Cinema-Blend-whereiszemoola

On Star Business: Too little punishment for too much

Several points to highlight:

• Now, the scale of the offence becomes much clearer. Ngu used RM15.5mil to finance his purchase of shares in Pancaran Ikrab and caused RM37mil to be transferred out of the company, making in all a massive RM52.5mil.
  And all he got was a day’s jail and a fine of RM2mil. Why? And there was nothing said about restitution or return of the monies.

A day jail and a fine of 2 million for an offence worth rm 52.5 million???

• In March this year, the Kuala Lumpur Sessions Court convicted Chan Kok Suan, the former managing director of Granasia Corporation Bhd for submitting false statements to the Securities Commission as part of the application for an initial public offering.
  Chan was convicted under section 32B(4) of the Securities Commission Act and was fined RM500,000, in default 10 months imprisonment, according to the SC.

And then the Mems Technology fiasco!

I could be wrong but I felt it was important because Mems Technology was highly regarded by the local brokerage houses. All of them gave the stock a high recommendation.

In the posting MEMS Told To Correct Its Financial Statements!, I noted that ".. by overstating its earnings by a mere 8 million, based on market capital, Mems managed to value itself 531 million. ". Mems on the date of that posting, on 28th Oct 2009, has a market capital of a mere 42 million!"

The punishement?

• In February, the Kuala Lumpur Sessions Court convicted Ooi Boon Leong and Tan Yeow Teck for knowingly authorising the furnishing of a misleading statement by MEMS Technology Bhd, a company listed on the then Mesdaq market, to Bursa Malaysia Securities Bhd.
  The Sessions Court sentenced each accused to a fine of RM300,000 (in default two years imprisonment).

rm300,000 fine each????

huh?

And the Star Business article then highlights..

• Last November, the Securities Commission secured a conviction against Datuk Tan Hooi Chong for abetting Kiara Emas Asia Industries Bhd in the misappropriation of the rights issue proceeds amounting to almost RM17mil between Dec 16 and 31, 1996.
  Tan pleaded guilty to the offence under section 32(6) of the Securities Commission Act 1993 read together with Section 40 and Section 109 of the Penal Code. Tan had also admitted to misutilising the rights issue proceeds for his personal benefit. He was fined RM600,000.

And the Star Business then compares to another case.

• But let’s look at another case. In March, former Perbadanan Komputer Nasional Bhd chief executive officer Zulkifli Amin Mamat was sentenced to four years’ jail and three strokes of the rotan for criminal breach of trust involving RM1.61mil.

WOW! I agree with Star Business Managing editor P. Gunasegaram when he raises the following issue...

• Why the anomaly? Is criminal breach of trust very different from what these other directors were doing?

Yes why?

Would you agree with P.Gunasegaram that the punishment for the directors is way too little?

Gunasergaram then continues...

• That must mean, if we take other more sinister conclusions out of the equation, that judges don’t seem to understand the seriousness of corporate crime and the extremely deleterious effects they have on the capital markets and thousands and millions of shareholders of public-listed companies.
  
  The only way that such lack of understanding or otherwise can be overcome is for the Chief Justice, Tun Zaki Azmi, himself to step in. Zaki has been working tirelessly to reduce backlogs and has taken strong, controversial steps in this direction. But the lack of punishment of corporate crime is one area that demands immediate attention too.
  
  It will be no exaggeration to say that the future of the country depends on it because no country has been able to reach the pinnacles of progress and achievement without a healthy corporate sector. And you can’t have that without adequate punishment of the bad hats.

Yeah... I am wondering of Megan Media's case.

Ok, there was some 'sort' of punishment .... in the posting Megan: Are You Shocked By The Light Sentence For The Accounting Fraud Commited?

• Kok pleaded guilty for helping public-listed Megan Media Holdings Bhd submit false revenue figures of over RM1 billion in its 2006 accounts. He also admitted to three other outstanding charges.
  
  For the offences, the Session Court fined Kok, who was the personal assistant to MMHB executive chairman then, RM350,000 on August 18 to be paid the next day in default of a year's imprisonment.
  
  The SC had earlier urged the Sessions Court to mete out a deterrent sentence.
  In a statement yesterday, the SC said the fraud had a significant impact on MMHB's share price as it dropped 85 per cent over three months after the news of false statements became public.
  
  "Kok had played a key role in the creation of fictitious invoices to support the false revenue figures."
  
  Several financial institutions had also been deceived into giving trade facilities which were then used to resemble payments for fake sales, it added

The Personal Assistant to the Executive Chairman was fined rm 350,000. That's all.

And what about the boss??? Yes what about that Mr. George Yeo Wee Siong????!!!!!

A fine of rm 350,000 was simply ludicrous!

Totally unaccecptable given what had happened!

Let's recall... sigh. Posted The Naked Truth in Megan in July 2007.

>>>>>>>>>>>>>>>>>>>>>>>>>>

Ok, Megan posted that Megan Media posts RM1.14b net loss in 4Q.

I have decided to have some fun in spotting the differences between yesterday's Quarterly rpt on consolidated results versus their previous quarterly earnings reported on March 2007.

I will state the current one first followed by the previous quarter.

1. Sales revenue. 21.417 million versus 306.150 million.

2. Property & plant. 101.939 million versus 588.601 million.

3. Investment in associate. Zero versus 67.502 million.

4. Inventories. 26.355 million versus 125.090 million.

5. Trade receivables. 13.601 million versus 430.354 million.

6. Other receivables,deposits and prepayments. 12.891 million versus 260.787 million.

7. Total assets. 163.441 million versus 1.511 billion!

8. Accumulated losses of 1.041 billion versus retained earnings of 262.545 million.

9. Total Equity-(Deficit) of 796.963 million versus total equity of 506.963 million.

10. Net Asset per share of -3.92 versus Net Asset per share of 2.50.

>>>>>>>>>>>>>

Megan Media cooked up their whole book!

Everything!

Let me explain... If you look at the comparison figures as posted, for example, point 2 reads: "2. Property & plant. 101.939 million versus 588.601 million."

This meant that Megan told the investing public their property and plant was worth 588.601 million.

Actual fact was it's only worth some 101.939 million!

Everything on the left, represented the actual audited numbers, while the right showed how insanely high everything was cooked up!

In short, Sales revenue figures was artificially boosted, value of their property and plant, investment amount in associates, stock inventory, trade receivables and deposits, receivables and prepayments were all false!

Yeah, he admitted guilty in submitting false revenue figures of over RM1 billion in its 2006 accounts!

And the fine? rm 350k?????

So what about George Yeo Wee Siong? Suit Filed Against 2 Megan Officials

• The SC also said it had obtained a warrant of arrest for former executive director George Yeo Wee Siong.
  “The SC is seeking the assistance of Interpol to trace and arrest George Yeo, who is wanted for similar charges,” the statement said.

See also Probing corporate Malaysia

On Business Times:

• Malaysia Aug export pace slows
  
  By Rupa Damodaran Published: 2010/10/09
  
  EXPORTS grew at a slower pace than market expectations, confirming views that export growth had peaked in the early part of the year.
  
  The Ministry of International Trade and Industry (Miti) yesterday said exports had expanded 10.6 per cent to RM52.85 billion while imports had risen 16.5 per cent to RM44.53 billion.
  
  This resulted in a total trade of RM97.38 billion, 13.2 per cent higher from a year ago.
  
  Compared with July, exports in August declined 4.6 per cent while imports contracted 8.0 per cent and total trade decreased by 6.2 per cent.
  
  Miti said the August growth was largely due to higher exports of liquefied natural gas (LNG), electrical and electronic products, refined petroleum products, chemicals and chemical products.
  
  Alvin Liew of Standard Chartered Bank said the bulk of exports remain to be electronics, accounting for 40 per cent of total exports although its pace eased to 3.7 per cent in August.
  
  "Key commodity exports (such as refined petroleum, crude oil and palm) remain supportive of headline exports in August, although crude oil exports grew by a slower 2.7 per cent year-on-year in August, way off the near 18 per cent year-on-year pace set in both June and July," he said.
  
  The bright spots for Malaysia, he added, turned out to be exports to the European Union (EU) and Japan which have been recording double-digit growth since December 2009 and March 2010 respectively.
  
  Exports to China rose 2.4 per cent compared to a year ago. Exports to the EU grew 12.6 per cent.
  
  Exports to Japan edged up 28.4 per cent on higher exports of LNG, refined petroleum products and E&E products but exports to the US saw a marginal increase of 0.5 per cent compared with a year ago.
  
  Liew added that the decelerating export picture corroborated with StanChart's weaker manufacturing outlook for Malaysia in the second half on the back of sluggish external demand and lingering uncertainties in the external environment.
  
  Miti said import growth was mainly due to intermediate goods which took up 70.2 per cent of the total.
  
  "Resilient domestic demand and higher capital investment by companies likely drove import demand, although concerns about the external economy may have dampened import appetite for the rest of the second half," Liew said.
  
  
  Read more: Malaysia Aug export pace slows here

52.85 Billion?

And since 2009 was a washout year, I don't thi nk it's meaningful to compare to those numbers. Instead I would compare to the export numbers in 2008. How? Current numbers are rather weak, yes?

From Matrade website: http://www.matrade.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_727adcb2-7f000010-562d562d-9ea58874

Blogged on August 2010: Regarding MudaJaya

It was a long posting and I made the following remarks.

• The allegations made in the so-called poison letter is rather interesting but as it is, I believe that there's no much to be said.
  
  The only concern is perhaps the receivables which had increased significantly since its fy 2007 and needless to say, if the allegations were indeed true!

As back then, there was nothing much to be said because there was not much that could be seen from its earnings notes. Yes, perhaps it's a concern that the receivables had increased significantly since fy 2007.

On today's papers, on Business Times:

• SC raps Mudajaya for inadequate disclosures
  
  By Adeline Paul Raj Published: 2010/10/08
  
  The Securities Commission yesterday took Mudajaya Group Bhd to task for having failed to make adequate disclosures on its independent power plant project in India.
  
  The SC, in a press release, said it viewed “seriously” the builder’s failure to provide adequate information on the IPP prior to August 30 this year and cautioned that it must ensure compliance in future.
  
  The regulator had looked into Mudajaya’s (5085) affairs some months ago after receiving an anonymous complaint about the builder’s investment in the Indian project.
  
  It had required Mudajaya’s auditor, Ernst & Young, to come up with a report on the project, which the latter did. The report was dated September 9 this year.
  
  The SC said it had reviewed the transactions relating to Mudajaya’s investment in the IPP, in particular the transfer of funds between related entities.
  
  “Ernst & Young’s S320 report had also revealed movement of funds between Mudajaya and related entities ... that is characteristic of the practice known as “round-tripping”.
  
  “The practice of round tripping has been raised as a concern in several jurisdictions. In this regard, the SC will conduct a separate exercise to review the use and disclosures associated with the “round-tripping” practice,” it said.
  
  An SC spokesperson clarified that it is studying the practice of round-tripping in general, not specifically Mudajaya.
  
  A quick Internet search on the term “round-tripping” revealed that it is a creative practice that is intended to wrongly inflate revenues.
  
  Mudajaya’s involvement in the Indian power project started in April 2006 when it agreed to build and operate a 1,2000-megawatt coal-fired plant in Chhattisgarh together with its Indian partner RKM Powergen Pvt Ltd.
  
  Among the issues brought up in the anonymous complaint letter was the high price Mudajaya paid for its 26 per cent stake. Mudajaya paid RM871 million for it compared with the RM273 million that RK Powergen paid for its 74 per cent stake.
  
  Mudajaya has since clarified that the premium it paid was justified as it included approvals, the IPP's contracts, coal cost-savings and a chance to enter India's power industry.
  
  But there was also criticism that its 80 per cent-owned company, MIPP International Ltd, which had been awarded a RM3.4 billion equipment and procurement contract for the plant, had unusually high profit margins.
  
  The SC, from its review, concluded that Mudajaya had failed to make adequate disclosures on pertinent matters relating to the IPP project.
  
  It then asked Bursa Malaysia Bhd to issue a directive to Mudajaya for additional information. This was then provided by the builder on August 30.
  
  Source: here

Now this sounds rather serious. Inflating revenue is DEAD WRONG!

It is cheating!

Let's refer to the posting Regarding MudaJaya again (Yes, I am aware that Mudajaya had since reported a 'newer' set of quarterly earnings but I will ignore that because it's rather irrelevant to this issue ) and look at this two tables again.

In fy 2007, Mudajaya's sales revenue was 273.981 million.
In fy 2008, Mudajaya's sales revenue surged to 422.382 million.
In fy 2009, Mudajaya's sales revenue surged again to 719.971 million.
TTM earnings as at Aug 2010, showed Mudajaya's sales revenue at 833.950 million.

Leaving out the TTM numbers, since fy 2007, Mudajaya's sales revenue surged some 445.990 million. In the space of just 2 years, Mudajaya's sales revenue increased by 261%.

In fy 2007, Mudajaya's net earnings was 30.140 million.
In fy 2008, Mudajaya's net earnings was 45.117 million.
In fy 2009, Mudajaya's net earnings was 116.897 million.
TTM earnings as at Aug 2010, Mudajaya's net earnings was 172.928 million.

Net earnings REALLY exploded in proportion to its sales revenue growth. Which would be logical.

However, since now allegations is saying that Mudajaya could be 'round-tripping'.

Now this would require a more stringent look at the cash. Does the cash balances shows the wealth creation?

In fy 2007, Mudajaya's had 84.767 million cash.
In fy 2008, Mudajaya's had 69.776 million cash.
In fy 2009, Mudajaya's had 116.074 million cash.
TTM earnings as at Aug 2010, Mudajaya's had 295.086 million cash.

Now that would appear fair but since Mudajaya had a placement exercise which generated some 176.902 million, I would DISCOUNT this 176.902 million from the latest cash balance of 295.086 million. Which means Mudajaya's cash balances for reference should be around 118 million. (Not forgetting Mudajaya fy 2007 cash was boosted by another share placement that generated some 56 million)

Now remember fy 2007, Mudajaya had 84.767 million. And after all this sales revenue growth and profit growth, Mudajaya's cash only increased to 118 million.

Hmmm..... how?

Could Ernst & Young’s S320 report that suggest 'round-tripping' between Mudajaya and related entities be true?

How?

On Star Business: What is ‘round tripping’ and why is the SC reviewing its use and disclosure?

• According to Investopedia, round tripping artificially inflates volume and revenues, but in reality adds no profit. Enron was said to be a company that engaged in round-trip trading, and, by doing so, was able to increase revenues (and expenses) without changing its net income

Here's Mudajaya's latest earnings update:


By itself, TTM sales revenue is extremely impressive at an incredible 859.852 million. Earnings is also very impressive at 200.541 million. The sales revenue and net earnings growth since fy 2007 is truly incredible, yes?

But if look at the cash, cash balances as at fy 10 Q2, is now only 243.990 million. And if you discount the share placement exercise which generated some 176 million, Mudajaya's cash balances actually weakened!

Yes, that's rather peculiar, yes?

Record sales revenue growth and record profit growth but yet, cash balances actually decreased!

My makcik would ask 'Macam mana ni?'

And needless to say... look at the trade receivables!!!!!!

Receivables is now at an incredible 359.422 million!!!

Why the sudden drastic increase?

Hey.. if one wants to be an investor, a long term investor, one better find out yes?

However.... now we are reading about the allegations about 'round tripping'!!

How?

Here's Mudajaya's latest cash flow:

Some 148 million in cash was generated from its profits.

The 'cash generated from operations' is interesting....

The trade receivables increased by 124 million! And the trade payables decreased by some 46 million. ( Ah.. if I am not wrong, it appears to me that the bulk decrease in cash went to pay off Mudajaya's creditors!)

How?

But some would be quick to point that for its fy 2009 earnings the less cash is easily explainable...

Quarterly rpt on consolidated results for the financial period ended 31/12/2009


Yes, for fy 2009, a huge chunk of Mudajaya's cash went into the entry 'investment in associates'. Amount shown in its Q4 cash flow statement is 149 million!

Which probably explains why the 'investor' does not see the 'creation of wealth' in Mudajaya's cash flows.

Case closed?

But.... but............. if one open Mudajaya's fy 2009 Q3 notes, MUDAJYA2009Q3.xls, one would see the entry of 'investment in associates' totals 86.600 million.

And if one opens Mudajaya's previous quarter cash flow notes, MUDAJYA2009Q2.xls. one would see the entry of 'investment in associates' totals 25.553 million.

Hmm... every quarter... a huge chunk goes into this 'investment in associates' and so far, this fiscal year to date, Mudajaya has dumped another 15.881 million!

Yeah.. so the data from Midajaya is saying that sales revenue growth is incredible and the earnings growth is explosive. But with it.. trade receivables growth was just as incredible. So was the trade payables. And of course, the bulk of the cash went into this 'investment of associates'.

How?

Now given the allegations of 'round tripping', the chunk of money that went into 'investment of associates' becomes rather significant, yes?

Who are these associates?

What are these investments?

How much more 'investments of associates' are we going to see in the immediate future?

-----------------------------------------------

Reply from David Koay

• Investment of associates should be the IPP project in India :) The money earned from the construction of the project is plowed back into the IPP project as part of its 26% equity stake commitment. So, can't really say there's no wealth creation as Mudajaya is bound to reap its harvest from India once the IPP starts operation. The question is whether the earnings from IPP could justify the RM871 million being plowed into the IPP project. Mudajaya will be putting another RM671 million over the next two years into investment of associates. That will equal about RM80 mil per quarter.
  
  As for valuation of Mudajaya, I will not put its construction earnings from IPP together with its 26% stake in IPP like what is done by CIMB. Instead, valuation should only include its 26% stake in IPP and exclude its earnings from IPP construction as construction profits are channeled back to the IPP anyway. By excluding IPP construction earnings, its earnings should be halved, probably about RM140-160m.
  
  Simple valuation: RM1800m (Construction earnings PER 12x) + RM800m 26% stake in IPP + RM30m properties. Work out to be RM6.40 per share. Hope this helps :)
  

On MSNBC front page: Why the foreclosure mess could last for years

• Paperwork problems will generate a wave of lawsuits and investigations
  
  The dimensions of the foreclosure crisis keep expanding. Lenders and loan servicers including JPMorgan Chase and Ally Financial are facing an explosion in homeowner lawsuits and state attorney general investigations of claims of falsified mortgage documents. Lawmakers in both houses of Congress have called for investigations. And procedural mistakes in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers for years. "This is going to become a hydra," says Peter J. Henning, a professor at Wayne State University Law School in Detroit. "You've got so many potential avenues of liability. You don't even know the parameters of this yet." ..

You know it's so, so very bad when you read articles with clips like this one: Out of Control!!! LISTEN TO THIS TERRIFYING 911 CALL of Thugs Hired by JPMorgan Chase Breaking Down a Door

• This comes in from Matthew Weidner…
  God help us all…
  LISTEN TO THIS TERRIFYING 911 CALL – BANK BREAKING DOWN A DOOR!
  The banks and institutions that now run this country are running absolutely wild and out of control.
  They do not fear judges or law enforcement.
  They do not fear any law.
  They do not need permission to kick down your front door, steal what they want and throw everything else into the streets.
  As one of the owners of a company who specializes in “securing” or “winterizing” properties was recently quoted in the Palm Beach Post said, “Lawsuits don’t phase us anymore.”
  I WANT ALL OF AMERICA TO WATCH THE ATTACHED NEWS STORY AND LISTEN TO ALL TEN MINUTES OF THE ATTACHED 911 PHONE CALL.
  HEAR THE TERROR IN THIS WOMAN’S VOICE.
  THIS WOMAN WAS NOT IN FORECLOSURE.
  THIS WOMAN’S HOME WAS IN PERFECT, PRISTINE CONDITION.
  SHE WAS RELAXING COMFORTABLY ON HER COUCH WHEN A BURGLAR CAME KICKING DOWN HER DOOR.
  IT WAS A BURGLAR HIRED BY THE BANK BREAKING DOWN HER DOOR.
  WATCH THE VIDEO BELOW

Do see news clip here: http://www.wftv.com/video/25278100/index.html?taf=orlc and LINK – LISTEN TO THE FULL 911 PHONE CALL HERE

Also see: Reality Check On The Foreclosure Mess In The Housing Market

Shh.. market's going higher, let's not mention the fund flows or better still let's ..... ask CNBC to talk about the current fund flows.

WOW!

Did Bob Pisani said that there was inflows into stock mutual funds in September???

Tide is turning?!!

Uh ah!

With that data from ICI, it would mean that we have seen 22 consecutive weeks of fund OUTflows!!!

And CNBC is telling America and the rest of the world that there's INFLOWS!

Here's the data. 22 consecutive weeks of outflows and 78 Billion withdrawn from stock equity mutual funds!



Monthly breakdowns.






5 consecutive MONTHS of outflows! Wall Street With Funds With Lesser Funds? No wonder Meredith Whitney predicts that there could be 80,000 layoffs in Wall Street!

Yeah I was expecting that data would be bad again this week but the CNBC clip certainly put everything in a nice perspective, yes?

Equity mutual fund investors are PULLING money out of their equity funds but Bob Pisani and CNBC reckons it's best to tell America and the rest of the world that investors are PUTTING money into their equity funds instead!

Irony. From a CNBC article in September 2010, 'Flash Crash' Effect: Investors Don't Trust Wall Street

• Nearly five months after the May 6 Flash Crash, many individual investors see the stock market as rigged, and they have little confidence in regulators to fix it.
  
  Most of the poll's 1,035 respondents view the market as unfair to small investors.
  In a new CNBC/Associated Press poll, 86 percent of the 1,035 respondents view the market as unfair to small investors..... ( more here )

Perhaps CNBC should ask investors if they trust CNBC!!!

Here's two nice posting to read again, Why Small Investors Have No Interest In Equities and They Just Don't Trust Wall Street

How?

What do we have?

Markets is going UP.
And Gold is going UP.
And long term treasuries is soaring!
And world markets is going UP!
And USD is falling! LOL!
And Japan is now on ZERO percent rates!
LOL!
Stock mutual fund is UP too!
Insiders selling is also UP too!
Bura Malaysia is also UP too!
LOL!

Past postings tracking the fund outflows.

• 20 Consecutive Weeks Of Fund Outflows And 71 Billion Withdrawn From Equity Funds
• More Money Redeemed From Equity Mutual Funds
• 65 Billion Outflow From Long Term Equity Funds
• 58 Billion Reason Why Americans Thinks Their Stock Market Sucks!
• Americans Pulled USD 53.279 Billion Out Of The Equity Markets
• Stocks Rally And US Equity Investors Rallied To Get Out Of the Equity Markets
• Main Street Telling Wall Street That The Equity Markets Stinks!
• Stocks Are Flying To The Orbit But Investors Keeps Cashing Out!
• Since 28th April 2010, Americans Pulled USD 42.116 Billion Out From Equities!
• more here
  

On Skysports: Van Bommel defends De Jong

• Bayern Munich veteran Mark van Bommel has jumped to the defence of Manchester City's under-fire midfielder Nigel de Jong.
  
  The Holland international has been on the end of criticism in recent days after he broke an opponent's leg for the second time this year.
  
  De Jong broke Newcastle's Hatem Ben Arfa's tibia and fibula in Sunday's Premier League clash after injuring USA's Stuart Holden in an international in March.
  
  The 25-year-old former Hamburg and Ajax man has been dropped by Holland boss Bert van Marwijk for their upcoming qualifiers against Moldova and Sweden.
  
  Despite Van Marwijk's actions, Van Bommel is standing by his international colleague and believes those calling him a 'criminal' are shouts that are wide of the mark.
  
  "Nigel is and remains one of us," he told AD Sportwereld.
  
  "We find this all very frustrating. It's very unfortunate that he has broken the leg of an opponent twice in six months.
  
  "But I know Nigel as a sweet guy. He doesn't want to injure anyone but wants to win every match. That is his strength.
  
  "Thanks to Nigel we reached the final of the World Cup. And now I hear people calling him a criminal. What a nonsense."
  

I've seen the tackle and it's bad. Period.

Here's the tackle again...

And if I were Van Bommel it's probably best not to shut it!!!

4 Oct 2010: Mish: Analysts Cut S&P 500 Profits Forecast; Earnings Estimates Still Overly Optimistic; Stocks Not Cheap

• Fancy Numbers
  “You need pretty fancy GDP numbers to get to $95 a share in earnings next year,” said Robert Doll, vice chairman of New York-based BlackRock Inc., which oversees $3.2 trillion. “Our view is that they’re still a little too high, and that nobody believes them.”Robert Doll is half-right.
  
  He's right in that "You need more that fancy earnings to get to $95 a share". He's half-right because the consensus believes. Bear in mind we could still see a bit of earnings expansion, but with the inventory replenishment and stimulus coming to an end, and with consumers heading back into a shell, it will not be sustainable.

Goldman Sachs Sued by German Bank Over Davis Square VI, an AIG CDO Bailed Out by Taxpayers - Janet Tavakoli

• "Goldman knew at the highest levels of its organization that its representations to LBBW Luxemburg that the notes merited triple-A ratings and were high grade were blatantly false," the Stuttgart-based bank said. "Goldman committed fraud and, or, was negligent in marketing and selling the notes to LBBW Luxemburg."
  "Goldman Sachs Sued Over German Bank's $37 Million Loss on CDO," by Edvard Petterson and Patricia Hurtado, Bloomberg News, October 4, 2010.

ZH: huhu.. Insider Selling To Buying: 2,341 To 1

• Sorry kids, we just report the news... as ugly as they may be. After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone (following Oracle insider sales of $223 million in the prior week). Insiders can. not. wait. to. get. out. fast. enough. This Fed-induced rally is nothing short of a godsend for each and every corporate executive. But yes, there may be value: there was insider buying in 2 (two) companies last week: General Dynamics and Best Buy, for a whopping total of $177,064. At the same time sales were a total of $414 million: so is anyone wondering why JPMorgan is reopening its gold vault... Anyone left holding the bag on this market when the FRBNY props are taken away, will be left with the same return as all those investors who entrusted their money with Madoff. Guaranteed.

Also on ZH: China Has Lost Over $100 Billion In Dollar-Adjusted Terms On Its UST Holdings In A Few Short Months

• As readers will recall, at the end of July, which was the most recent TIC data update, China owned $847 billion in US Treasury bonds. Since then, the world's reserve currency, which is what said Treasuries are denominated in, has lost 4.7%, or $40 billion in real terms. Yet an even more jarring observation is that from its June highs, the USD has dropped 12.4%. Expressed in real terms from the perspective of China's State Administration of Foreign Exchange, this means that our biggest creditor has lost over $100 billion when adjusted for the purchasing power loss in the dollar.

Unker Bow Tie: Commodities Rally Still Strong, Gold Will Hit $2000: Rogers‎ -

• "Gold is going to go a lot higher over the next decade. It may slow down for a while because it's run up so dramatically here in the last few weeks. But gold's going to be much higher," Rogers said. "Adjusted for inflation it should be well over $2,000 now. When I say something like it's going to 2,000 in 10 years it's not a very dramatic statement given the state of the world. I'm sure it's a given."
  
  Rogers said one reason gold will continue to gain is because of what he called the failed policies of the Federal Reserve, its Chairman Ben Bernanke, as well as Treasury Secretary Geithner and other government officials. He said their efforts to prop up the economy have made things worse, not better.
  
  "They've all been dead wrong, totally unadulterated wrong," he said. "Unemployment is higher now than it was before. Everything is worse instead of better. Let people go bankrupt. Let the system clean out and start over."
  
  Either way, he said, investors are better off in commodities than stocks and bonds.

Robert Reich: Wall Street’s Global Race to the Bottom - So the race to the bottom is now official. Wall Street will set up its casino wherever financial gambling is least regulated.

On Naked Capitalism: Multi-Billion-Dollar Class Action Suits Filed Against Lender Processing Services for Illegal Fee Sharing, Document Fabrication; Prommis Solutions Also Targeted

And oh... :D