Uncle Sam wants his taxes

…his tax dollars.

The White House doesn’t want to let this happen. There are hundreds of billions that could be brought back into the US and provide a healthy tax boost.  The White House wants to get their hands on the tax dollars generated. This is a figure that could exceed $100 billion.

Look for a lot of lobbying, and a few political trips to far off lands, while our politicians do some cattle trading over a tax “holiday” for the companies looking to bring the money back without a hit to their cash stash.

Companies push for tax amnesty. U.S. multinational firms, such as GE (GE) and Cisco (CSCO), are pushing for a tax holiday in order to repatriate billions of dollars “trapped” overseas but have been rebuffed by the White House. Research suggests that 30-40% of the nearly $1T in cash held by non-financial S&P 500 companies is being held abroad; for some companies, the trapped cash accounts for more than 75% of their cash balances, but bringing the money back to the U.S. for domestic use would force the firms to pay tax on the money, usually of 25-35%. Corporations say bringing the money back would be good for the U.S. economy, but the White House feels it would raise expectations of future tax holidays, that the repatriated money might be paid to shareholders instead of used for job creation and that a lack of investment is not the most pressing economic problem.

via Wall Street Breakfast: Must-Know News — Seeking Alpha.

AOL buying Yahoo?

According to WSJ.com AOL may be looking to acquire Yahoo (whatever is left of Yahoo at this point).  AOL is on the acquisition trail.  Last week they made a small deal/big move in acquiring Techcrunch (Michael Arrington is reported to be staying on, $$).  There seems to be a ton of faith in AOL’s CEO, Tim Armstrong.  Private Equity is behind him.  Perhaps AOL can really become the content behemoth that Terry Semel dreamed of.  Terry was early (and according to former employees, not too engaged).

Yahoo has a massive user base via its Yahoo mail, Flickr photo sharing sites and many other properties. Exposing those users to some of the unique content created by the AOL owned sites such as Engadget and Techcrunch could provide some synergy (AHHH, not that word).  The idea behind “synergy” is what got Time Warner into the whole AOL mess back in the day.

AOL Inc. and several private-equity firms are exploring making an offer to buy Yahoo Inc., according to people familiar with the matter, devising a bold plan to marry two big Internet brands facing steep challenges.AOL and private-equity firms are exploring a bid for Yahoo, devising plans to marry two big Internet brands that both face steep challenges. The discussions are preliminary and dont include Yahoo. Jessica Vascellaro discusses. Also, John McKinnon discusses the Estate Tax as it grows as a hot-button election issue.Silver Lake Partners and Blackstone Group LP are among the firms that have expressed interest in teaming up with AOL to buy Yahoo or trying to take it private on their own, these people said. They added that at least two or three other firms could be interested in participating if a formal buyout proposal is drawn up.

via AOL, Private-Equity Firms Explore Bid for Yahoo – WSJ.com.

Housing crisis continues in new ways

This mortgage mess will certainly be with us for many more years.  Not only do we have to contend with banks that still don’t want to lend, but there are many banks that are cleaning up the mess in questionable ways.  It seems that there are a lot of dishonest folks in the mortgage game and when you give them an incentive that is directly tied to their pay they tend to find a way to fudge something for their own gain.  I think that the whole idea that, in the end, someone else pays (taxpayers via Fannie and Freddie), makes it feel like a “I won’t have to deal with it when it goes bad”.

Good old accountability needs to come back into the game.  If a bad mortgage is written, someone gets in trouble or loses their job.

The cover it up, dress it up, and get rid of it mentality has to stop.

Two big mortgage lenders are reviewing foreclosures as public officials heighten pressure on the industry over allegations that they made errors in documents used to evict homeowners. GMAC Mortgage, a unit of Ally Financial Inc., said Tuesday that it has enlisted legal and accounting firms to conduct independent reviews of its foreclosure procedures in all 50 states.

GMAC has already halted foreclosures in 23 states.Separately, Wells Fargo & Co. said it would review pending foreclosures for potential defects in response to requests from lawmakers and public officials. The San Francisco-based company says it has not turned up any evidence of problems.

via GMAC, Wells Fargo to review foreclosures – Yahoo! Finance.

Greece

In the same conversation as the Dubai meltdown, Greece has been mentioned by many as the economy on the least stable footing.   However, Greece does not have a family member willing to pony up billions to keep things in tact.  It appears that much of their hope lies with the IMF. However, the IMF might not have the financial wherewithal to do so.

The idea that they might be in trouble is one thing, the fact that they are falsifying data is an entirely different deal.

In a damning report published as the eurozone grapples with its worst financial crisis since the euro’s launch in 1999, the Commission said figures from Greece’s were so unreliable that its budget deficit and public debt might be even higher thangovernment had claimed last October.

FT.com / Europe – Greece condemned for falsifying data.

As we have been saying for quite some time, the AIG bailout was an indirect bailout of many entities.  This allowed for 1 hated entity (AIG) to take the fall for many that would be better off not tarnished (GS).  There would have also been a major backlash due to the foreign entities that benefited from the AIG (100 cents on the dollar) bailout.

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG

via Geithner’s New York Fed Told AIG to Limit Swaps Disclosure – Bloomberg.com.

Apple (APPL) has been on a roll since Steve Jobs returned.  This could be their first major bump in the road.  A crippling patent victory by Nokia could put a bit of a halt to the meteoric rise of the iPhone.

My hunch is that there is some validity to the counter suit by Apple and there will be a settlement that might not even include licensing fees.

This might just take years to play out unless a judge decides that he/she wants to make a name for themselves.

Nokia opens new front in Apple patent battle| Reuters.

Shocking!  Not really, just sad.

U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday.

via Banks with political ties got bailouts, study shows | Reuters.

Not out of the woods by any means yet, folks.  In fact, some of the support that the government provided might just prove to be like a financial Vietnam…  A bad situation with  resolution options that are painful no matter which you choose.

Choices

1. I slap you in the face
2. I kick you in the shin
3. I take all of your money

…Get the picture?

Read the excerpt below.  Lovely.  The link to the full article continues below.

We still face serious headwinds in the economy and, as I’ve said many times this year, the current market valuations are ignoring the risk factors of owning equities – an amazing thing considering how recently those risk factors showed up and bit people’s faces off both last fall and this spring.  For example, according to the NYTimes this morning,  American International Group, Fannie Mae, Freddie Mac and GMAC, are not only unable to repay the government, they are in need of continuing infusions that make them look increasingly like long-term wards of the state.  The total risk they pose to the taxpayer far exceeds that of the big banks. Fannie and Freddie, in the final days of the year, are even said to be negotiating with the Treasury about greatly expanding the money available to them.

via Fa La La Friday – Scroogy Swap Prices Blacken Christmas | Phil’s Stock World.

I bought $10,000 of C at $4.19 and it is going down quickly. I’d like to think I will look back positively in 5-10 years and this will all be worth a good laugh.

But right now, it doesn’t feel very funny. Can we get some new leadership at this company?

I have spoken about Corning (GLW) enough to make you say, “enough already, we get it”.

GLW should be a core long term holding in your portfolio.  They had a little hiccup in share price about 6 weeks ago (down to the mid $14′s) but have moved up about 25% since that point.  It was kind of odd that they sold off, because Corning has made it a habit over the past few years to pre-announce in a way that essentially says that they are on track.  That is what they did on 10/22/2009.  After that announcement, they sold off about 7%-8% within a week.

I wish that I would have taken the opportunity to add to my current position.  Let me reiterate why GLW is a great long term buy.

A leader in the following core sectors:

• LCD
• Filtration Systems
• Fiber

Corning - GLW

Those three sectors alone are fantastic long term plays.  We haven’t even seen the real impact of climate regulation and the continued move toward larger and flatter TV’s, monitors, and devices will allow the LCD division to generate plenty of cash.  Let’s not forget about our constantly growing demand for bandwidth which ultimately leads to more fiber.

There are plenty of other markets that Corning is entering with plenty of R&D money.  This is a smart long term play.