Federal prosecutors are supposedly making a criminal case against bankers over Libor. I don't believe for a minute that DOJ is serious about prosecuting bankers who fudged Libor. This is the same DOJ that could find no criminal wrongdoing in the financial crisis of 2008 or bankers' extortion of municipalities though interest rate swaps. They haven't even indicted John Corzine for his theft of billions from MF Global clients. Puh-lease. Let's get real. Government prosecutors won't prosecute the heads of banks who will employ them in the future for corporate legal work. Expect a few eight-figure settlements later this year and nothing at all afterwards. Only smaller players get caught and punished, like the CEO of now-busted Peregrine Financial Group.
I was embarrassed when the U.S. government elected to keep GM and Chrysler alive with pre-packaged bankruptcies and bailouts. The government still hasn't been made whole on those deals. Now France is heading down pretty much the same road if it decides to save Peugeot. Automaking gravitates to lower-cost locales, which now even includes the non-unionized southern states of the U.S. Keeping high-cost producers alive keeps their products priced artificially high, ensuring an endless cycle of government bailouts and business failure. Unionized automakers will continue in this zombie pattern until the taxpayer has had enough and allows them to fail.
It's funny that we Americans think we have the right to criticize other countries' restrictions on foreign investment. The U.S. has placed so many reporting requirements on foreign-domiciled banks that they are refusing to open accounts for American citizens who want to do business overseas. The U.S. has also declined to adopt international accounting standards that would enable investors to compare financial results across national borders. I remember the debate about U.S. GAAP versus international standards from my MBA studies a decade ago, and back then the switch to international standards seemed imminent. I can only shake my head at the wrong turns the U.S. has taken since then, with SarBox and other stuff. Doing the right thing used to be so easy.
The defense bubble I've been warning about for years is about to pop. Wall Street is finally pricing in the likelihood that forced budget cuts will hurt the earnings of major federal contractors. This is good news for cheap analysts like yours truly, because there are some decent defense stocks I'd like to pick up at a discount. It's bad news for all of the Pentagon watchers and players who are still in denial about the inevitable end of major contingency operations. I've known plenty of people on active duty who were counting on jobs with contractors as second careers. They really need to switch gears now and make other plans.
I've had enough for one Monday.