Facebook Initial Offering Debacle Could Further Erode Economy

If it sounds like a scam and smells like a scam, it is probably a scam.

Zuckerberg and Thiel sold off millions of shares


Investors don’t seem to have taken note of the dot-com bubble that bursted just a few years ago and decided to trust Facebook’s growing popularity to put their money on the blue tech giant. Despite the warnings issued by investment experts about unwarranted tech companies whose real value is not reflected by how many people are willing to give the NSA their personal information in exchange for trendiness, greedy small, mid-size and large investors decided to put up with another scam that was announced well ahead of its time.

Facebook’s initial public offering in itself was a very risky bet for people who dared to make a quick buck out of the company’s growing acceptance around the world. However, there are those who would jump from a tall building without a parachute if such an act comes wrapped around with the words cool, promising, trendy, nice, future and so on. After only three days of trading, Facebook stock dropped 18 percent; a number that could have been larger if its underwriters hadn’t intervened to keep the adventurous offering afloat.

Although the fictitious stock gained big time early in the trading, its value dropped like a hammer hitting levels inferior to the opening price of $38. For most mid and low level investors this is already a disaster, but the situation could get even worse for those who decide to keep cool until the price stabilizes to its actual value. Current analysis of the future of the stock suggests that the price is likely to plummet to as little as $10 per share. That is right. The public hype together with the massive cultural phenomenon that Facebook turned into since its creation does not determine the actual value of its stock. According to an analysis conducted by Thomson Reuters’ StarMine, the correct price should be around $9.59 per share. Most investors must be asking themselves where was this analysis a week ago?

According to Reuters, multiple price analysis suggest that earnings projections for the company will reach an amount that reflects the growth of the technology sector in general. Facebook’s future shows gains of about 10.8 percent, whereas the price at which its stock was offered shows an inflation in value of about 24 percent. Would the abrupt fall in value be a temporary occurrence perhaps? Not likely. Especially now that some of the procedures to offer, sell and trade Facebook’s stock are under questioning and the practices may go under careful review by authorities.

A number of issues popped out since Facebook began offering stock to investors; among them, Morgan Stanley’s cut in its revenue forecasts, Facebook’s stock sell off, the loss of 18 percent in its value, a lawsuit filed by an investor after he smelled a rat, reviews begun by financial regulators and so on. All in all, Facebook’s IPO operation turned one of the fastest transfers of money in the near past; about $40 billion. “Facebook right now is going for far more than what it’s worth, it’s like buying $1 for $1.98, it just doesn’t make sense at this price,” said Eddy Elfenbein, editor at Crossing Wall Street. “Just from basic modeling the stock should be around $17 to $20 dollars, and that is with a lot of variables.”

According to CNBC, the Financial Industry Regulatory Authority is now reviewing allegations suggesting that Morgan Stanley shared information with insiders right before the IPO began. That information, the allegations say, was negative news. The complaints prompted Massachusetts Secretary of Commonwealth, William Galvin to issue a subpoena to Morgan Stanley over the discussions the company had with investors regarding Facebook’s stock offering. After changes were made to Facebook’s S-1 filings, the revised report was then sent to Morgan Stanley’s investors before making it available to the press.

The lawsuit mentioned above was filed by a Maryland resident who sued the Nasdaq OMX Group. Phillip Goldberg says in his class-action lawsuit that the company was negligent when handling Facebook’s IPO, which in turn caused losses to investors like himself. In the documents he says that delays in the purchases caused the loss of his money. The mishandling, he says, occurred on May 18, the day Facebook began selling stock. More investors decided to sell their freshly acquired stocks after a supposed glitch prevented Nasdaq from completing numerous orders from people who wanted a piece of Facebook’s fortune. “The whole FB story is a fiasco,” said Jon Najarian, from TradeMonster.com. “The Nasdaq has blood on its hands from the locked markets they disseminated for over 2 hours.”

But the situation with Facebook’s failed attempt to sell its nonexistent value is not rooted on glitches or misunderstandings, but on the well-known impossibility of selling a product at such an unreasonable value. Those who sought to make a quick dollar have paid the price for their greed. However, it is unlikely that big investors lost money in this new chapter of financial insanity. But retail investors who did not have inside information on Facebook’s real value continued begging for shares. This fact makes anyone question whether the work of banks such as Morgan Stanley went beyond being a traditional underwriter. The same question could be asked about other Facebook underwriters such as Goldman Sachs. How much did they hype the value of the stock? How did they do it? There are other caveats to the Facebook debacle, for example whether there were any bets against the stock and how much money was made in those bets? It wouldn’t be the first time.

But perhaps more sickening is the fact that since Facebook’s initial stock offering, both Mark Zuckerberg and one of the company’s directors, Peter Thiel have sold millions of shares to collect their piece of the pie. Not even the heads of the company gave the stock a chance. As reported by Market Watch, “Chief Executive Mark Zuckerberg has sold 30.2 million shares and director Peter Thiel has sold 16.8 million shares of the social-networking company. This information was confirmed by securities filings published late on Tuesday. The gross amount collected by Zuckerberg adds up to $1.13 billion, while Thiel made $633 million.

In the meantime, neither Facebook not Morgan Stanley are willing to talk about the scandal known as Facebook’s initial public offering. But some analysts and financial writers are willing to adventure dire predictions given Facebook’s debacle. Paul B. Farrell from Market Watch believes that Facebook could destroy the little that is left of the economy. Farrell has put the social networking company in his top 12 as a candidate to sink the economy into a deeper crisis. “What’s going on? Facebook’s in trouble, that’s what. Now in the cross hairs of public scrutiny, everybody’s taking potshots. And the warnings are just beginning,” said Farrel in an article published on Market Watch.


US stock futures tumble after S&P downgrade of US

Associated Press
August 8, 2011

NEW YORK (AP) — U.S. stock futures are tumbling after Standard & Poor’s downgraded the U.S. credit rating for the first time.

The ratings downgrade announced late Friday came after the Dow Jones industrial average had recorded its worst week since 2009.

Asian and European stocks are down Monday. The downgrade of U.S. debt is overshadowing bond purchases that the European Central bank is making to help Italy and Spain avoid defaulting on their debts.

Ahead of the opening bell, Dow Jones industrial futures are down 222 points, or 1.9 percent, to 11,181. S&P 500 futures are down 27, or 2.3 percent, to 1,171. Nasdaq 100 futures are down 50, or 2.3 percent, to 2,134.

Gold is above $1,700 per ounce for the first time because investors are looking for something safe.

Council on Foreign Relations Propaganda


The Council on Foreign Relations (CFR) is an invitation only membershipgroup made up of about 4000 people that comprise what many observers consider to bethe shadow government of America. The CFR is more than a ‘think tank’, it is a network of elitists that control America by creating policies, laws, financial alliances and monopolies. This new video, starring such diverse personalities as Angelina Jolie and Zbigniew Brzezinski, promotes the CFR as a wonderful place where people meet to discuss policy, thus giving the impression that all points of view are represented and implemented with the public’s best interests at heart.

Some of its members include bankers (Timothy Geithner, Henry Paulson, Alan Greenspan, Paul Volcker, and World Bank President Robert Zoellick), Secretaries of State (Henry Kissinger, Condoleeza Rice, Hillary Clinton), Supreme Court Justices (Bader-Ginsberg and Stephen Breyer), corporate titans (George Soros, Michael Bloomberg, Dick Cheney), mainstream media (mainstream media is manipulated by the CFR- Katie Couric, Bill Moyers, Diane Sawyer, Tom Brokaw), foreign heads of state (Mikhail Gorbachev, Benyamin Netanyahu and Robert Mugabe of Zimbabwe), religious leader (the Dalai Lama)and entertainers (Shirley Temple, Angelina Jolie, Fred Thompson).

Some of the more notable corporations that enjoy CFR membership include AIG, BP, Citigroup, Goldman Sachs, Google, Merck, NASDAQ, Pfizer and VISA.

The truth about the CFR is that it is a global agenda organizationfilled with collectivists who advocatedepopulation and covert controlover America and the world. An example of this is the quote by Zbigniew Brzezinski (co-founder of the Trilateral Commission and former US National Security Advisor):

“I once put it rather pungently, and I was flattered that the British Foreign Secretary repeated this, as follows: … namely, in early times, it was easier to to control a million people, literally it was easier to control a million people than physically to kill a million people. Today, it is infinitely easier to to kill a million people than to control a million people. It is easier to kill than to control….”

Brzezinski’s statement does not advocate killing, but that he and his compatriots have given serious thought to both options. The average auto mechanic does not ponder these things. Who does? Only those who have a self image of being empowered to do either and, therefore, must make a choice.

David Rockefeller, honorary chairman of the CFR, he is also the founder of the Trilateral Commission (a secretive members-only group with designs to remove the borders between Canada, U.S. and Mexico in the pursuit of eventual world governance),his family founded the Population Council (with its roots in eugenics, which is the philosophy of improving the human gene pool through selective breeding, historically, it has sometimes been accomplished through brutal means such as forced sterilization and genocide)and he is a banker, famous for this quote:

“For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as “internationalists” and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”

This video is pure propaganda; it would seem incredible that some CFR members do not understand its true nature, but may have been used for marketing and public relations purposes in this video.

G. Edward Griffin , who revealed the character of the CFR in “The Capitalist Conspiracy” in 1971, said that due to the growing awareness of the CFR’s role in leading America into global collectivist government, the CFR is attempting to brighten their tarnished image with this public relations video. And it uses the same production style seen on TV ads selling pharmaceutical drugs. The message is about learning, discussion and solutions, but omits commentary on their goals and methods.

Stock Market Plunges 1,000 points in minutes

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Stocks plunged Thursday as investors succumbed to fears that Greece’s debt problems would halt the global economic recovery. Themarket Dow Jones industrials slid almost 1,000 points before recovering to a loss of 328.

The sudden drop was a painful flashback to the worst days of the 2008financial crisis. Computer programs intensified the selling while investors watched protests in the streets of Athens on TV. Fears are running high in the financial markets that the Greek government will not be able to implement austerity measures that would enable it to contain its debt problems. And, in turn, that the country’s problems will hurt other economies in Europe and even the U.S.

The Dow’s gyrations showed the high emotions in the markets. Down 998.50 points in mid-afternoon, it recovered less than an hour later to a loss of 328. Meanwhile, interest rates on Treasurys soared as investors sought the safety of U.S. government debt. The yield on the benchmark 10-year note, which moves oppoosite its price, fell to 3.37 percent from late Wednesday’s 3.54 percent.

“The market is now realizing that Greece is going to go through a depression over the next couple of years,” said Peter Boockvar, equity strategist at Miller Tabak. “Europe is a major trading partner of ours, and this threatens the entire global growth story.”

The stock market has had periodic bouts of anxiety about the European economies during the past few months. They have intensified over the past week even as Greece appeared to be moving closer to getting a bailout package from some of its neighbors.

The fear now is that other countries will also be overwhelmed by their debt, and the recovery that is in its early stages will be wiped out. That would almost inevitably affect the U.S. recovery.

The losses in stocks were so widespread that just 161 stocks rose on the New York Stock Exchange, compared to 3,008 that fell. The major indexes were all down more than 3 percent.