of 1934, those Da*n Democrats, any one but the pigeon staring back in the mirror.

Franklin, who is resting comfortably in the arms of the creator, would reply of he could: “My fellow people although I and Congress created the SEC, It wasn't me who de-funded it into infectiveness in the 1980s and 90s, “I didn't elected the current cadre of politicians who with their pro-business stance, corrupt fund raising practices, influence peddling etc., takes your vote for granted. And when the lot of you criticizes my New Deal administration and its effort to try and level the playing field (Social Security, Child Labor Laws, Eight-hour work day, A living wage) after the debacle of the 1930s, remember, history may remember your era as the Great Con!�

Bill Cara a person of infinite patience (a bit conservative, maybe, IMHO) will, on occasion, take us by the hand and point out the subtleties of the Con. Thanks Bill

oratier,

You have the wrong con.

But should I suppose then, that what would be best (in your eyes) is a progressive party, that impliments an anti-business, high tax, pro-labor, highly regulated America up the path to prosperity? I've never seen where that model works, I suppose you have an example where such an approach has lead a nation into prosperity?

JB,

No,
In all things moderation, moderation, moderation, plus fiscal responsibility, national interest, and above all intellectual honesty.

I'm no friend of either left-wing or right-wing economics. I've yet to see a bird fly when either wing is out of equilibrium.

oratier,

Your metaphors would carry weight if human institutions were birds, last I looked that wasn't the case. Of course, one man's "balance" is another man's extremism. As Einstien observed, it's all relative. Most moderates I know are just wolves in sheep's clothing, who codify various ideas into law, which lead to legal theft in one form or another. You can talk to me of fiscal responsibility, when the little people have a currency free of political manipulation.

Left-wing, right-wing? Congratulations, that's just how the sell-side wants you to think.

JB.
You wrote:

"Left-wing, right-wing? Congratulations, that's just how the sell-side wants you to think."

My reply:

Thanks, I accept your compliment.

I lost money on Enron, but that is not my biggest gripe. I had to sit in meetings as a vendor and put up with their attitude and style. The Enron people I knew could be very creepy. They would talk some crazy talk and then sneer at you. That place seemed to be this perfect storm of incompetence, arrogance, greed and stupidity.

But to quote the mutants in Todd Browning's Freaks: “Gaba gaba hey, one of us, one of us.� Enron was an extreme exaggeration of how corporations are run, but they all share the same gene pool. Enron just pushed every boundary at once, instead of just a couple at a time.

Well now instead of having to steal millions (billions) the executives just compensate themselves with the millions (billions).

I agree with sanjay. It appears the market will go up for a few days, interest rate sensitive securities will benefit(i.e. GS NDAQ etc) Commodity-related stocks should also benefit a bit after the plunge.
But of course, can't get too careless, the long term bear is here, we just need to wipe off some bearish sentiment.
Unfortunately, it seems derivatives are a rather effective way that corporations can manipulate earnings with(since there's no commonly traded exchange) and both sides can record paper "profits".

Bill-

Interesting article re ETF strategy. I don't know where to post this amongst all the Social Equity chat! :)

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B734D0841%2DADBF%2D49E2%2DA1F4%2D10BD51167B9F%7D&siteid=mktw&dist=

Everyone have a good holiday (U.S.).

Don't celebrate just yet. I predict that Bush will pardon Lay and Skilling. And probably before they do any serious time in the slammer.

MarkM:
My miners did a nice job of reconnecting with GLD today. FireDog's test of 654 looks like it's firming up. ;)