Facebook to Faceblush Follow Through . . .

COMMENT:
By John Galt for America's Chronicle

This is the one-day after follow through on our analysis of Facebook's first day of trading last Friday. The graph says it all and corroborates what we predicted last week (see post below):

No fire yet, but lots of smoke!

FaceBook Changes To FaceBlush

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COMMENT:
By John Galt for America's Chronicle

Friday, May 18, 2012, 6:00PM

"Hoodie" management style doesn't go well in Wall Street.

Facebook goes public and falls flat on its book Face. The initial public offering that was supposed to be all the rage comes out at $38 per share and closes its first day of trading at $38 - as flat as a pancake .  A record number of 23 underwriters that participated in the offering had to resort to buying more shares in the market to prevent it from falling below the issuing price - they are not a happy bunch tonight. The marketing department of Facebook must be feverishly working on the main financial news to prevent them from saying what we are going to say right here - the Facebook IPO is an unmitigated disaster.

Apparently Wall Street does not take well to billionaires CEO's wearing hoodies and being cool - even though we are not so sure wearing a hoodie is cool or just plain dumb-looking, unless you are robbing a 7-Eleven, of course. Perhaps it reminds them too much of Wall Street Occupiers. At any rate, it is not the wide eyed youngsters cheering the young Zuckerberg at the opening bell who are going to bankroll this company whose valuation is more in the future than in the present. Selling companies for what they could be is not as easy now days in Wall street as it was during the technology bubble of the 90's - or perhaps because of it.

We were skeptical of the valuation and did not attempt to participate in it. We are still skeptical a day after because this valuation already discounts many years of successfully monetizing the concept into the future. Neither the company or Zuckerberg have successfully presented a plan for this monetization.

We are also skeptical that the Wall Street of today can afford to finance, while giving the benefit of the doubt, as much into the future as Facebook's valuation is asking. Near term the stock price will come into selling pressure from the unexpected size of the underwriters participation which grew more  in the effort to support the stock price from falling below the issuing price. Their participation will have to continue in the following days if they are to prevent this from happening. They will be unloading this backstop in the months to come.

Young Zuckerberg told his employees before ringing the stock exchange opening bell that he "could hardly wait to see what else they could come up with for the company". If he doesn't know what is in the works we don't think $100  billion dollars of investments are going to wait to find out.

We hope nobody yells, 'fire'!

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The Welfare State Has Arrived in America.

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COMMENTS:
By John Galt for America's Chronicle

And only the brave will be able to change its course.

The following chart of per capita expenditures in the United States compared to four of the most economically troubled nations of Europe was composed by the Senate Budget Committee Republican staff from IMF data and purports to show just how deep in debt the US is getting due to an out of control welfare and entitlement state.

All four bankrupt nations of Portugal, Greece, Spain, and Italy, are actually in better shape as to their financial commitments to their population than the United States who spends more than $20,000 per person compared to Italy's $16,900, Spain's' 13,100, and doubles Portugal with $10,200.

The debt leviathan in America should be a source of extreme worry to Washington who instead chooses to ignore it and remains on track to increase it. As we are witnessing in the recent elections that have taken place in Greece and France, Democratic institutions are not up to the job of electing the leaders that would solve the problem. The contrary is the case where the popular demand turns to protect their privileges rather than controlled them or reduce them. Democracy brakes down when individual self-interest goes unchecked. The masses are not lead, they are leading.

All indications are that Americans are not all that different than our European brethrens and that our masses will move to protect their privileges as well through the electoral process. American Democracy is, however, more evenly split still with a close 50/50 balance between the moochers and the producers. European democracies have long lost that balance in favor of the moochers. As this high level of US government expenditures indicate, the trend favors the moochers. We are on ground zero.

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From Indian Chiefs To Kings - It Is Getting Hilarious But Worrisome.

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COMMENTS:
By John Galt for America's Chronicle

The Telegraph of London front page piece.

From politicians running as Indian chiefs to get elected to the senate, to dueling female factions between Hollywood stars and first ladies (see right column for those stories), and even national magazine covers declaring America's first gay president, it all adds up to a carnival of the absurd and a festival of laughs. Now, as if all of that is not enough to have us rolling on the floor hysterically, we find that serious people in Europe think we have become a monarchy.

The Telegraph, the most serious newspaper of England and probably the Continent, is portraying President Obama as "King Barack the XIV, the Sun King" on its front page. This is the same Europe that went wild for candidate Obama in 2008. What is going on? Has America gone from a feared and respected country to one that is the laughing stock of the world? What really rankles is the source of the laughs, the Europeans, which are not exactly a fearsome bunch anymore

Perhaps we would not be as susceptible to the smirks coming across the Atlantic if America's President would be portrayed as Edward III, the catalyst of the union jack in Great Britain, or Queen Victoria in whose reign the sun never set; but a French King? No, no, that we cannot stomach. We don't want to think that it has anything to do with the new election in France of a socialist president who aims to increase taxes for the rich to 75% and wants to implement an stimulus program to get the economy back to its feet even though they have to borrow the money. Yes, perhaps we have a lot in common with the French.

This is getting a little scary!

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Greek Democracy: In Shambles.

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COMMENT:
By John Galt for America's Chronicle

They invented it first: they will destroy it first.

Chances are he works for
the government and gets
his bones for free.

Five out of 10 Greeks work for the government; 3 of them work in the private industry; the other 2 are unemployed. For those 7 Greeks out of 10 their free goodies are partially (very partially we may add) being taken away - if Germany has its way. For the other 3 Greeks they will have less income to buy their goods with - but at least they are earning them.

The Great Unemployment Lie.

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COMMENT:
By John Galt for America's Chronicle

The US Economy is suffering from a dangerous employment shrinkage; and no, we are not heading in the right direction.

We are engaged in the election hunger games of concealing the dire consequences for the general health of the US economy of the true employment situation.

To facilitate the understanding and meaning of an statistical game that is otherwise boring, let us talk about the "employment Rate" instead of the official "unemployment rate", which is a second calculation dependent entirely on the first.

Politicians and TV pundits are always telling us that in spite of the difficult jobs market "we are going in the right direction" because the unemployment rate, as officially publish by the Labor Dept., is dropping. Well, are we? And is it? As far as the employment picture is concerned they point us to the "official" statistic of the "seasonal adjusted unemployment rate". This unemployment rate has been dropping from a maximum of 10.8% in 2009 to the present 8.1%. Although recognizing that this rate is still "unacceptable", and that it compares badly with unemployment rates of 4-5% during the pre financial crisis of the Bush Administration, they do not fail to emphasize that the drop is proof that at least we are heading in the "right direction".

We say that this drop of the "official" unemployment

figure is prove opposite of what they claim and that

we are actually heading in the "wrong direction".

Trouble Ahead For Europe and The US Economy: France Goes For More Socialism and Greece Prefers Chaos.

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COMMENT:

By John Galt for America's Chronicle

The second Largest Economy of Europe turns against Merkel's Germany and elects socialist Hollande as president defeating Sarkozy and saying No to fiscal responsibility while opting for the road to higher deficits. The European debt crisis will resume its merry way to bankruptcy and the breakup of the Euro monetary unit. The US economy will be affected. .  Read More . . .

In the meantime, Greece joins France in their preferred way, by electing anybody that moved and promised to opposed the Germans and the European Council in implementing the debt reductions they already promised. Nobody has won and a free for all is declared. There is no government, except perhaps that one that can re-unite all factions that prefer to keep borrowing and spending.

All of this is nothing but bad news for Europe,, and by corollary, for the United States economy. At America's Chronicle we warned of these elections months ago and to the fact that they would make the European recession so much worst that it will threaten the Euro monetary unit. . .

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