Tag Archives: Ponzi scheme

Amazon Reports Q1 – Stock All Over The Map

Amazon stock has been hammered as much as 3.5% in after hours as it reports a first quarter net loss of 12 cents vs 2014 first quarter net income of 23 cents…But the GAAP net income number is full of misleading accounting applications.

Amazon burned through $4.3 billion of cash in Q1 2015 vs. burning through $3.5 billion in Q1 2014.  $4.3 billion represents more two-thirds of the proceeds of the money AMZN raised last in 2014 via a bond issue.  Both sales and expenses increased 15%.  But AMZN’s interest expense more than doubled to $115 million from $42 million, year over year.

Just to give you an example of how manipulated this stock is, the price jumped up to $417 from the $389 NYSE as the headlines were coming across the tape; it dropped down to $372 while I was writing this and now it’s bounced back over $400.

If this stock opens over $400 tomorrow, I recommend shorting it with both hands.   You can read my in-dept analysis of  AMZN and it’s highly misleading accounting here:  AMAZONdotCON.

I won’t have full update until the Company files is 10-Q, but if you buy my report now, you will receive the update when I add it to the existing report.

The Government Has Already Busted Through The New Debt Limit

The other day I was wondering what happened with the March 16 deadline facing the Government on its “suspended” debt ceiling limit.  March 16 had come and gone without any media fanfare.  It’s almost as if the White House demanded silence from the media on this.

So I googled the topic and found out that the debt ceiling limit was reset to $18.113 trillion. That is  $1 trillion above where the outstanding debt was one year ago.  But didn’t Obama tell us that the spending deficit in 2014 was only $483 billion?  Pourquoi?  If the amount of debt outstanding increased by a trillion, how can he claim the spending deficit was only $483 billion?  Because he is a liar.

So Congress quietly approved raising the debt ceiling limit to $18.1 trillion and now the Treasury debt outstanding has busted through that ceiling:   $18.152 trillion and counting.

For now the criminal Treasury Secretary, Jacob “Jack” Lew, is implementing a bunch of “legal” accounting moves that let him continue signing checks to pay the Government’s zealous overspending.  “Accounting moves?”  Sound more like a Ponzi scheme.  What this means is that Lew is tapping into various dedicated trusts which has meager surplus levels of cash – like the Federal pension fund and the Social Security trust – in order to pay bills.  But this avenue will hit a wall this year and then Congress will have to deal with the debt ceiling limit again.

It’s a truly sad, Orwellian state of affairs when the Government’s ability to continue issuing Congressional paychecks and welfare EBT debit cards boils down to accounting gimmicks…this country is pathetic (source: King World News):

ThisCountryIsBroke

 

 

The First Rand Gold Bond Deal Is Old Mother Hubbard’s Cupboard

The entire Anglo-European banking world continues to pile on an infinite amount of fraudulent fiat paper gold on top of an ever-shrinking pile of physical gold that is available to be delivered to the entitled buyers.  – Investment Research Dynamics

It’s a gold hypothecation Ponzi Scheme of the highest order.  The world’s first gold corporate bond deal – issued by South Africa’s FirstRand Bank (Rand Merchant Bank) is a scam.   Investor beware.

In my curiosity to confirm my suspicion that this deal was nothing but a paper Ponzi Scheme designed to redirect investor money that otherwise might have been used to buy and take delivery of actual Krugerrand gold coins into a fiat paper fraud deal, I contacted representatives of First Rand to get a term sheet so I could see how the deal was structured.   Here’s an outline of what I found and it confirms my suspicions (I’ve linked the term sheet and product pimp sheet below):

1) The investor “buys” Krugerrands from First Rand (Rand Merchant Bank) –
technically, First Rand does not send you any coins or transfer ownership
title of the coins to you. Instead…

2) The investor is issued a note which pays interest in more Krugerrands but that interest is not received by the investor until the note matures;

3) PLEASE NOTE: this bond is UNSECURED, meaning if First Rand defaults, you are
standing in line to get paid out behind secured creditors. IT ALSO MEANS THAT THE
GOLD COINS YOU PURCHASE ARE NOT PLACED IN AN ALLOCATED ACCOUNT
AND YOU WILL LIKELY NEVER SEE THOSE COINS IN THE EVENT OF DEFAULT;

4) I have serious doubts as to whether or not the Krugerrands you buy were ever in the
the possession of First Rand (Rand Merchant Bank) to begin with. This is a pure
“fractional fiat system” gold sale transaction;

5)  If and when you redeem the bonds, First Rand makes it quite cumbersome for the     investor to receive the coins. You have to notify First Rand 60 days in advance AND you have to personally travel to the Rand Refinery to PICK UP your coins.

So let’s review: You give First Rand money upfront to purchase gold coins that may or may not exist. You receive an unsecured note that bears interest.  IF you decide to redeem your note a maturity in physical coins, you have to personally travel to the Rand Refinery to get the coins.

Perhaps the worst aspect of this deal is that Rand Merchant Bank is getting  free money to use as it wishes by merely issuing an unsecured loan.  “Free” because the interest is not paid out until maturity.   At the very least this bond should bear an interest rate that reflects the subordinated, unsecured nature of the deal.  But it’s been issued under the pretense of the investor being entitled to gold coins.  Clearly this deal is neither secure nor backed by real gold.

This is a Ponzi Scheme that is designed to give Rand Merchant Bank FREE money to use as it wishes (see the term sheet), is unsecured and it was issued with the intent of NEVER having to redeem ANY of the bonds in physical gold.

TermSheet           SalesPropaganda            

Investor beware – caveat emptor – because Atlas Shrugs.

Here’s Why Amazon.com Stock Is Getting Ripped Today

AMZN is down 10% today on already  3 times higher volume than the 90-day daily average.  Amazon.com’s business model is nothing but a massive, cleverly disguised Ponzi scheme.  This is why, despite impressive sales growth every quarter, AMZN can’t make any money.  In fact, in most quarters it actually bleeds money when analyzed from a cash-in/cash-out basis.

In its earnings report yesterday, for instance, if you skip everything and zero-in on the Statement of Cash Flows, you’ll see that “Net cash provided by operations” was -$2.5 billion.  When you net out capex, Amazon burned at total of $3.5 billion in cash.  In fact, it’s projecting an operating loss for next quarter of anywhere between $55-455 million.  That will burn even more cash.  At some point it will likely have to raise more money this year.

I wrote an article detailing why I thought eventually AMZN would implode:  Is Amazon A Giant Ponzi Scheme Dressed In Drag?

The reason Amazon can’t make real money and has been suffering declining operating margins for several quarters in a row now is that, ultimately, AMZN achieves sales growth by getting a product from the factory floor to the consumer’s floor more cheaply than just about any other retailer.  I love AMZN for this reason.

But the cost of doing that is called “fulfillment.”   Jeff Bezos went to agreat effort and expense back in AMZN’s early days to make sure the accounting rules would enable him to hide this cost in the financial statements.  But as you see from the operating margin contraction over time,  which will be negative next quarter,   the Company is hitting the old “law of diminishing marginal returns” wall.

Perhaps this is why insiders have  been selling the shares vs. buying at a 3.2 million shares to zero ratio over the last 12 months.

Amazon is one of the few internet stock bubble companies that actually survived the tech stock crash of 2000.  My hat’s off to Bezos for managing that feat.  But, as the actual results of his operations show, it’s a testament more to the fact that he’s perhaps the greatest snake-oil salesman of our era rather than an accomplished business operator.   This is why the actual cash generated from the AMZN business model has been next to nothing over the past 14 years.

You can ignore reality, but you can’t ignore the consequences of reality.  Ultimately, AMZN die-hard shareholders who stick it out rather than sell now will eventually face some very unpleasant consequences – possibly as soon as this year.