I come back to the computer tonight with the market having taken new highs on an MLK shortened trading session - the first open since Caterpillar bombed the SEC reporting system with a $580MM goodwill impairment on it's most recent acquisition. An acquisition barely 6 months old.
The company has gotten so large that half a billion dollars - or 10% of their corporate cash, or 73% of this bond issuance due 2015 - can vanish into the vortex of capitalism and the business media deems no bombastic coverage. Whitewashed.
Empirical evidence is mounting to support a claim that our economy has become so dangerously bifurcated that a social disorder outcome is solely abated by the full faith and credit of the United States for the reason that some of America's largest corporate engines must once again go to the well of accounting shenanigans in order to manage the shock of stifled future revenue and earnings figures. Shareholders' $0.87/sh one-time "noncash" charge comes with no expected cut to the dividend, and one presumes that a dead hooker went out the door with the dirty laundry on this write down. But look at this Wikipedia list of all the other deals CAT has done with increasing frequency. Was she the only one?
At the risk of piecing a strawman, Caterpillar's not alone - I feel Freeport Copper & Gold bought an insurance policy with their December 2012 MMR and PXP acquisitions given the probable decline curves and uncertainty yet surrounding natural gas. And the Freeport team is experienced. Would it really be that novel an idea to look at getting into CCJ's backyard by going for DNN?
The wizard behind the curtain of Western Financialism is the full faith and credit of the United States because these corporations are not being held accountable to the economic destruction they currently create. While the labor force continues to shrink, these companies abuse a toothless regulatory environment therefore driving share price in lieu of real-world fundamentals. They can do this because the US government's transfer payment system is wide open, creating a situation tantamount to bread at the circus, or payoffs for peace. Whitewashed.
Now that the battleship runs flank speed into a 3 month can-kicked US Debt Limit, it is imperative for grass roots industry to kick ass. The Big Boards still lie. Whitewashed.
For there to be out-sized reward there must be risk, but a scandalous deal should not be allowed to go unpunished by the market.