5. Berlusconi Comes BackBentornato, Berlusconi! It's so nice to have you back where you belong. Right here on our 5 Dumbest list, that is. Italy's former prime minister returned to the spotlight last Sunday with a fiery stump speech in Milan announcing his "last great electoral and political battle." Silvio Berlusconi, who was pushed out of office in November 2011 as the country's borrowing rates skyrocketed, promised his supporters sweeping tax cuts and bunga bunga sex parties for all if his center-right wins the election later this month. OK. The billionaire didn't offer voters pro bono bunga bunga. Nevertheless, he did give them a self-described "shock proposal" to scrap outgoing Prime Minister Mario Monti's much-hated levy on primary residences. For the record, a recent survey showed Berlusconi's rhetoric appears to be working. His center-right coalition gained 1.3 percentage points to finish the week at 27.8%, compared with 32.8% for Pier Luigi Bersani's center left, which dropped 1.6 percentage points. On the flip side, Italian stocks, as measured by iShares MSCI Italy ETF, have fallen with the rise of Berlusconi's poll numbers. "I want to help Italy get out of this dark atmosphere the technical tax men have put it in, and in which the tax men of the left will leave it mired," said Berlusconi, deriding both Monti's centrist coalition and his center-left opponents. Monti was quick to hit back, saying Berlusconi "has never kept any of his promises." Meanwhile, Gianfranco Fini, the speaker of the lower house of parliament, tweeted that in his second cabinet meeting, Berlusconi would "decree that everyone wins the lottery." You bet your culo, Gianfranco. Berlusconi has always been a winning ticket for the 5 Dumbest Lab. That's why we are proud to support him in his quest to retake the prime minister's position. Berlusconi is not really campaigning for his old job. If Berlusconi's People of Freedom party wins, that position will go to party Secretary Angelino Alfano. Berlusconi said Sunday he would serve as both economic minister and industry minister in an Alfano administration. "That is, if Angelino Alfano reconfirms his trust in me," Berlusconi laughed about the man who would clearly be his puppet. Don't worry, Angelino. The joke's not on you. It's on the Italian people and most assuredly on German Chancellor Angela Merkel. Although we doubt she is smiling as brightly as we are about Silvio's comeback.
4. Wynn's Easy Win Let's be honest, folks: Did anybody really believe Nevada gaming officials were going to rule against casino mogul Steve Wynn in his fight against his former partner Kazuo Okada? We didn't think so. In perhaps the least surprising decision to come out of Las Vegas since Larry Holmes stopped Gerry Cooney three decades ago, the Nevada Gaming Control Board determined that Okada's allegations against Wynn Resorts ( WYNN) regarding a donation made to the University of Macau by Wynn Macau were unfounded. Additionally, the U.S. District Court of Nevada granted Wynn Resorts' motion to dismiss a shareholder suit action -- yeah, Okada again -- against Wynn and it's board based on the Macau donation, saying there was insufficient legal basis for the case to go forward. Think about it. The guy's last name is Wynn. Did you really think he was going to lose? Not in a million years and certainly not in his own backyard. And those were only two of CEO Steve Wynn's preordained victories this week. He also got the nod from proxy adviser Institutional Shareholder Services, which recommended that Wynn shareholders oust Okada from its board at a special Feb. 22 meeting. Okada was previously deemed persona non grata at the company after former FBI director turned Steve Wynn's personal snoop Louis J. Freeh fingered Okada in a bribery scandal involving Philippine officials. The casino company forcibly redeemed Okada's 20% stake in the company last year for a $1.9 billion promissory note payable in 10 years. "Mr. Okada is an unsuitable person, and we are seeking to remove him from the Board of Directors of Wynn Resorts to protect the interests of the company and our shareholders," the company said in a statement. So after Steve Wynn's trio of triumphs this week, does anybody really believe Okada can score an upset at the upcoming shareholder meeting? Come on. Raise your hands if you think Okada has a shot. Once again, we didn't think so.
3. Herbalife -- Yet Again
Oy gevalt, Herbalife ( HLF)! Give us a break, would you? We swear to you, Dumbest fans. We were all ready to take a breather from the insanity surrounding the beleaguered supplement seller. Seriously, if anybody needs a respite from the trio of hedge fund honchos -- Carl Icahn, Bill Ackman and Dan Loeb -- scrumming over this silly stock it most certainly is us. But then the New York Post jumped into the fray Monday with a report saying Herbalife is the target of a law enforcement investigation and all hell broke loose. Check out this comical chain of events. The Federal Trade Commission, responding to a Freedom of Information Act filing by the New York Post, released documents containing 192 assorted complaints against Herbalife that it received over the past seven years. The Post's story immediately sent the stock down 12% to less than $31. Herbalife, which must have a bad PR SWAT team standing by 24/7, immediately responded by demanding a correction from the Post, claiming "we are unaware of any other regulatory interest and/or investigation." That set off the Federal Trade Commission which backtracked on its verbiage, saying the Post article may have stemmed from the way it clumsily used "boilerplate language" in a letter to the newspaper. Frank Dorman, an agency spokesman, told reporters that the FTC "cannot confirm or deny whether any government agency is investigating Herbalife." Herbalife stock gradually rebounded from its morning selloff as the full story seeped out. Shares of the company finished the day up 44 cents at $35.51. Talk about a wild ride! Mr. Toad has nothing on Herbalife. Heck, a trip down Space Mountain is more serene than a trading day in this stock. Then again, look at the numbers -- and by numbers, we're not referring to the company's sales or earnings -- and it all makes sense. Herbalife is a $4 billion market-cap company with a 97 million share float that trades a whopping 14.6 million shares a day. Slightly over 36% of the stock has been sold short as of mid-January, making it ripe for quick downdrafts and powerful short squeezes higher. Dow component IBM, to pull a stock out of thin air purely for comparison's sake, has a $230 billion market value, 1.3% of its shares sold short, a float of 1.12 billion and daily trading volume averaging 3.2 million shares per day. That's right. IBM gets less than a quarter of the daily action than Herbalife does. And its products probably taste better to boot. Let's be honest. Reality has clearly left this stock. Fundamentals have been replaced by fun and games. And, quite frankly, it's getting tiring even for us.
2. Whitman's Witlessness Meg Whitman's own company is cracking up, but HP's ( HPQ) CEO still feels the need to weigh in on Dell's ( DELL) denouement as a public company. Chutzpah, you have a new poster child. HP aimed a dig at rival Dell just hours after CEO Michael Dell and Silver Lake Partners announced a $24.4 billion deal to take the No. 3 PC maker private. Clearly seeing an opportunity to feed on any uncertainty surrounding the buyout, HP made its own head-scratching overture in the direction of Dell's customers. "Dell has a very tough road ahead," HP said in a statement. "The company faces an extended period of uncertainty and transition that will not be good for its customers." You have got to be kidding us, Meg. How can you, of all people, crow about somebody else's 'uncertainty and transition'? Talk about throwing stones in glass garages. "With a significant debt load, Dell's ability to invest in new products and services will be extremely limited," HP added. "Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity." Look, we won't argue with the logic there. We honestly can't remember the last private equity deal that didn't end up with its principals getting paid off, employees getting laid off and the company being chopped up and sold off. It's a mafia bust out-perpetrated by investment bankers. And it's hard to expect anything different from this Dell deal. (On that note, will somebody please explain to us what Michael Dell needs to do privately that he can't do publicly? Is holding analyst calls and responding to shareholders so onerous that his only solution is to crush the company he founded with high-interest debt? And what on earth is Microsoft doing in this deal other than alienating all the customers it hasn't already ticked off with its Surface release?) All that aside, Meg should not be yapping about Dell cutting its R&D spending when everybody knows HP is cash strapped as a result of years of dumb deals and even dumber CEO selections. Dell's slide has been painful, but at least it hasn't been entirely self-inflicted. HP shares, on the other hand, have tumbled more than 43% over the past 12 months due to its own mismanagement. How bad are things for HP? Check this out. HP's stock popped 3% Tuesday following an article in business Web site Quartz.com about the company's board studying a plan to break up the once-iconic tech company. Tech site All Things D refuted the report. And HP declined to comment. That's right. HP's shareholders are cheering for the company's destruction. The rest of the world is wondering what the heck is going on there. And all the while Meg is dilly-dallying over Dell's LBO. Is it just us, or shouldn't she have something better to do?
1. S&P Gets Popped Better late than never, Holder. U.S. Attorney General Eric Holder shocked the market -- and the 5 Dumbest Lab, too, to be honest -- when he charged Standard & Poor's Monday with knowingly inflating its ratings on the subprime mortgage bonds that helped cause the 2008 financial crisis. The Justice Department alleges the company's desire to bolster its sales "led S&P to downplay and disregard the true extent of the credit risks" posed by the crappy securities it was blessing with triple-A ratings. Shares of S&P parent company McGraw Hill ( MHP) have dropped 19% since the government announced its allegations. Moody's, which saw its shares get equally smacked, and Fitch were not charged, although we can safely assume Holder will eventually turn his attention to S&P's competitors at some point. Come on, folks. It took the guy nearly half a decade to go after S&P for what he calls its "egregious" conduct. We can surely wait another few years for him to seek justice for the rest of the lot. Can't we? S&P typically charged customers $150,000 to rate a subprime mortgage-backed security. If a member of its sales staff lost a lucrative deal to a competitor as a result of a poor rating, then that employee was forced to submit a "lost deal" memo to his or her superiors. Of course, those salespeople -- we won't even bother to call them analysts because they were anything but -- won't be giving back their hefty bonuses for their so-called work during the credit bubble. And since this is a civil, not criminal, crusade, they have no chance of going to jail for their key roles in the country's financial collapse. But the company's current shareholders are obviously paying dearly for S&P's prior misdeeds judging by the stock's reaction. And if acting Associate Attorney General Tony West gets his way, they will surely get hit again. West said Tuesday the company could be liable for $5 billion in penalties "at the very least." For its part, S&P called Holder's lawsuit "meritless," despite a trove of emails clearly proving otherwise. "The fact is that S&P's ratings were based on the same subprime mortgage data available to the rest of the market -- including U.S. government officials who in 2007 publicly stated that problems in the subprime market appeared to be contained," company spokeswoman Catherine Mathis said to Bloomberg. Sing that tune all you want, Mathis, but chances are that defense is going to fail you. Our government's on-the-spot ineptitude is time-honored. Nevertheless, so is its ability to eventually arrive at the right answer, with Holder's lawsuit being the consummate case in point.