This week, the two biggest stories of the past few weeks, Goldman Sachs (NYSE:GS) vs. the SEC and the precarious situation in the eurozone, continued to unfold. Meanwhile, all eyes are still on Warren Buffett's every move and social media giants Facebook and MySpace face scrutiny about the information they provide to adverstisers.
The $1 Billion Question
While it seems every analyst is predicting a different outcome in terms of the SEC's fraud lawsuit against Goldman Sachs, the latest best guess is that a settlement will be reached. The number being batted around is a cool $1 billion – apparently that would be sufficient to satisfy the masses, and it's in line with the $875 million precedent set by the SEC case (also concerning collateralized debt obligations or CDOs) against 10 firms when the technology bubble burst back in the early 2000s. (Learn more about the tech bubble in the Greatest Market Crashes Tutorial.)

Speaking of CDOs, the Federal Deposit Insurance Corporation (FDIC) is dealing with more than 250 of the troublesome securities, which were purchased by small institutions that failed. The Wall Street Journal reported last week that the FDIC isn't taking this flood of toxic assets lying down – it's weighing the possibility of jumping on the lawsuit bandwagon and suing the financial firms that allegedly misrepresented the value of the CDOs. (Learn more about the role CDOs played in recent financial crisis in Collateralized Debt Obligations: From Boon To Burden.)

It's a "Dumb" Deal
The Oracle of Omaha has been cleaning his investment house at Berkshire Hathaway (NYSE:BRK.A). In the first quarter, the firm sold all holdings in WellPoint Inc. (NYSE:WLP), UnitedHealth Group (NYSE:UNH) and SunTrust Banks (NYSE:STI). Berkshire also reduced its stake in Johnson & Johnson (NYSE:JNJ), Procter & Gamble (NYSE:PG) and ConocoPhillips (NYSE:COP). But the big story was Berkshire's 23% cut to its Kraft (NYSE:KFT) holdings.

The share sales were intended to raise cash for the purchase of Burlington Northern Santa Fe, but Buffett's open dispute with Kraft makes it hard to believe that he doesn't just plain want out of the stock. Buffett had very vocally disapproved of Kraft's pursuit of Cadbury (OTC:CDSCY), and the sale of two of the company's pizza brands to Nestle (OTC:NSRGY); he was widely quoted as saying that "the odds are that both deals are dumb" at Berkshire's annual shareholder meeting earlier this month. (Find out how to track what Buffett's been doing in Build A Baby Berkshire.)

Spain's Game Plan
In an attempt to avoid a Greece-like bailout, Spain's prime minister José Luis Rodríguez Zapatero (say that name three times fast!) announced spending cuts of $US18 billion and told the wealthy of the country to expect an income tax hike, the New York Times reported this week.

As for Greece, it has now received the first 14.5 billion euros of bailout loans from the eurozone countries. That sum is meant to cover a nine billion euro bond due to mature May 22. (For more on what's been happening in Greece, read Greece: The Worst-Case Scenario.)

Social Media Sells You Out
Everyone knows advertising companies are privy to the information you put online – everyone knows, but no one really wants to think about it. Have you ever noticed that when you are logged into your Gmail account reading an email about a party this weekend, the ads at the top all change to party supply stores, the best places to party, and catering companies to hire for your next party?

This is nothing new, and auto-scanning email for keywords is pretty tame, especially compared to the accusations against Facebook, MySpace and other social networking sites that they've provided information to advertising companies that could be used to find consumers' names and other personal details. Despite promises to the contrary, it appears that Facebook and MySpace advertisers may have been privy to information that could allow them to look up individual profiles and access such information as real names, ages, hometowns and occupations, according to a May 21 story in the Wall Street Journal.

As of late last week, both Facebook and MySpace had announced moves to update privacy features.

The Bottom Line
The news never sleeps, especially when Warren Buffett is involved in the story. Look for the Goldman Sachs and eurozone stories to unfold and heavy news coverage to continue in the coming weeks … and probably months.

If you missed last week's news, check out Water Cooler Finance: Greece Attacks And Google Hacks.

Related Articles
  1. Economics

    Long-Term Investing Impact of the Paris Attacks

    We share some insights on how the recent terrorist attacks in Paris could impact the economy and markets going forward.
  2. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  3. Home & Auto

    5 Mistakes That Make House Flipping A Flop

    If you're just looking to get rich quick, you could end up in the poorhouse.
  4. Entrepreneurship

    Top 10 Features Of a Profitable Rental Property

    Find out which factors you should weigh when searching for income-producing real estate.
  5. Bonds & Fixed Income

    Credit Default Swaps: An Introduction

    This derivative can help manage portfolio risk, but it isn't a simple vehicle.
  6. Insurance

    How the Federal Deposit Insurance Corporation (FDIC) Works

    Learn more about the Federal Deposit Insurance Corporation (FDIC) and what happens to your deposits over $250,000 if a member bank fails.
  7. Professionals

    7 Careers That No Longer Exist

    Learn how technology and innovation has led to the near-extinction and elimination of seven careers that once employed hundreds of thousands of people.
  8. Forex Strategies

    3 Simple Strategies For Euro Traders

    Euro traders can execute three simple but effective strategies that take advantage of repeating price action.
  9. Economics

    Federal Deposit Insurance Corporation (FDIC)

    The Federal Deposit Insurance Corporation (FDIC) insures deposits in banks and thrift institutions.
  10. Wealth Management

    Warren Buffet’s Frugal, So Why Aren’t You?

    Aside from his renowned investing prowess, Buffet is legendarily frugal.
  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  2. Are 401ks FDIC insured?

    The Federal Deposit Insurance Corporation (FDIC) works as a protector for customers when banks and financial institutions ... Read Full Answer >>
  3. Does the FDIC cover identity theft?

    When a third party gains access to your bank account and conducts transactions without your consent, the FDIC does not have ... Read Full Answer >>
  4. Does the FDIC cover credit unions?

    The Federal Deposit Insurance Corporation (FDIC) does not cover credit unions. The FDIC only insures deposits in banks and ... Read Full Answer >>
  5. Does the FDIC cover business accounts?

    Bank deposits owned by corporations, partnerships, limited liability companies (LLCs), and unincorporated associations, including ... Read Full Answer >>
  6. Do penny stocks trade after hours?

    Penny stocks are common shares of public companies that trade at a low price per share. These companies are normally small, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center