Notes on Blogging and on Michael Lewis

Michael Lewis is a columnist for Bloomberg News. I heard about him through other investors a few months ago. He is the author of ''Liar's Poker,'' ''Moneyball'' and ''The Blind Side.'' Incidentally, the latter book will soon be a major motion picture.

Over the past few weeks, there were many rumors spread about the blogosphere and possibly mainstream media. Although the validity of blogs must always be questioned and verified (including my own...by you the reader), Lewis comments on the following rumors:

Rumour No. 1: ''Goldman Sachs controls the US government.''

Rumour No. 2: ''When the US government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.''

Rumour No. 3: ''As the US government will eat the losses if Goldman Sachs goes bust, Goldman Sachs shouldn't be allowed to keep making these massive financial bets. At the very least the $US11.4 billion Goldman Sachs already has set aside for employees in 2009 - $US386,429 a head, just for the first six months - is unfair, as the US taxpayer has borne so much of the risk of the wagers that generated the profits.''

... Open this link for the full article. It is a worthwhile read.

Here is an interview of Michael Lewis talking about the bank crisis.

http://fora.tv/2009/06/01/Michael_Lewis_The_End_of_Wall_Street#fullprogram

To get a break from investment finance, skip over to:

04.Lack of Professionalism as a Father: Poop in the Pool and
05.Advice for Future Parents

Those sections are absolutely hysterical!

Good Bank Results?

Goldman Sachs:
Link: http://finance.yahoo.com/news/Goldman-reports-profit-to-rb-14915517.html

But Goldman's report was not all positive. The bank said its net loss for common shareholders was $1.03 billion in December, prompting some to question whether the change in financial years had allowed Goldman to dump much of its bad news into that one-off period and start afresh in the first quarter.

Wells Fargo:
http://www.housingwire.com/2009/04/13/wells-fargo-q1-profits-packed-with-accounting-gain/

That gain comes as the result of WFC’s controlling interest in a legacy joint venture with Prudential Financial; the joint venture was acquired when Wells took over Wachovia last fall. Prudential currently holds a 23 percent non-controlling interest in the venture, as well as a put option on its interest in the venture; according to government filings, Prudential intends to exercise such an option “at a date in the future.”

Analysts are aware of this change, but say that a lack of transparency from Wells is making it difficult to see just how much of the bank’s jump in quarterly earnings is due to this ‘liability into asset’ transformation. And, of course, this one-time non-cash event happens to occur in a quarter where Wells needs a boost in earnings in order to bring up its lagging stock price, and ostensibly to set up any future capital raises.