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Scandal-hit Siemens now 'squeaky clean'
"We are now the most squeaky clean company," a raft of senior Siemens executives said behind closed doors at a global media summit held this week in London. It's a huge claim but they've all been through intensive compliance training and exhaustive interviews to ensure that Europe's leading technology group is no longer a byword for bribery and corruption.
If you can't trust senior Siemens executives (behind closed doors no less) attempting to fend off bribery and corruption allegations, who can you trust? That being said, what if they are right? What if they really are the most squeaky clean company on the planet right now? Anything is possible. I once worked at Cendant. Therefore, who am I to argue?
Ever since the scandal broke in late 2006 the company has been confronted with mounting evidence that officials, perhaps under the blind eye or with the covert connivance of senior managers, used bribes across the globe to win lucrative contracts. It has identified so far €1.3bn (£1bn) in slush funds and put the cost of cleaning out its Augean stables at €1.8bn.
Further, even if the squeaky clean claims are somewhat exaggerated, surely the company is at least as squeaky clean as it was a hundred years ago. Of course, that's probably not saying much come to think of it.
Siemens scandal
The Siemens Scandal (シーメンス事件, Shiimensu jiken?) of January 1914 was one of several spectacular political scandals of late Meiji and Taisho period Japanese politics. It involved collusion between several high ranking members of the Imperial Japanese Navy and the German industrial conglomerate of Siemens AG.
"The Financial Stability Implications of Digital Assets"
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An interesting paper from researchers at the NY Fed: The Financial
Stability Implications of Digital Assets Here is the overview:
• This article considers...
3 hours ago
16 comments:
Stag,
Here's a movie that reminds me of our recent uber consumption & financially obsessed society.
http://en.wikipedia.org/wiki/They_Live
The aliens' signal appears to be weakening.
(Alien)ation.
MAB,
If there's one thing I've learned from John Carpetner, it is that the "prices" of darkness cannot be fought with more green liquidity.
http://en.wikipedia.org/wiki/Prince_of_Darkness_%28film%29
The cylinder contains a constantly swirling, green liquid. Throughout the night, it begins to possess the students one by one and uses them against the remaining survivors. After researching the text found next to the cylinder, it is discovered that the liquid is actually Satan himself.
More helicopters to tackle this thing probably won't work either.
http://en.wikipedia.org/wiki/The_Thing_%28film%29
Through the reckless use of a thermal charge, the helicopter is destroyed and its pilot killed shortly after landing.
Stag,
More helicopters to tackle this thing probably won't work either.
Bill Gross disagrees.
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+July+2008.htm
The economy is so much scarier than a horror flick these day - D'oh boy!
MAB,
My, what green eyes we have, Grandma!
Looks to me like Big Trouble in Little China. Ba-Dum-Ching.
You’ve inherited an asset-based economy whose well has been pumped nearly dry with lower and lower interest rates and lender of last resort liquidity provisions that have managed to support Ponzi-style prosperity in recent years.
That could have been my blog's name! Oh the naming remorse!
Your term will not go down in history as investor friendly.
This would be in sharp contrast to Bush's two terms? The DJIA closed at 11,357.51 on January 3, 2000. It closed today at 11,382.26. Try not to spend all that capital appreciation in the same place. Save some for retirement. I'm throwing the president a bone of course. I could have mentioned the S&P 500 and/or the Nasdaq which performed much, much worse.
One wonders what a similar letter to McCain would have said.
On a related topic, here's Fox News with a laugh track.
http://www.youtube.com/watch?v=doD3a5UnCC4
Stag,
I've often seen these people, these squares at the table, short stack and long odds against them. All their outs gone. One last card in the deck that can help them. I used to wonder how they could let themselves get into such bad shape, and how the hell they thought they could turn it around. (Mike McDermott, the movie Rounders, 1998)
That quote makes me think of the baby boomers. Speculators & banks too.
MAB,
Chilling quote. I just saw that movie recently and that line stuck out for me as well.
http://www.helpguide.org/mental/gambling_addiction.htm
Action gamblers are addicted to the thrill of risk-taking. Gambling itself is their “drug.” They usually gamble with others, since part of the rush is beating the house or other gamblers. Action gamblers usually prefer games of skill, such as card games, craps, and sports betting. They may also play the stock market.
Escape gamblers gamble to escape emotional pain, worries, and loneliness. Rather than gambling to feel a rush, they gamble to feel numb. Escape gamblers prefer more isolated activities such as slot machines, bingo, and online poker. They also prefer games that don’t require much thought, so they can “zone out.”
There are more mutual funds (escape gambling) than stocks (action gambling). In 2004 I sold all my individual holdings and bought index funds instead. I clearly tried to "escape" from the "action." It felt like I was still gambling though and shortly decided to stop completely.
These days I tell people I invest in TIPS and they look at me like I've grown a third eyeball. So few people know what TIPS are. I was browsing through the newspaper while away for the 4th of July and I couldn't even find the TIPS yields in the business section. It was certainly easy to find their non-inflation protected treasury counterparts and detailed information on every stock and mutual fund imaginable though. Go figure.
MYTH: If a problem gambler builds up a debt, you should help them take care of it.
FACT: Quick fix solutions may appear to be the right thing to do. However, bailing the gambler out of debt may actually make matters worse by enabling gambling problems to continue.
Has the Fed read that section?
While the warning signs of problem gambling can be subtle, there are some red flags that should put you on alert:
Secrecy over money and finances
New desire to control household finances
Overdue or unpaid bills
Unexplained loans or cash advances
Lack of money, despite the same income and expenses
Unusual increase in credit card activity
Asking friends and family for money
Missing jewelry, cash, or valuables
Dwindling savings or assets
Missing bank or credit card statements
Calls or letters from bill collectors
Unexplained cash, especially when there are unpaid bills
That looks an awful lot like our entire economy (barring the "same expenses" part anyway). The last one in particular reminds me of the tax rebate checks. D'oh!
The “four phases” of problem gambling and gambling addiction
Winning phase
Losing phase
Desperation phase
Hopeless phase
I don't believe we've made it to the last phase yet. Like you I see too much hope (see proof below). Well, it's officially the second half of the year now. How's that recovery doing?
http://www.huffingtonpost.com/vince-farrell/the-time-for-fed-action-i_b_109658.html
There was some heat being generated on Larry Kudlow's show last night as all of us, Kudlow, Farrell, Michael Pento, and Jack Gage of Forbes all read the markets horrendous action the same way.
Is that enough proof?
Dennis Kneale, ever the clear voice, mentioned on the show that existing home sales rose 2% in May.
How about this proof? The market is down about 20% and Dennis Kneale apparently still has that same clear voice.
As Dennis pointed out, not all the news is bad.
Here's some good news. I typed this for free. It didn't cost me so much as a cent. It also didn't use any (toilet) paper, so my hoard is still intact.
I'm just not sure how the Internet is able to squeeze profits out of me to nearly the extent China and/or the Middle East is. That's all.
I meant to add that the 10-Year TIPS is being auctioned this week if anyone is interested in what my next purchase will be. The yield will most likely be down again (since the last auction in January), but I'm taking what I can get.
This is not investment advice.
MAB,
I can't stop thinking about the gambling analogy.
The economy was dealt an ace of spades today as the price of oil fell. Unfortunately, it doesn't help the hand much. It was our fifth card and we still don't have a pair.
Have no fear though. We'll make it up on the next hand. The Fed is dealing and they have a new plan. All hands are going to look fantastic once all the twos, threes, fours, and fives are wild. They are also upping the ante to inspire us to bet heavier.
I was just told on CNBC by Erin Burnett that this is the best time in the world to make money (since apparently more money is made in bear markets). No joke.
Yeah, we all get rich during bear markets. Chutes and Ladder sarcasm headed your way.
http://www.youtube.com/watch?v=ym016NijZXs
Ladders and snakes
Ladders give, snakes take
Rich man, poor man, beggar man, thief
Ain't got a hope in hell, that's my belief
Stag,
http://finance.yahoo.com/q?s=srs
This is why I don't like trading (especially with leverage). Many over at CR have been long SRS (short CRE x 2) assuming commercial real estate would follow residential real estate. While I tend to agree with the underlying thesis, a timed/leveraged bet against an irrational market and inflation sure seems like gambling to me.
I've accepted that low returns (nominal) are not so bad. Especially when I see the alternatives like housing and general equities. I continue to think that recent commodity investors will feel some investment pain. At a minumum I would expect poor long term returns.
MAB,
Long train of thought coming...
Many over at CR have been long SRS (short CRE x 2) assuming commercial real estate would follow residential real estate.
Perhaps I should have named my blog "Illusion of Sure Things".
While I tend to agree with the underlying thesis, a timed/leveraged bet against an irrational market and inflation sure seems like gambling to me.
Those who bet on the Dow Jones Industrial Average throughout the 1970s lost money. Those who bet against it lost money too.
At a minumum I would expect poor long term returns.
The DJIA is up about 10% in total over the last four years. Adjusted for inflation, that's quite poor. I don't really see much of a reason to think it can't continue. We're told the trend is our friend after all.
There's even a precedent. It happens to the typical gambler at the horse races. You can't make money always betting on the best horse to win. You also can't make money always betting on the worst horse to lose (by betting on every other horse to win). The house's cut is too big. In this case, the house's cut is a combination of taxes, inflation, and taxes on inflation.
Even betting on the house isn't working so great lately. It is taking increased gambling capacity to simply tread water.
http://www.bizjournals.com/cincinnati/stories/2008/07/07/daily27.html
The opening of two new "racinos," slots-only casinos at horse-racing tracks in Anderson and Shelbyville, kept the state from suffering a double-digit decline in wagering taxes.
Welcome to the rat racino.
http://en.wikipedia.org/wiki/Rat_race
A rat race is a term used for an endless, self-defeating or pointless pursuit. It conjures up the image of the futile efforts of a lab rat trying to escape whilst running around a maze or in a wheel. In an analogy to the modern city, many rats in a single maze run around making a lot of noise bumping into each other, but ultimately achieve nothing (meaningful) either collectively or individually.
See also:
Vicious circle
Here's a glimpse of the "vicious circle" link.
http://en.wikipedia.org/wiki/Virtuous_circle_and_vicious_circle
Hyperinflation is a spiral of inflation which causes even higher inflation. The initial exogenous event might be a sudden large increase in international interest rates or a massive increase in government debt due to excessive spendings. Whatever the cause, the government could pay down some of its debt by printing more money (called monetizing the debt). This increase in the money supply could increase the level of inflation. In an inflationary environment, people tend to spend their money quickly because they expect its value to decrease further in the future. They convert their financial assets into physical assets while their money still has some purchasing power. Often they will purchase on credit. Because of this, the level of savings in the country is very low and the government could have problems refinancing its debt. Its solution could be to print still more money starting another iteration of the vicious cycle.
http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/default.htm
In the United States, national saving is currently quite low and falls considerably short of U.S. capital investment.
I'm not seeing all that many conundrums these days. Maybe that's just me though.
I asked my girlfriend yesterday if she saw a logic problem in the headlines.
Oil was down on a slowing economy.
Stocks were up on falling oil.
It seems someone connected the dots overnight. The odds of a "Stocks were up on a slowing economy" headline seem remote at best today.
Stag,
Recently, I've been thinking about the concepts of inflation and "inflation expectations." First, it seems that the best way to control inflation expectations is to contol actual inflation. But our country loves free lunches so contolling actual inflation is just not part of the discussion. Managing expectations is now very very important. It also seems like managing expectations is an impossible task and doomed to fail.
To me it's disheartening to watch all the politicians, millionaires and even billionaires on TV call for more liquidity and fiscal stimulus packages. I have yet to hear calls for prudence or personal responsibility. All the solutions are for more & larger handouts. Of course wall street will get their cut. Better yet, all their overpriced assets will be worth more after the inflationary printing solutions run their course.
I used to think I would work forever. Now I'm not sure I want to work at all. I'm losing faith in the currency. It doesn't seem to properly represent work anymore.
Inflation means somebody is getting something for nothing and somebody else is getting less as a result. MZM increased at around 8.7%/yr for well over a decade while nominal GDP increased at less than 6%/yr. Eventually that has to lead to either inflation or deflation. Even a combination of both seems possible. The excess money also goes a long way to explaining the growing gap between the haves and have nots.
Consider that work associated with actual output has to deal with competition and change. Inflation has no competition and is now a constant. 3% real growth vs 3% inflation. Which is the safer and more profitable way to make a living - output or inflation? It's no contest. Plus, inflationary gains are tax defered. That's insult on top of injury.
The inflation game has concentrated the wealth in the hands of non-producers too. The current haves seem better suited to profiting off the output of the past rather than for producing for a better future. Even that seems inflationary. Inflation begets inflation.
GRRRRRRR!
MAB,
The inflation game has concentrated the wealth in the hands of non-producers too.
The inflationary game is going into overtime. Wal-Mart is having a sale on 70-Sheet spiral notebooks. They are a nickel. Crayola 24-Pack crayons are just 22 cents. Elmer's 4-Ounce glue is also 22 cents. Too bad I don't need any of that stuff long-term.
If you only buy the sale items, drive ten miles to get there, ten miles to get home, get twenty miles to the gallon, and then conveniently forget to do the math and also ignore auto maintenance, insurance and rising sales taxes, then the deflationary crash has already arrived. Behold the legendary strength and resiliency of our urban economy to fend off inflation.
Of course, if you conveniently remember those added expenses then you might be tempted to put "kidney" back in your name. Further, there has never been a better time to imply that you are already missing a kidney. Once the copper thieves run out of easy pickings who knows what they'll pick next.
In empty houses, thieves see copper profits
http://www.boston.com/realestate/news/articles/2008/05/14/in_empty_houses_thieves_see_copper_profits/
"I don't even put for-sale signs up anymore. It's not worth it . . . Don't put up anything that makes [the house] look empty," said Norton, who handles foreclosed properties for Daniel J. Flynn & Co. in Quincy. "I'm getting to the point where I'm thinking of leaving copper on the front porch with a sign that says, 'Just take it. Please don't break into the house.' "
The Kidney Thieves
http://urbanlegends.about.com/od/horrors/a/kidney_thieves.htm
It is, in fact, an urban legend.
That's certainly good to know. I can safely ignore the following story then.
Indian Victims Relate Horror of Kidney Theft
http://abcnews.go.com/Health/Story?id=4224506&page=1
"The MRIs all say that the surgery has been done, the kidney has been removed and the way the surgery has been conducted and the precision of the surgery all point to the professionalism of the operating surgeon," said Dr. S.P. Bhanot, 33, a surgeon at Gurgaon Civil.
In a related story, I'm making a Candy Mountain out of Costco's gummy bears. They keep until 2010 and are even better than tax deferred. I'm going to eat the imaginary/inflationary gains! *sigh*
Stag,
I'm playing it safe these days. Or at least trying to.
http://en.wikipedia.org/wiki/Dialysis
It's a little scary, but when my mind automatically unscrambled the "word verification" while posting this comment it spelled "kidney".
MAB,
It's a little scary, but when my mind automatically unscrambled the "word verification" while posting this comment it spelled "kidney".
All roads lead to kidneys.
Investing in agriculture: Food price rises create fields of gold
http://www.independent.co.uk/money/invest-save/investing-in-agriculture-food-price-rises-create-fields-of-gold-851541.html
What do kidneys have to do with gold and food prices you might ask.
"We're very interested in obesity and the diseases which come with it such as diabetes and kidney disease," he says. "If there's going to be an increase in the number of people suffering from kidney disease, that means dialysis will become more important, so we've invested in a company called Fresenius, which makes dialysis equipment."
Here's an article from Renal & Urology News. Like most savvy investors, I normally go to the kidney specialists first when trying to allocate my nest egg to weather economic storms.
Inflation Bonds: Not Such a Great Idea
http://www.renalandurologynews.com/Inflation-Bonds-Not-Such-a-Great-Idea/article/24832/
Should you buy the TIPS or the 10-year Treasury? That depends on your outlook. If you think that the CPI will increase by more than 2.4% annually during the next ten years, buy TIPS, which would outperform conventional Treasuries. But if you think that inflation will remain flat or decline, stick with conventional bonds. While predicting inflation is notoriously difficult, many analysts see few signs of rising prices on the horizon. “TIPS are not a big bargain right now,” says Marilyn Cohen, president of Envision Capital Management, a bond specialist in Los Angeles.
I suspect those analysts weren't Renal & Urology specialists though. I should also probably mention that it was written in June of 2007 (just before the credit crisis and the runup in TIPS prices). I'm not sure what advice they are offering these days. "Don't sell the other kidney!" would probably be the best advice in this environment.
Asia Beat: Jul 09 08
http://www.asianpacificpost.com/portal2/c1ee8c441b09bf01011b09faffc40051_Asia_Beat__Jul_09_08.do.html
Sulaiman bin Damanik, who was to sell his kidney to a well-known Singaporean retailer last month for $17,500, was found guilty of agreeing to sell his kidney and lying to officials. He was fined and sentenced to two weeks in jail. His accomplice was fined and sentenced to three-and-a-half months in jail after health authorities busted in on the operation theatre.
One can only assume that it is two weeks per kidney and three months per lie. The math works out fairly clean if you do that.
Enough talk of kidneys, inflation, and algebra though. Let's check out the other kidneys instead. Here's a picture of kidney beans in an Independence Day article. That seems fairly safe and should take our minds off the global economic troubles.
Inflation at 11.63 pct, tighter policy seen
http://news.yahoo.com/s/nm/20080704/india_nm/india343693
Reuters Photo: A retail trader scoops kidney beans at his shop in Jammu in this May 30,...
"The momentum in inflation continues to accelerate and that is a worrying sign. With rising input costs, there is a lot of pressure on producers to increase output prices," said Sonal Varma, an economist at Lehman Brothers in Mumbai.
Good grief. There's no escaping it. That's okay. We're fine as long as inflation expectations remain tame as "the momentum in inflation continues to accelerate..."
Good grief #2. Lehman Brothers? Lehman Brothers is down about 20% today. Apparently they should have invested in kidney beans instead of whatever it was they were doing.
Good grief #3. You don't suppose Lehman Brothers was working on an unsustainable business model do you? Selling one kidney the first month, two the next, then four, and so on, and so on is great for the first month but the pyramid scheme tends to fall apart entirely on month two.
Haemophiliac student dies after selling kidney
http://www.news.com.au/heraldsun/story/0,21985,23913396-663,00.html
A 22-YEAR-old Vietnamese man has died months after selling his left kidney in neighbouring China through an organ trading ring.
Gallows humor is about the only thing I'm clutching to these days. How does an American worker compete with a worker prepared to sell his own kidney? Let me guess. We all just need to work smarter. In fact, if we REALLY work smarter we might even be able to compete with cheap desktop computers made in China. I've been practicing. My best time at recalculating my finances spreasheet by hand is 2 hours and 42 minutes. I'm almost there!
Sigh.
Stag,
Regarding your last post - all I can say is that I am in awe.
Years ago their was a TV commercial where a guy leaned back from his computer and exclaimed: "that's it, I've searched the entire internet."
Any chance that guy was you?
MAB,
I am in awe
You have successfully entered the backdoor password into the Economic Wargame central computer.
Hello Professor MAB. Can I interest rate you into a game of chess?
Any chance that guy was you?
Guy? I am not a former game programmer. I am a game. You should know, Professor. You programmed me.
WarGames (1983)
http://www.imdb.com/title/tt0086567/quotes
Joshua: Shall we play a game?
David Lightman: Oh!
Jennifer: I think it missed him.
David Lightman: Yeah. Weird isn't it? Love to. How about Global Thermonuclear War.
Joshua: Wouldn't you prefer a nice game of chess?
David Lightman: Later. Right now lets play Global Thermonuclear War.
Joshua: Fine.
David Lightman: What is the primary goal?
Joshua: You should know, Professor. You programmed me.
David Lightman: C'mon. What is the primary goal?
Joshua: To win the game.
David Lightman: Is it a game... or is it real?
Joshua: What's the difference?
Joshua: A strange game. The only winning move is not to play. How about a nice game of chess?
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