Tell Me Where is Sanity

Everywhere is freaks and hairies

Dykes and fairies, tell me where is sanity

Tax the rich, feed the poor

Till there are no rich no more

I'd love to change the world

But I don't know what to do

So I'll leave it up to you

"I'd Love to Change the World" by Ten Years After

Where's the outrage, where's the congressional hearing, where's the Presidential teleprompter anger?

How can we, as a nation, sit idly by and let a corporate titan, who just a short year ago was on its knees begging the American taxpayer for a bailout loan, pay one if it's employees $45 million of our hard-earned tax dollars to go away? Sure this guy had a contract, but since when do we let silly little things like contract law get in the way of anger?

Of course I'm not talking about fat cat Wall Streeters, I'm talking about one of Hollywoods fat cat funny-men...Conan O'Brien.

Yes Conan O'Brien, former host of NBC's Tonight Show, owned by the "Hedge-Fund-Lightbulb" firm known as General Electric, is the recipient of the publics largess. 

If we remember way back in the dark days of 2008, General Electric did not initially qualify for government backed loans under the Troubled Asset Relief Program (TARP). But because of behind-the-scenes appeals from GE, regulators soon loosened the eligibility requirements to allow GE to participate in a new program known as Temporary Liquidity Guarantee Program or TLGP, and participate they did.  TLGP allows companies to issue debt at much lower interest rates because it is backed by the U.S. government (you & me), and GE Capital has issued nearly a quarter of the $340 billion in debt backed by the program. As GE's chief executive Jeffrey Immelt acknowledged, "the governments actions have been powerful and helpful". Gee, thanks.

Now I have absolutely nothing against Mr. O'Brien, I personally think he is funnier than Jay Leno, and he and his team are worth every penny of the $45 million that their contract says they should receive. What I am against is the double standard. Why were GE's executives excluded from over-sight by the pay-czar? Why is Mr. O'Brien's contract more sacrosanct than the investment banker that helped Goldman Sachs earn enough money to pay back TARP early and with interest? These double standards are common in fascist states, where private companies that cooperate with the government and do its bidding are allowed to remain under private control, are given unfair advantages over their competition (Fannie Mae & Freddie Mac), and avoid late-night visits from the KGB. I'd like to think that the United States is better than that, but I know that's not true.

Investment Considerations

When you go to the Mafia or the KGB for a loan or some special favor, you have to realize that even though you think you paid them back, you are free only when they say you are free...and they reserve the right to change their minds at any time. We started down this road over a year ago, when the head of the Federal Reserve and the Treasury Secretary, started telling companies who they would merge with and at what price. When the government refused to let companies fail and instead played grand puppet-master we allowed ourselves to slip towards the dark side. 

From an investors perspective you have to realize that the playing field has changed, no longer can you count on buying stocks or bonds of firms based on their operating fundamentals alone. Now you have to look at their relationship with the government, and their competitors relationship with the government. It's not the end of investing, its just another variable to factor in. Take Russia as an example. You can still invest in companies, make or lose money, you just have to realize that you do so only with Putin's blessing.

Tell me where is sanity...

Chris Wiles

This article contains the current opinions of the author but not necessarily those of the Rockhaven Capital Management.  The author’s opinions are subject to change without notice. This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.