by Eric Englund
Street wants to regain your trust. Mutual fund managers, stockbrokers,
Wall Street executives, and the Securities and Exchange Commission
(SEC) want Americans to keep the faith that buying and holding
stocks, for the long term, is a key to building personal wealth.
This is a tough sell considering Americans have watched their
401(k)s become 201(k)s. Not to worry says the laughable SEC,
they’ve got your back covered. Here is what is stated in the
Annual Report: "Today, as more and more
investors turn to the markets to help secure their futures,
pay for homes, and send children to college, our investor
protection mission is more important than ever. And as the
nation’s securities exchanges mature into global for-profit
competitors, there is even greater need for sound market regulation."
Of course, this is nothing but hot air from a worthless bureaucracy.
If the SEC was going to help Wall Street turn over a new leaf,
it would immediately investigate why Goldman Sachs recently
a "buy" recommendation regarding Ford Motor Company’s
common stock. I promise this investigation will not transpire
as the Wall Street banksters are in control and will continue
to rip off anybody foolish enough to trust them.
conventional wisdom asserts that Ford remains the only sound
domestic automaker as Chrysler is in bankruptcy and GM will
likely follow suit. Ford, moreover, has not taken any bailout
funds, from the Federal government, and this is viewed positively
by the buying public. Along these lines, there are Americans
who refuse to purchase a car from GM or Chrysler due to their
acceptance of bailout funds. Of the "Big 3" U.S.
automakers, Ford has the most positive image.
did Patrick Archambault, of Goldman Sachs, recommend buying
Ford stock on April 22, 2009? Here are some key reasons conveyed
in his recommendation:
Sachs does not foresee bankruptcy at Ford as the automaker
has sufficient liquidity to make it through 2010 without
earnings will improve by $9.3 billion from this year through
is estimated that Ford will pick up about 25 percent of
the market share GM and Chrysler will lose as they reorganize
in bankruptcy and shed brands.
upon these factors, and others, Patrick Archambault predicts
that Ford’s stock may climb by "…58% percent to $6 within
Goldman Sachs, and Wall Street are depending upon something
very important. They are counting on the fact that business
analysts on television and in the print media will not question
this recommendation. These Wall Street charlatans also know
Americans are financially illiterate and can’t read a balance
sheet – I’m certain the same holds for members of the aforementioned
mainstream media. For if someone actually analyzed Ford’s
12/31/08 fiscal year-end audited financial statement, it would
be painfully obvious Goldman Sachs recommended the stock of
a company that is insolvent.
Motor Company, indeed, possesses cash and marketable securities
totaling $15.7 billion in its automotive operations and $24.3
billion in its financial services unit. Yet, this does not
overcome the facts that Ford has a deficit working capital
position of $15.1 billion and a deficit equity position of
$17.3 billion. Plain and simple, Ford is broke and will not
survive, intact, America’s current economic depression. For
those who own Ford Motor Company stock, be assured it will
head to $0 when Ford goes into bankruptcy; and most likely
becomes another state-owned automaker.
the world did Goldman Sachs recommend buying Ford stock? The
answer came nearly three weeks after Goldman’s recommendation.
On May 12, 2009, Ford announced
it had raised approximately $1.4 billion in a stock offering
consisting of 300 million common shares. Shortly before Goldman
made its buy recommendation, Ford’s common stock was selling
for $3.80 per share. Immediately after Goldman’s recommendation,
Ford’s stock zoomed up to $4.33 per share. By May 12th, Ford
was able to price its 300 million share offering at $4.75
per share. I’d say Mr. Archambault’s recommendation netted
Ford an additional $285 million in proceeds, from this stock
offering, due to his recommendation (this is the difference
between offering 300 million shares at $4.75 vs. $3.80). One
could also argue this stock offering may not have transpired
at all had a heavyweight, such as Goldman Sachs, not put out
a prior buy recommendation on Ford. Is there, nevertheless,
a more sinister motive behind this recommendation?
opinion, Goldman Sachs was doing the bidding of the Obama
administration. We know there is a cozy relationship between
the White House and Wall Street; in which the Working
Group on Financial Markets (aka: the Plunge Protection
Team) exists specifically to serve the President of the United
States. Members of the working group have close ties to Wall
Street – and especially to Goldman Sachs. With the messy situations
President Obama is dealing with at Chrysler and GM, perhaps
it would be best to deal with Ford’s looming failure (and
subsequent rescue) later rather than sooner. Hence, it would
make sense to help Ford raise some cash, on the capital markets,
in order to give it some additional cash to "burn"
– thereby putting Ford’s financial collapse further into the
my hypothesis, and to deepen the plot, it is important to
bring Ford’s top executive into the picture. Ford’s press
release, about this stock offering, states the following:
"Net proceeds to Ford from the offering are expected
to be used for general corporate purposes, including to
fund with cash, instead of stock, a portion of the payments
the company is required to make to the Voluntary Employee
Beneficiary Association (VEBA) retiree health care trust with
the United Auto Workers." The press release further states:
are pleased with this equity offering, which is another
key step in our plan to transform Ford into an exciting,
viable enterprise poised to return to profitability,"
said Alan Mulally, Ford president and CEO. "By issuing
equity now and potentially funding a larger portion of our
future VEBA obligations with cash, we are able to
further improve our balance sheet and significantly reduce
the potential dilutive impact of the VEBA obligations on
existing shareholders." (Italics added)
is a smokescreen in which Ford’s president and CEO must feign
excitement in that part of the newly raised capital is being
diverted from operations and given to the UAW’s retiree health
care trust. Alan Mulally, most definitely, would have preferred
for the entire $1.4 billion to be used for working capital
purposes. With unions being a significant voting block for
Barack Obama, I have little doubt Mr. Mulally was informed
this stock offering had strings attached. If Ford was going
to get the Working Group’s assistance in raising capital,
via a stock offering, some of the funds had to be diverted
to President Obama’s powerful ally – the United Auto Workers.
After all, UAW executives are smart enough to understand that
Ford’s stock may become worthless so it is better to put cash
in the retiree health care trust rather than the stock of
an insolvent company.
the chairman of the SEC, Mary Schapiro, even care about stock
manipulation at all? Does it not pique a modicum of curiosity
when a major brokerage firm puts out a buy recommendation
regarding the common stock of a company which is broke and
has bleak prospects due to atrocious economic conditions?
And shortly after the buy recommendation this company is able
to raise over $1.4 billion – via a stock offering – with a
percentage of the funds being diverted to the grubby hands
of President Obama’s major ally, the UAW. This certainly looks
like manipulation and payola to me. Rest assured, there will
be no stock-manipulation investigation launched by the SEC.
To be sure, there is no "new" Wall Street. It remains
the same old playground for corrupt, wealthy elites to find
ways to separate you from your money. Ford Motor Company’s
successful stock offering is just another glaring example.