GalaTime

The post title sounds like an Irving Wallace book, but as the articles below indicate/speculate, there is definitely a truth-stranger-than-fiction story behind Goldman’s (and Merrill’s) missing December.

WSJ: Goldman Sachs and Merrill: Did December Ever Happen?

Consider that Goldman Sachs lost $1.3 billion in December — compared to $2.12 billion for the entire previous three months. Merrill Lynch, too, took at least $8.1 billion of losses in December, compared to $5.9 billion in November.

A variety of theories have been posited, including everything from a massive currency trade to bets on subprime mortgages. Doubts plague us, however. What we do know is this: Merrill Lynch declined to disclose its fourth-quarter earnings at all, even though it was still an independent company at the time.

Market Folly: The Deception & Reality of Earnings Season: Q1 2009 (Goldman Sachs, Wells Fargo, et al)

We’re simply here to kick off what we have already deemed the Q1 ‘09 Earnings Season Clusterf*ck. You will most likely be deceived, tricked, and possibly even lied to. But, it’s cool, because everyone is all of a sudden profitable out of NOWHERE. We just want to tell our readers not to place too much weight or emphasis on this earnings season simply because if the earnings already reported are any indication, this past quarter took place in Candyland, not recessionary America. So, keep on your toes and don’t put on any big positions before these releases… you’ll have better luck at blackjack or baccarat.

Economic Policy Journal: The Goldman Sachs Three Card Monte Act

Was Goldman fully protected on their own? Maybe, maybe not, depending on how much insurance Goldman actually bought. But, what van Praag is doing is, like an expert three card monte shark, keeping you focused on the wrong card. While everyone is focused on the card van Praag is playing with, the real action is the card left over on the other side. That card is the wholesale liquidation of AIG portfolios at fire sale prices that Goldman and money center banks were able to flip for billions in profits at the expense of the taxpayer.

And then there’s goldmansachs666, of course.

Derman: A Sigh is Just A Sigh

Fundamental Theorem of Finance.

“Security prices exclude arbitrage if and only if there exists a strictly positive value functional, under the technical restrictions that the space of portfolios and the space of contingent claims are locally convex topological vector spaces and the positive cone of the space of contingent claims is compactly generated, that is, there exists a compact set K of X (not containing the null element of X ) such that C = {x ? X : x ? 0} = U ?K for ?>= 0.”

Yeah, try explaining that to the keyboard-punching, money-minting, school-ditching teenagers sitting in brokers’ trading rooms in Mumbai, doing cash-futures arb.  :-)

Michael Lewis @ CN Portfolio

Since mid-January, I could have told you tomorrow’s price today for at least one stock listed on the NSE: Maytas Infrastructure.

Every trading day, the price hits its 5% limit on the downside and stays there. There’s always a big sell order sitting on top to keep it limit down. It’ll be a while before the selling pressure abates, so the daily -5% move is pretty much a given in the near future.

Pity the mutual fund manager who’s holding a boatload of this crap!

The BSE Realty Index is was having a bad day today:

The all-time low is 1403 (seen on Dec 2, 08), not that far from today’s low (1498). And who can we thank for that? DLF - the biggest index constituent - was down almost 35% earlier today!

On a somewhat related note, Arjun forwarded me this link: 15 Indian Stocks that may shock you

2. DLF:

DLFs non-DAL revenues declined 44% QoQ to Rs22.5bn and around 40% of sales have been to DAL, a group entity. 44% of debtors are DAL and of total debtors, the share of DAL has increased during the quarter with DAL receivables increasing by Rs14.5bn QoQ.

During 1QFY09, sales to DAL were Rs15.6bn, which is marginally higher than the increase in receivables from DAL. We would like to add that DLFs high level of transactions with group company DAL and high level of receivables has been a point of debate since it went public.

The other index biggies - India Bulls RE & Unitech were also down double digits. As I said earlier - those with BS on their Balance Sheet will get taken out by the market.

PS: DLF, like Satyam, is a past winner of the Golden Peacock Corporate Governance Award.

PPS: Based on a similar level of in-depth due diligence that was conducted earlier,

the UK-based World Council for Corporate Goverance has decided to take back its highest honour– Golden Peacock Global Award for excellence in corporate governance in 2008 — it had bestowed on Satyam Computer Services four months ago.

Most finance sites & blogs (including GalaTime) saw a spike in traffic since Raju went public with his confession. See today’s Economic Times homepage for a taste of how widespread the coverage is:

The latest number I’ve seen for the fraud is Rs 8,000 crore!

Nasdaq: DSP Merrill Lynch Terminates Advisory Engagement With Satyam

The company said it decided to terminate the engagement, as it came to know that there were material accounting irregularities.

Note that Satyam hired DSPML ~ Dec 29, 2008. So it took DSPML just 10 days to figure out that there was Satyam was cooking the books.

Does anyone still believe that the rest of Satyam management, their Board of Directors, their banks & their auditors (PwC) really didn’t know about this? For the past many years?

Come on.