It turns out that almost all of the content owners have more to lose when their cable company ownership is rendered useless by new, cheaper streaming alternatives – in other words the anti-piracy campaign might really be about stunting the growth of even legitimate online distribution.

So says Edward Jay Epstein, legendary investigative journalist and author of The Money Demons and the forthcoming The Hollywood Economist 2.0:

Now we learn why Christopher Dodd, the retired Senator from Connecticut, is receiving over $1.5 million a year to head the Motion Picture Association of America.

The MPAA, the trade organization for the Hollywood studios, is financed by Warner Bros., Fox, Universal, Disney, Sony, and Paramount. Each provides about $10 million per year. Aside from efforts to suppress digital piracy, it lobbies Congress and regulatory agencies. Its crucial job here is to protect the Big Six’s crown jewels: their intellectual properties. Without their libraries of movies, animated shorts, and TV series, they couldn’t survive.

Consider Warner Bros. Its library has more than 60,000 licensable properties, including 6,500 movies and 40,000 TV episodes. Whereas its DVD sales have been on the wane, its TV licensing has skyrocketed. In 2010, according to sources at Time Warner, Warner Bros. harvested over $4 billion from worldwide licensing to TV. Nearly 80 percent came from just four cable customers—HBO, Turner, ABC Family, and NBC-Universal’s cable channels. Not only did this far exceed its share of theatrical box-office receipts, which were $2.4 billion in 2010, but this licensing is highly profitable: The studio pays none of the cost of advertising, prints, or logistics. Almost all proceeds, minus some residuals paid to third parties, go to a studio’s bottom line. Whatever the vagaries of the box office, licensing is the largest and most reliable source of profits for the studios.

But these golden geese are in danger of being strangled to death by video streaming. New age companies, notably Netflix, Amazon, Apple, and Google, now compete with cable TV by streaming movies and other video directly over the Internet. Netflix, for instance, offers unlimited streaming for $1 extra a month with its mail-in service, Amazon offers free streaming to its 10 million Amazon Prime customers, and Google offers YouTube free.

Keep reading at Jay’s site below:

Hollywood’s Pirates of the Internet (The Hollywood Economist)

The market is staging a furious rally this morning on the heels of a – are you ready for this? – Alcoa earnings report.

But seriously folks, we’re in earnings season now and earnings have been one of the few bright spots here in the Balance Sheet Recession.  And that’s got a lot to do with today’s enthusiasm.

You already know everything that can go wrong (Euro breakup, China crash, credit ratings downgrades, new leg down in housing etc).

So by all means keep those issues in mind while I spin the counter-narrative.  Not a prediction, just a reminder that we’ve gotten pretty negative – even dyed-in-the-wool perma-bulls like BlackRock’s Bob Doll are now saying “muddle-through”, this is a great sign.

Your counter-narrative here:

China slows and then stops slowing.  Slack from their real estate deceleration is picked up by the burgeoning Chinese consumer as the party’s Grand Plan to stoke internal demand within shows some signs of coming together.  China goes from tightening to stimulus and the GDP growth rate stabilizes in the mid-to-high single digits.

Europe forcibly restructures Greece, bails out Italy’s banks, they have a recession everywhere except Germany and in the end, nothing is solved but nothing is shattered either.  The rest of the world learns the truth about how unimportant Europe has become to the global economy.

The Sensex (India), Shanghai Composite (China) and Bovespa (Brazil) get their sh*t together and stop going down.  Rate cuts stop the downward slide and an amelioration of US investor fears lead to net inflows to emerging market stocks again.

US GDP growth and hiring surprise everyone.  Corporations pass the baton to the consumer, who is sick and tired of being sick and tired.  Home prices bottom and move higher in almost half of the Case-Shiller 20-city index.  Foreclosures leave the market faster than previously thought.  The rate of spending to fix up homes accelerates.

Treasurys stop rallying on bad news overseas and bad news overseas stops getting our attention.  Half a trillion in erstwhile “risk-off” capital comes pouring out of bonds and into stocks.

Iran stops sabre-rattling and dicking around with the Straight of Hormuz as it faces a reprise of the Green Revolution within it’s own cities.  Oil prices settle back down to natural supply/demand levels in the mid-80′s which acts like a tax cut for the American consumer.

100,000 troops come home and begin to build lives for themselves and their families.  They start businesses and buy foreclosures and speed the velocity of money around the economy with a gush of pent-up desire to consume after years in the desert.

Obama and Romney run neck-and-neck into the election.  Congressional approval ratings climb off of multi-decade lows as unemployment creeps down to 7.5%.  Gay stuff and abortion end up becoming more important come November 2012 than “the economy” in voters mindsets.  Again.

The Nasdaq takes out an 11-year high, the Dow and S&P take out 2011′s mid-year highs.

Anyway, these aren’t “reasons to be bullish” or “outrageous predictions” or anything corny like that – they are simply the narrative we are not hearing from anywhere – even from the bulls.

It’s worth thinking about what can go right sometimes.

Unlike Mitt Romney, Jon Huntsman is Not a Big Bank Apologist

Mitt Romney is leading but his Wall Street policies lie somewhere between status quo proponent and Big Bank apologist.

His fellow candidate Jon Huntsman penned an op-ed for Fox News that’s been getting a lot of attention as it makes its way around the web – because he is the ONLY candidate talking about the fact that we’ve made our Too Big To Fail banks even Too Biggier.

Check it:

In 2008, with the nation’s economy in crisis, Washington and Wall Street offered American taxpayers a Sophie’s Choice: spend hundreds of billions of dollars to save big banks from failure, or witness the collapse of our financial system and irreparable economic harm.

This was not only a betrayal of the public’s trust; it was also a betrayal of our free market system, which only works when every business plays by the same rules.

Taxpayers were promised those bailouts would be a one-time, emergency measure. Yet today, we can already see the outlines of the next financial crisis and bailouts.

The six largest financial institutions are significantly bigger than they were in 2008, having been encouraged to snap up Bear Stearns and other competitors at bargain prices.

These banks now have assets worth over 66% of gross domestic product – at least $9.4 trillion – up from 20% of GDP in the 1990s.

Huntsman’s solution is to break them up.

Now obviously Jon can’t win, at least not in this cycle.  The hardcore in the party are convinced that he’s been turned – either by the Chinese, with whom he lived as ambassador or by Obama himself, the man who sent him there.

But the irony is that Jon may well be the most qualified to actually run the country.  He’s level headed, has run a state as Governor, is worldly and forward-thinking and knows how to do business in a global economy.  So of course, he’s running neck-and-neck with a can of stewed tomatoes in the back of the GOP pack.

Oh well.

Source:

Wall Street’s Big Banks Are the Real Threat to Our Economy (Fox News)

The King is Dead – The Decemberists I’m not officially ranking them but The King is Dead might’ve been my fave album overall this year.  It came out early in 2011 and I kept it in heavy rotation for the last 12 months.  I couldn’t help it, it’s just such a bright, shiny record — despite the fact that, thematically speaking, it’s all kind of post-apocalyptic.  Colin Meloy and the boys keep this album tight, with regular-length songs and a nice departure from the more operatic stuff they’d done on their previous two releases (Hazards of Love and Crane Wife).  Standout Tracks:  “This is Why We Fight” might be the band’s best song ever and the R.E.M.-inspired “Calamity Song” actually features R.E.M.’s Peter Buck on guitar, which is awesome.

The King Is Dead

Hot Sauce Committee Part 2 – Beastie Boys I’ll be honest, this album was going to make my list no matter what, even if it sucked, because I basically think about the various phases of my life in terms of what I was up to around each Beastie Boys album since Licensed to Ill in 1986.  But this one doesn’t suck and it’s probably twice as good as To The Five Boroughs, which most of the fans hated for various reasons.  Hot Sauce finds the Boys doing their usual but in a hyper-evolved way, I love it and it’s always in regular rotation.  Standout tracks: “Make Some Noise,” “Too Many Rappers,” “Don’t Play No Game That I Can’t Win.”

Hot Sauce Committee Part 2

Collapse Into Now – R.E.M. I have a pet theory as to why R.E.M. broke up this year, it goes something like this: The band makes one of its best albums in years – perhaps in a decade – and nobody notices it.  The record is packed with songs that in a different era would be smash hits on college rock radio stations and even the Top 40 pop charts.  But no one hears them.  So fuck it, if we put something out this great and no one cares, why bother anymore? This is a great R.E.M. record, too bad you numbskulls didn’t buy it.  Now look what you’ve done!  Standout tracks: “Uberlin,” “Alligator_Aviator,” “Oh My Heart,” “Mine Smell Like Honey,” “It Happened Today.”

Collapse into Now

Watch the Throne – Jay-Z and Kanye West Haters gon’ hate, but let’s face it, this was a solid Hip Hop album.  Sonically interesting and lyrically tight, every song ranks high on the repeat listens scale, and how many rap records can you play straight through these days without skipping?  I would rather have three copies of this CD on a desert island than have a variety pack that includes the new Drake disc and that flaming pile of garbage Tha Carter IV from Lil Wayne this year.  The only miss on WTT is that track with Beyonce on it, ugh, they could’ve left that off, it makes no sense at all.  Standout tracks: “N***as in Paris,” “Otis,” “That’s My B*tch.”

Watch the Throne

The Dark Side of the Moon (Original Recording Remastered) – Pink Floyd Pink Floyd released new remasters of each of their albums this year.  I grabbed Dark Side out of all of them and I wasn’t disappointed.  The clarity is amazing on this remaster and what I’m most happy about with this edition is that all they give you is the album itself, not all those stupid alternate versions or demos or b-sides and the other superfluous stuff that typically clutters a reissue.  You probably have this album in some format or another, but if you want to upgrade, this year’s edition gives you a great excuse.  Standout tracks:  “Us and Them” still sounds amazing but that album-ending  progression from “Brain Damage” (“the lunatic is in my head…”) to the crescendo of “Eclipse” (“All that you touch All that you see …”) still gets me every time.

The Dark Side Of The Moon

Mylo Xyloto – Coldplay Yeah, yeah, yeah, I know.  But I don’t care, this is a great album.  It’s very easy to hate this band and Chris Martin’s pretentiousness and his elitist wife’s embarrassing oeuvre of snotty comments and accidentally hilarious Oprah-isms.  But truthfully, had I blindfolded you and just played you this record and you didn’t know who it was by, you’d say it was fantastic.  Brian Eno, the man behind the best work of Coldplay progenitors U2, is billed in the liner notes as being in charge of “Enoxification” right alongside the drummer and the guitarist.  And it’s true, these songs have been thoroughly enoxified.  Clearly, the tracks here are aiming for radio airplay, and you know what — what’s wrong with that?  They want to do a song with Rihanna, what do I care?  As long as it sounds good.  Standout tracks: “Charlie Brown,” “Paradise,” “Us Against the World.”

Mylo Xyloto

Rave On Buddy Holly – Various Artists What?  You didn’t hear the Buddy Holly tribute album?  Go get it right now if you’re a music fan, it’s really cool.  Before there was The Beatles or the Rolling Stones or The Who there was Buddy Holly.  With the exception of Jerry Lee Lewis, Elvis and Chuck Berry, no one was more important to the establishment of the Rock Star concept.  Holly was goofy and fronted a three piece that featured a standup bass, but he was a mindblowing talent, an amazing songwriter and performer who was snatched away from us by that fateful plane crash in February 1959.  Anyway, Paul McCartney gets the rights to his music and recruits some of your favorite (and not so favorite) current artists to cover his hits.  Standout tracks: Kid Rock’s “Well All Right,” Fiona Apple’s “Everyday,” She & Him’s “Oh Boy,” Graham Nash’s “Raining in My Heart.”

Rave On Buddy Holly

Pickin’ Up the Pieces – Fitz & the Tantrums Fine, technically this album came out in 2010 but nobody heard it until 2011 when the appearances on Conan and Jimmy Kimmel began.  And technically this is my blog so its inclusion is my call at the end of the day.  This is a monster of an album made by one of the few bands that is piano-driven in a sea of guitar rock.  The way to think about Fitz & the Tantrums is that they’re making pop music that is informed by the Motown and soul influences of the band members.  The songwriting here is top shelf and the result sounds both familiar and like nothing you’ve ever heard before at the same time.  I love this album, it can be played on repeat all day long.  Standout tracks: “Don’t Gotta Work It Out” and “MoneyGrabber” are probably the two songs you’ve heard in commercials or TV shows this year without realizing who’s they were.  Now you know.

Pickin’ Up The Pieces

I’m With You – Red Hot Chili Peppers Not their best but far from their worst, this is a solid record from a band that’s been pretty solid overall throughout their 20-plus year career.  Coming off the double album pomposity of Stadium Arcadium, you can tell that the band is desirous of getting back to its alternative roots here.  Rick Rubin is back behind the boards for his sixth straight producing gig with the Peppers.  If you’re a fan, you’ll like this record.  Standout tracks: “The Adventures of Rain Dance Maggie,” “Monarchy of Roses,” “Happiness Loves Company.”

I’m With You

Codes and Keys – Death Cab for Cutie Death Cab doesn’t break any new ground here, which is just fine with me and most of the fans.  They have an inimitable style that’s all their own, you either feel them or you don’t.  And I do.  Codes and Keys is a substantially better record than the disappointing Narrow Stairs and has several songs that became 4 star-rated in my iTunes upon the first or second listen.  Standout tracks: “St Peter’s Cathedral” has that repetitive sing-song refrain thing going on that we first fell in love with on Transatlanticism, the instrumental intro for “Doors Unlocked and Open” is so kickass, too.

Codes And Keys

Wasting Light – Foo Fighters This is a rock record, period.  The band enlisted producer Butch Vig to take things back to the way they used to be.  The whole record was recorded dirty, just like Nirvana’s masterpiece In Utero record.  Stripped down, raw and more rock than most of what now qualifies as rock music these days.  There are some great songs here but nothing written specifically to crack the Top 40.  Gone are the power ballads and software and studio production tricks, this one’s for fans of the old Foo Fighters and not for the casual listener.  And did anything rock harder than White Limo this year?  I think not.  Standout Tracks: “Rope,” “White Limo.”

Wasting Light

For the Record – Torae Oh snap, an old school banger.  Torae is the little-known Brooklyn MC who could.  At least he thinks he can, his ambition is all over this record, as are incredible beats from legendary producers he managed to pull in for this project like DJ Premier and Pete Rock.  For the Record sounds like a mid-90′s East Coast rap album, and that’s a compliment at a time when we’re daily assaulted with ringtone rappers, R&B snoozefests and a whole lot of down south pretenders who are better at getting an album deal than actually making an album.  Most of my hip hop listening this year has come courtesy of free mixtape downloads – but this one I bought.  Standout tracks: “Shakedown,” “For the Record.”

For the Record

Honorable mention to the following albums I’ve started listening to but have not fully digested just yet:

El Camino – The Black Keys
The Whole Love – Wilco
Green Naugahyde – Primus
Sky Full of Holes – Fountains of Wayne
Torches – Foster the People

What albums did you like, love or hate this year?

I’m going to tell you an amazing story today.  It’s a story about art and collaboration, a story about youth and innocence, influence and homage.  It spans decades and takes place around the world.

But most of all, it’s a story about love…

It is the middle of the 1970′s and we’re looking in on a tiny bedroom in Northern Dublin, Ireland.  Its teenaged inhabitant calls this bedroom “the box.”  The boy who lives in this room is called Paul Hewson but you will come to know him later as Bono, lead singer of the band U2.  He is trapped in “the box” in body only, because his mind is set free when he is listening to music.  And of all the music he listens to, nothing has quite the liberating effect, he will later tell interviewers, than the songs and lyrics of Bob Dylan.  He calls Dylan an artist who paints the kind of images “you can’t see with your eyes.”

The Dylan influence will set Bono up for all sorts of folk music, eventually leading him to John Lennon and the idea that rock and roll can, in fact, change the world.  The first song Bono learns for acoustic guitar is If I Had a Hammer which clearly sets the tone for the artist’s activism at an early age.

Paul is a terrible student in school and can’t concentrate on anything but music.  Listening to Bob Dylan and The Who and the Kinks and the Beatles is his only ticket out of the grayness that surrounds him.

***

It’s 1987 and the band U2 has transformed from a Dublin-based post-punk curiosity to the biggest rock and roll band in the world.  Bono is no longer a kid obsessing over 60′s rock and folk music, he is now an internationally-known rockstar himself.  The band is  touring here in support of their monster record The Joshua Tree while simultaneously recording tracks for a follow-up album.  America is enamored with U2 and it is a two-way love affair.

Bono and Company traipse across the country in cowboy hats, seeking out America’s roots music wherever they can find it – they are in search of the blues, gospel. country & western and soul.  They cut a track with B.B. King at Sun Studios in Memphis, the legendary recording studio that gave birth to the early work of Johnny Cash, Elvis and Roy Orbison.  They head to Harlem to do a gospel version of I Still Haven’t Found What I’m Looking For with the New Voices of Freedom choir.

Bono is staying at guitarist The Edge’s house in Los Angeles that fall.  This is the same house that the Menendez Brothers will murder their Beverly Hills parents in a couple of years later coincidentally, but for now it is base camp for one of the greatest singer-guitarist duos in rock history.  Bono wakes up one morning in mid-November with a melody and some words running through his head – he is stuck on a song title: Prisoner of Love.  It just so happens that he has a lunch date with one of his idols and biggest influences that day, Bob Dylan.

He sheepishly lays out the song idea and some of the lyrics he’s come up with for Bob on the off-chance that perhaps it was already a Dylan song that Bono subconsciously rewrote in his own head.  Dylan says no, it wasn’t his song, and he agrees to work with Bono to write it and even lay down a vocal track.  Dylan joins u2 back in Sun Studios in Memphis to record the song only it’s no longer called Prisoner of Love, it is now called Love Rescue Me.  Some of the original lyrics don’t make it into the final version although they are still printed in the liner notes on the album’s inside jacket.

“Cowboy” Jack Clements, the original engineer who worked with Carl Perkins, Jerry Lee Lewis and Elvis Presley, is brought in to work on the recording, he breaks out old microphones and mixing equipment that hasn’t seen the light of day since the 1960′s.  The band is in disbelief at their good fortune – they are recording at Sun Studios with Bob Dylan, B.B. King and the legendary Memphis Horns brass section using the original equipment and engineers that laid the very foundation of Rock and Roll.

The six-minute Love Rescue Me, becomes the eleventh track on the new album, now titled Rattle and Hum. that will be released in 1988.  It is accompanied by a feature film that follows the band on their Joshua Tree tour and incorporates both their stage performances and their downtime, which was spent writing and recording around America.  Rattle and Hum is a hit with fans, it sells 14 million copies and hits number one around the world.

But the critics hate it.  The mix of live tracks, covers of classics (like All Along the Watch Tower and Helter Skelter) and originals like Desire and Love Rescue Me is seen as pretentious, unfocused and overly bombastic.  The album suffers both from having to follow the beloved Joshua Tree and from being seen as a companion to the disappointing film, which is also universally panned.

It is not until years later that the music separates itself from the movie and begins to get its due.

***

It is August 13th, 1998 – ten years after the release of Love Rescue Me on U2′s Rattle and Hum.

All is quiet on Lower Market Street in the Northern Ireland town of Omagh.  A stolen maroon Vauxhall Cavalier is driven up the street and parked in front of a clothing shop.  Two men get out of the car and melt into the crowd.  The car is packed with 500 pounds of a fertilizer-based explosive.  There are three bomb threat calls placed to various law enforcement personnel but they end up evacuating the area in front of the Omagh courthouse rather than clearing the area where the car bomb is parked.  At ten minutes after three in the afternoon it explodes, killing 21 people immediately and injuring more than 220 people (eight more will die of their wounds in the hospital).

It is the worst single terrorist atrocity in the history of the conflict.  Protestants are killed in the blast as are Catholics.  A woman pregnant with twins is killed as are six children and two tourists from Spain.  The carnage is inexplicable.  Sinn Fein and the IRA themselves are appalled, they condemn the fringe group – the RIRA – and many believe that the atrocity brings the two sides of the conflict closer to a peaceful resolution, the exact opposite of the attack’s intention.

The world is shocked and the town of Omagh will never be the same.

But out of this tragedy, one man has a vision and an idea to take the horrific event and turn it into something with the power to heal and bring people together.  In October 1998, two months after the bombing, music student Daryl Simpson forms the Omagh Community Youth Choir.  He assembles the choir with both Protestant and Catholic children, some of whom were personally affected by the bombing that summer.  They become a beacon of hope and unity and a symbol for the war-torn region that cooperation is possible between the two sides.

***

It is ten years after the Omagh Community Youth Choir is formed in the wake of the bombing and twenty years after U2 releases Love Rescue Me.

Music producer Mark Johnson is working on an incredible project called Playing For Change that will spawn both a documentary and an album.  Johnson is inspired by the street musicians here in the US and the world musicians around the globe, each so authentic and unique when performing for the love of music on their own.  His idea is to travel around the world sampling their playing and singing in order to incorporate them all together into a greater whole.

He will record singers and guitarists on the streets of New Orleans and Santa Monica.  He will record the Twin Eagles Drum Group, a Zuni, New Mexico-based Native American organization with roots that stretch back 60,000 years.  He will record string instrumentalists in Russia and vocalists in Africa and the Netherlands.  Singers and players from all regions of the world are recorded alone in their local environments but brought together through the genius of Mark Johnson and his project.

The resulting album, Playing For Change, is a masterpiece of collaboration.  The opening track, a world music version of Ben E. King’s Stand By Me, features 35 different musicians, none of whom had ever met each other, playing in perfect harmony and syncopation.  On the album there is a cover version of the classic protest anthem Biko, there is also a version of Bob Marley’s War/No More Trouble that features musicians from around the world and includes vocals by Bono himself.

But the most beautiful track on the entire Playing For Change album is the Omagh Community Youth Choir’s version of U2′s Love Rescue Me.  It tranforms from roots-rock, Dylanesque dirge to angelic hymnal in the voices of the kids from Omagh.  Daryl Simpson accompanies his choir on piano as they elevate Bono and Bob Dylan’s Love Rescue Me to something much bigger – something somehow greater – than what the rockers had originally intended two decades ago.  I don’t know how Playing For Change’s Mark Johnson came across the choir or chose their version of this song for inclusion, but it becomes the standout track upon the very first listen.

And so a song inspired by the teenaged Bono listening to Bob Dylan in his bedroom in Northern Dublin became a recording between the men at the legendary Sun Studios in the American Rock and Roll heartland.  And this song, in turn, became part of the healing process for a community that has learned to carry on after suffering through the unimaginable together.

And now I’d like to share it with you, in the ethereal iteration performed by the Omagh Community Youth Choir that would eventually appear on Playing For Change.

Merry Christmas, happy holidays and may love rescue you this New Year.

More on the Omagh Bomb Memorial

More on Sun Studios

More on the Playing For Change project

I mean like a legit one, with everyone wearing three thousand dollar suits and stumbling through mountains of cocaine? I mean the old school ones from before Dodd-Frank and the credit crash when they used pick out their own live lobsters from a crystal tank and make them fight each other in a ring on the floor before boiling and eating them. I mean the parties that began at 6pm at Cipriani and ended in the VIP room at the club Marquee (which was itself a giant VIP room during the good old days) and then at one of Amy Sacco’s after-after hours places that were so exclusive you had to show up with the secret password and one of Amy’s baby teeth to get in.

Yeah, me neither. I was never at one of those. I swear.

Those parties are a thing of the past, however, as it turns out that minus the freewheeling, anything goes-mentality and a metric asston of leverage, the business of banking is actually rather moribund and mulit-million dollar compensation packages are in no way guaranteed by mandate by virtue of whose dad was “The Man” at Princeton back in the day.

The Emperor never had any clothes to begin with, just an unholy amount of leverage and the ear of their congressmen. Now that we all know this and have treated their share prices accordingly, the banks have pulled back on the bacchanals quite a bit.

Here’s my friend Kevin Roose at DealBook:

But, mindful of mass layoffs, flagging profits and sustained anger on Main Street, the nation’s largest banks have canceled firm-sponsored celebrations or moved them in-house to avoid the costs and the criticism.

For the fourth year in a row, Goldman Sachs and Morgan Stanley have shelved their official holiday parties. The investment banking divisions of JPMorgan Chase, Citigroup and Bank of America have also decided against them. But groups of employees at all five firms were permitted to hold — and pay for — their own festivities..

Corporate holiday parties, in general, are on the wane. This year, only 74 percent of companies are holding them, down from 95 percent in 2006, according to a survey of 120 companies conducted by Amrop Battalia Winston, an executive search firm.

Yeah, for some reason, it’s not quite as “festive” when you’re laying off between 2 and 10% of your workforce each year and nobody knows what the business model might look like in a year from now.

Source:

For Wall St.’s Big Players, the Holiday Party Is Still Over (DealBook)

These were the most defining moments for the markets in 2011, as decided by me – someone who’s relentlessly documented every event this year online, on the radio and on television.  I’ve deliberately left out certain major world events like the Fukushima earthquake, the Arab Spring, the death of Bin Laden and the Occupy protest movement as I felt that they were not specific to the market even though they were impactful to some degree. – JB

10.  David Einhorn Savages Green Mountain – In mid-October, the hedge fund manager took on one of the hottest stocks in the market, releasing a 110-slide presentation on why Green Mountain Coffee Roasters was his newest short position.  Einhorn, known for his very public takedowns of Lehman Brothers and Allied World in the past, laid out a multi-pronged thesis ranging from an overly promotional management team, mysterious transfers of stale inventory, bizarre accounting practices and a looming patent expiration that would lead to a flood of competition.  Shareholders sold first and asked questions later – the stock was decimated, losing 30 points, dropping from 93 to 64 within a week and a half.  On November 9th, Green Mountain reported a massive earnings disappointment and the stock promptly dropped another 30% after hours.  He may have seen his deal to buy the NY Mets slip through his fingers, but in the battle of Green Mountain, it’s advantage: Einhorn for sure.

9.  Muddy Waters Slams Sino-Forest – On June 2nd, there was a massive sell-off in shares of Canadian company Sino Forest, a timber concern with it’s assets in China.  Sino Forest had become the latest quarry of noted short-seller and research analyst Carson Block of Muddy Waters.  Block released a blockbuster strong sell rating on Sino essentially alleging that the forests the company claimed ownership of simply didn’t exist – a shocking allegation given the size of the company and the pedigree of its largest shareholders (hedgie John Paulson was on the hook for a big chunk of stock, as were BlackRock, Hartford and Vanguard).  The Toronto Stock Exchange promptly suspended trading.  By year end the stock would practically disappear, wrecking everything in it’s path down the hill.  The company is on the verge of default as of this writing having just missed the deadline to file it’s 3rd quarter financials.  There were many Chinese frauds uncovered and busted on Western markets in 2011 but nothing even came close to the spectacle of the Sino Forest fraud.

8.  Raj Rajaratnam Convicted – As the proverbial big fish stemming from a massive investigation into hedge fund insider trading, Raj Rajaratnam had become the focal point of law enforcement’s desire to score a big win.  Raj was a billionaire hedge fund manager with ties throughout the industry and hooks into Fortune 100 companies from coast to coast; it is safe to say he is the highest profile Wall Street figure to be tried in decades.  On May 11, a federal jury hands the Feds exactly what they were looking for: a conviction on all fourteen counts, including conspiracy and fraud, in a lower Manhattan courtroom.  Raj will eventually be sentenced to fourteen years and ordered to pay a $92.8 million fine to the SEC.  The traditional hedge fund research methods and intelligence network will never be the same again.

7.  Silver Bulls Crushed at the Hunt Brothers High – In late 1979, the Hunt Brothers famously attempted to corner the market in silver and eventually drove the price up to an all-time high of $48.70 per ounce by early 1980.  And then a cascade of selling and margin calls knocked the precious metal (and its speculators) back into the stone age.  The fabled Hunt Brothers High stood for thirty years, but as silver began to rally through 30 and then 40, it became obvious that it could serve as a magnet.  Unfortunately for silver bulls, that old high also served as massive resistance.  On April 26th, silver printed within pennies of that historic high and then promptly was crushed by 30% within 10 days back down to $32.  Trend followers and those betting on “the big breakout” were hit so hard and so fast, they could barely even speak.  It was reminder to investors that commodities are not stocks, their only inherent value is the price the next person is willing to pay.

6.  MF Global Files for Bankruptcy – For months, shares of MF Global were trading as though something was wrong but market participants just chalked it up to the general fear surrounding financial stocks, particularly those with brokerage operations.  Then, in October, CEO Jon Corzine admits a $187 million trading loss from speculations he was making in European debt.  Corzine had gone from golden boy to rogue trader overnight with that bomshell; just two months prior, MF had done a bond offering with a provision guaranteeing extra income if the company lost the former CEO of Goldman Sachs to a role in the President’s cabinet.  On Halloween, after a frantic week of trying to save itself, MF Global files Chapter 11.  It is a $41 billion bankruptcy – the eight largest in US history.

5.  Bank of America in Free Fall – Of all the spectacular crashing and burning of 2011, nothing even comes close to the destruction in shares of Bank of America, a company that lost almost two thirds of its market capitalization over the last 12 months.  Every effort was made by management to please the investor base, from asset sales to mass layoff announcements (40,000!) to open conference calls hosted by mutual fund managers who were in disbelief at how low the stock was sinking with every passing day.  BAC dropped from a January high of 15 to 10 by August – but it was just getting warmed up; from August to November it was cut in half again, trading to as low as 5.08 by Thanksgiving and wrecking the funds of John Paulson as well as the careers of several boldfaced mutual fund managers like Bill Miller and Bruce Berkowitz.

4.  Gold Goes Parabolic – This summer, when the rubber began hitting the road in terms of borrowing costs for sovereigns like Italy, gold finally lived up to the safe haven hype.  From July 1st through the middle of August, Gold ran an incredible $400 an ounce, from 1440 to over 1840 – a staggering 30% in six weeks.  This before ultimately succumbing to having become a “source of funds” for hedge funds with no choice but to sell assets.  As of this writing, gold has notched a 13.7% year-to-date gain, besting virtually any other asset class one could invest in.

3.  Greek PM Calls for Referendum – Markets around the world had been smashed beginning in August and culminating with the early October lows.  As one of the worst-run and most highly indebted of the 17-nation Euro Zone, Greece was the main focus of the turmoil.  It was postulated that if Greece couldn’t be saved, all would be lost for both similarly-indebted countries (like Italy and Spain) as well as countries with high exposure to Greek bonds (like France).  But all of a sudden, the rhetoric coming from Germany and Brussels began to get more constructive.  US stocks staged a furious rally of almost 20 % from trough to peak into the end of October.  The Euro ministers had come to an agreement on how to save Greece and for the first time in months, there was hope.  And then on November 1st, the embattled Greek prime minister George Papandreou announces that he will not agree to the proscribed measures from the Euro Zone without first taking it to the people for a national referendum.  Ministers in Europe who thought they finally had a resolution were indescribably shocked, markets from China to the US tumbled as investors began to distrust everything and everyone.  Papandreou will eventually be thrown out of office for this gamble although the underlying issues still remain.

2.  S&P Downgrades the United States – Yes, Congress ultimately came to an agreement to put off any real decision in time for the normally automatic debt ceiling “deadline”. But it was too late, Standard & Poors looked at the political trauma (and it’s own reputation of always being behind the curve) and decided to act.  On August 5th, S&P downgraded the Untied States from AAA to AA+ for the first time in history.  The result was hilarious, US Treasury bonds surged higher as investors dumped almost everything else and bought US bonds in a frenzy of safety-seeking.

1.  Steve Jobs Resigns as CEO of Apple – We knew that one day, the cancer in Steve Jobs’s liver would force him out, but we were never truly prepared for the announcement to come.  After fourteen years at the helm of Apple and one of the most miraculous corporate turnarounds in history, on August 24th Jobs told Apple that he could no longer serve the company in his condition.  The stock sold off that night on the news but quickly recovered, Steve would live to see Apple trade at a new all-time high and eventually become the most valuable company in America.  On October 5th, Steve Jobs passes away and the world both mourns his passing and celebrates the amazing revolution he’s sparked from a garage in Los Altos, California.

You can’t even buy the stock yet but the analysts at Sterne Agee are wasting no time in telling you not to ahead of the company’s massive IPO (coming Thursday).

John Melloy shot this over to me and I just had to share it, you almost never see something like this…

Ahead of Zynga’s (ZNGA) expected IPO pricing this

week in a range of $8.50-$10.00 per share, we are initiating coverage

with an Underperform rating and target price of $7, based on a healthy

11x EV to EBITDA (2012E) multiple, which is a 30% premium to its

peer group. While we believe in the potential for social games, we

think Zynga’s growth is slowing even faster than what is obvious at

first, its margins are under pressure, and free cash flow has been

declining recently; thus we believe the implied valuation in the IPO is

not justified.

The Bottom Line. Farmville, the company’s flagship title which

helped generate hyper-growth in the past, has peaked and the other

titles are coming on line at a much slower pace. Cityville, currently

Zynga’s best title in terms of traffic, is tracking, by our estimates, 50%

below Farmville at the same point in its history. Castleville (released

11/15), the new title in the “Ville” series, is averaging DAUs 50%

below Cityville at the same point. The picture with Mafia Wars 2

(released in early October this year) appears quite dismal with DAUs

having already declined to less than 1M from 28M reached 2 weeks

after launch. This also implies, perhaps, that sequels in social gaming

are not a guaranteed success.

Not a pretty take on a company seeking an initial valuation of $9 billion.

Another year in the books and I’ve updated my Investing Fads and Themes by Year guide accordingly.  It begins with 1996 because that was my first summer working on The Street and my earliest exposure to the market.

So what was 2011 about?

Well, it was basically about Risk-On Risk-Off.  Stocks were the most correlated they’d been in 80 years and by the fall it was shown that 84% of S&P 500 stocks were moving in the same direction as the S&P 500 each day.

This meant that investors could skip out on doing intense stock-specific research and just focus on getting the market right.  In order to get the market right, one needed to pay closer attention to the euro versus the dollar more than anything else.  When the euro was in favor, so were stocks and risk assets, when the dollar was in favor, stocks and commodities were schmeissed almost universally.

This seesaw arrangement meant paying attention to the headlines coming out of Europe – and none were more important than those mentioning Angela Merkel.  As the chancellor of the Euro’s strongest economy (and shotcaller), Merkel has held the key to whether or not Europe’s monetary union and common currenc y would survive.  We still don’t know as of this posting.

Dividend stocks were all the rage this year as interest rates remained low and bond yields remained paltry.  This was easy to foresee and many of us positioned in the highest-yielding and most consistently paying sectors.  The big winners this year were those who overweighted Healthcare, Telecommunications, Consumer Staples and Utilities.

Social media IPOs were also a major trend this year – on the bull side and the bear side.  I correctly predicted this at the end of 2010 and I was not disappointed with the hype and headlines of these deals.  LinkedIn, Groupon, Pandora and Zynga were the most talked about deals of 2011.  Spectacular opening valuations gave way to gravity for many of them but the incessant interest in them has not yet abated.  Besides, Facebook and Twitter are still waiting in the wings.

Anyway, here is my updated guide to the Investing Fads and Themes by Year, 1996 – 2010.  Enjoy!

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Tags: $LNKD $GRPN $ZNGA $P

More Bogus Claims About College Debt

I’m getting tired of hearing sick old men say the kids should just take any job available and “deal with it.”  I saw the mentally ill Ben Stein take off on a Saturday to spread this f***ed up message on CNN yesterday to anyone who would listen.  Stein recommends that college graduates do the jobs illegal immigrants do because “there is dignity in work.”  The chutzpah here is unbelievable.  Stein’s last paying gig was an endorsement of a “free” credit report that was neither a report (it was an ongoing service) nor was it free.

But back to Stein’s “dignity in work” nonsense…

As if a kid carrying $30,000 in college debt could sell oranges on the freeway and pay that off.  The fact is, the student loan debt bubble and increasingly impervious tuition costs in this country are a root cause of the general sickness in our economy.  Enslaving kids with higher and higher levels of debt because college costs only go in one direction regardless of the economy is one of the things we’ve allowed to go on for too long as a society.

By labeling the younger generations as “entitled,” it becomes easier to ignore the guilt and the shame.  That’s why those who’ve already been through the obstacle course keep doing it, in print and on television. That’s why when an army goes to war, one of the first things the command does is come up with a racial slur for the enemy. Easier to kill them when you’re referring to them as something less than human.

And  just who is the supposed “entitled generation” in real life, those who did what they were told and who now seek opportunity where none exists through no fault of their own?  Or those who have already had opportunity and who now exploit near-free labor, desperation and onerous interest rates from those who come after them?

Here’s one take, from a blogger at Knowledge and Confusion:

The younger generation in America has been labeled by the older as “entitled.” However, anyone who is paying attention can see that this is not the case as twenty and thirty-somethings work much harder for much less than the generations of the last century were expected to. Particularly more so than those who grew up during America’s golden age between the 1950′s and late 1970′s when jobs were plentiful, union membership was high, and America had the largest middle class in the entire world…

Most of us college grads do not feel that we are above doing menial work. Our bitterness comes from the fact that that the  menial jobs that are available to us do not allow for us to make our student loan payments and pay our other bills at the same time.  I and almost every college grad I have spoken to says that they would be happy to flip burgers if their student loan debt was forgiven. Because then we could afford to support ourselves. We see large corporate banks getting bailed out of their debt by the US government and while we cannot write off student loan debt in even partial bankruptcy. Unfortunately, in this pseudo-capitalist system we see socialist policies for corporations and capitalist policies for individuals.

Let’s knock off this bullsh*t about how anyone out of college who wants to can just start a successful business out of thin air or can simply pick strawberries in the field to pay off their loans, rent an apartment and afford mass transit to get back and forth, while still having a dollar or two to feed themselves.  It’s a goddamn lie and the sick old men know it.

The Myth of the Entitlement Generation (Knowledge and Confusion)

UPDATED:  Here are some charts on the cost of school and tuition – the idea that every single thing under the sun is subject to the normal vicissitudes of inflation/deflation save for college is a joke and it’s crushing our youngsters.  Consider that wages overall have stagnated for a decade while college enrollment has soared at the same time and you come to the only conclusion you can – it’s all broken.