Dot Con

“Anyone catch Frontline on PBS last night? It was entitled "Dot Con" and all about how the big investment firms on Wall Street ripped us off with the internet IPOs. Great show. If you can't get the show or missed it there is a transcript at www.pbs.org.”

“Good stuff Sol, thanks for the heads up.”

“Yep. I just caught the last few minutes. 'Dot Con' indeed. I don't think they invented the IPO rip-off schemes with the dot-coms, but the volume of business surely exploded.

Who gets first dibs on all those shares before trading even begins?”

“Old news.

The big players always got first crack at IPO's -- reserving their block before trading started. This didn't start with the dot bombs.

Ordinary investors could get in on IPO's too. You just had to commit to a block of 10,000 shares or so.

But the whole dot fiasco should be a lesson to everyone. There is no such thing as 'new economy'. It's still the old economy. Buy on fundamentals, not speculation. I don't care who is pimping a stock. If it doesn't have a low debt ratio, steady earnings growth, and a reasonable P/E I don't buy it.”

“How real can the stock market be when it is so heavily influenced by rumor and innuendo? At least now, when the economy is in the dumps, we don't have to listen to Allen Greenspan's minute-by-minute ruminations.”

“In fact, Gordon, that was the very subject of another episode of Frontline about 4 years ago, when the bull market was hitting its stride. People were spending their children's college funds and cashing in their life insurance policies to buy stock in companies that never made a nickel of profit.

Unreal.

The question now is, how does one know what numbers can be trusted? Which is the next Enron?”

“I agree Gordon, it is old news to some but at least it's getting out to the general public more and more these days.

I just wonder when this sort of news is going to be taken up by the public as an issue that requires serious reform. How many Ivan Boeskis (sp?), Michael Milkens (sp?), savings and loan scandals and Enrons is it going to take?

The same thing is going on with the IMF. Firms like Goldmun Sachs loan countries like Argentina, Mexico, etc. huge sums of money. The politicians of those countries squander the money. They can't pay it back on time. The IMF requires all sort of draconian measures on the average taxpaying citizen of those countries to pay the money back. They revolt and governments fall. The loans go into default and the American taxpayer, via the IMF pays Goldmun Sachs back.

Thanks Wall street.”