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Reggie Middleton: Double-Bubble forming in Vulture Financing and Facebook's IPO

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Published on May 4, 2012

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Welcome to Capital Account. We've seen the European Central Bank try and prop up sinking assets in a Eurozone engulfed by a tidal wave of debt. However, our next guest, Reggie Middleton, says that vultures scouring the continent for distressed assets are actually causing a micro-bubble in these same scraps. How big could this bubble get, and what could eventually pop it?

And while we are on the subject of bubbles, let's not forget Facebook's impending IPO. The company is targeting a valuation near 100 billion dollars in what would be a record debut for an American company. At nearly 100 billion dollars, it would rival the market values of companies like Amazon and McDonalds. We ask Reggie Middleton if he thinks this is a bubble in the making, or fair value for a booming industry of social networking and ad-driven revenue models.

Also, in the US, the jobs reports for April shows unemployment ticking down a notch to 8.1 percent, but Reggie Middleton will tell us why anyone enthusiastic about the US jobs situation is smoking something called "Hopium." The meager 115 thousand jobs the labor department says the economy added is just the start.

And the jobs numbers have people again asking if the Fed is going to act, and how? You just can't leave the fed out of any conversation anymore it seems. In fact, our own guest Jim Grant was invited on Bloomberg yesterday to give his own, rather colorful, view of the Federal Reserve. He borrowed the metaphor developed by Matt Taibbi and used often by Reggie Middleton, only instead of mentioning Goldman Sachs, the topic of conversation was the Federal Reserve. He said that the Federal Reserve is "the squid of all squids," and that "They - the vampire squids - have manipulated virtually every single price and valuation in the capital markets. People ought to recognize when they invest that one of the unspoken risks is the risk that this hall of mirrors, this Barnum and Bailey world that the Fed has created for us is going to vanish one day because they will not be able to hold it any more... It's not as if there is nothing to do in investing, but one must always keep in mind that the valuations that we see, that the prices that we watch flicker across the tape are prices that are fundamentally manipulated by these well-intended, dangerous people in Washington called the Federal Reserve".

With the original Squid Hunter, Reggie Middleton, on the show today, it is bound to be a fun Friday!

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