A Reassuring Lie

April 2, 2012

Knowing who you can trust in this world is imperative, no matter what industry you are thinking about. The lies and deception department is often called the "Marketing" department or Public Relations department.

Goldman Sachs has been in the news quite often lately. One of their executives said many at the firm call their clients "Muppets". Other high ranking executives have recently been convicted of insider trading. One of Goldman's Ex-CEO's just took MF Global into bankruptcy while stealing $1.6 BILLION dollars of client money.

This week, it becomes apparent that the Goldman Sachs machine is telling their clients one thing, so that THEY can make money doing something different. The problem comes from a recent article stating a case why the muppets should be buying stocks when, at the same time, the company forcasts the market to lose over 10% in 2012. Someone with rose colored glasses might explain this dilemma by saying the company simply wants to have articles on both sides, thus creating the ability in 2013 to pull an archive file from 2012 and say "We told you so" by pulling out the article that was correct.

A more pessimistic view would say they are trying to get the general population to do one thing so it is easier for their wealthier clients to make money doing something different. Last year I wrote a white paper explaining how JP Morgan Chase is doing this same thing. I've been in this industry since 1992 and have worked with one of the largest firms in the industry. Unfortunately my experience supports these pessimistic views.

All Spain. . . all the time.

The above saying was the mantra in John Mauldin's newsletter this week. I wrote weekly about the dilemma in Greece for the last year. Now they have their bailout and are speaking about bailout number three already. Spain is the next in line, but has an economy more than triple the size of Greece. Long time readers will remember the articles referring to the Euro Zone Countries acting like children. When Greece got a bailout, then everyone else would begin stepping up saying "Where is Mine?" Spain appears to be one of the first children on the door step.

I won't go into Spain's bleak conditions this week, to avoid extra length. If I were you, I would expect a few comments over the coming months though! The Euro Zone is printing money faster than Bernanke can say "Weimar Republic!". It will be interesting to see how it all plays out.

Have a great day!!

John Norquay
CEO PivotPoint Advisors

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