California Scientific
4011 Seaport Blvd
West Sacramento, CA 95691

Mark's Market Blog

1-31-09: January Myths, GM, Aliens Among Us

By Mark Lawrence

Please help support this web site

  • If you need a windshield, consider ours.
  • Contribute to our site maintenance fund:
  • Support our advertisers. Thanks, Mark

A couple months ago I figured out how Social Security benefits are calculated; that information is now on-line here.

This is the end of January, and the benchmark for two stock market myths. The first is that what the market does in the first week of trading in January mimics the entire year. The second is that the month of January mimics the year. So, our January Oracle / Groundhog has spoken, what was said?

The first trading week of January 2009

The month of January 2009

Our two oracles agree, it's time to duck our heads back into the sand and go back to sleep.

It was revealed this week that Merrill Lynch executives, seeing the bankruptcy on the wall, brought their $4 billion worth of 2008 bonuses forward to be paid one week before their bailout. BofA received $20B to help save Merrill Lynch, so effectively 25% of the bailout went to executive bonuses. Obama blasted all Wall Street executives for giving themselves $20 billion in bonuses during this time of economic crisis. "That is the height of irresponsibility," Obama told reporters. "It is shameful. There will be time for them to make profits, and there will be time for them to get bonuses. Now is not that time." Under a bill by Sen.McCaskill of Missouri, employee compensation would be capped at $400,000 a year, the same as Obama's, until their companies no longer relied on government aid such as TARP. McCaskill said an average of $2.6 million dollars had been paid in bonuses to executives from the first 116 banks that got money from TARP. Sen. Chris Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, said "You're never going to get any support for the continued tough decisions we have to make if this kind of behavior continues. So I'm going to look at every possible legal means and otherwise to see that this money gets paid back. This infuriates the American people, and rightly so."

Goldman Sachs recently estimated that the total value of troubled American bank assets is $5.7 trillion. Obama is planning on asking Congress to increase TARP from $700B to some larger amount.

GM has been ordered by the government to reduce their bond debt by trading stock for the bonds. GM bonds are currently trading for about 17 cents on the dollar. GM informed congress that under current tax law if they trade $10B in stock for $30B of their outstanding bonds, as the government is asking, they will have to show the $20B in reduced debt as income and pay taxes on it. GM is asking for relief from these taxes.

Homeland Security Secretary Janet Napolitano wants what she calls "criminal aliens" off American streets. She estimates there are now as many as 450,000 criminals in federal, state and local detention centers who are illegal aliens. After the criminal serves his or her sentence, immigration officials will be ready to deport that person right away.

Table of Contents    Next Entry    Previous Entry    Receive these by email