Don't believe the hype

I wish we had a lot more of this from the Wall Street media. CNBC has occasional moments but all too often it's about "easy money" and whatever load of nonsense Wall Street wants to promote. As I've mentioned before, someone is going to tap into investor anger and develop a media outlet that offers information for investors. No matter what everyone may think about the job Wall Street has done the last few years it is in our best interest to correct the wrongs and build a system that brings real benefit beyond a a thin sliver of the elite. Washington helped scrap "traditional" pension plans and they sure as hell better start working on making the system that they created (401K and IRA) work. Meanwhile, don't believe the hype. Read More......

Dublin archbishop gets it

If only the church had a few more leaders who could step up and face reality instead of smearing victims. The Catholic church in Ireland is in a very dangerous moment and making excuses won't help. Dragging out an already bad situation will only lose more support but the church does seem to prefer a narrow minority who sees no wrong. Maybe their goal is to have a small group of purists who will accept anything. In Dublin, at least, the church is moving in the right direction. Why so little elsewhere?

The archbishop — who leads an archdiocese containing more than 1 million of Ireland's 4 million Catholics — said in an Irish Times column that the church in Ireland has lost credibility because of its weak response to 15 years of revelations of chronic child abuse within its ranks.

Martin said it was incomprehensible why other church leaders remained "in denial" following a nine-year investigation by a child abuse commission, which published its devastating 2,600-page report last Wednesday.

He said the report documented beyond any doubt "church institutions where children were placed in the care of people with practically no morals." The last of those workhouses for Ireland's poorest children closed more than a decade ago.

The archbishop also accused the orders of reneging even on the amount promised to the government, which is funding more than euro1.1 billion in payouts to victims and their lawyers. Martin said the church's failure to complete transfers of cash, property and land worth at least euro128 million over the past seven years "is stunning."

"There may have been legal difficulties, but they are really a poor excuse after so many years," he wrote.

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Get rich cheating

Honesty can be so refreshing sometimes. Read More......

Prime loans default as unemployment climbs

It looks as though we will learn in the next quarter or two how accurate the "worst case" bank loss forecasts really were. If history is a guide, they will be wrong again and the banks will need to raise even more capital. Just because the banks and their apologists say it's over doesn't mean that it's over. Overstating and distorting the truth is what they've been doing since the bubble burst. None of them can live with the truth because they might have to face the fact that they're not as clever as they think they are. Either that or those in the government would have to admit that they've been duped over and over and over. NY Times:

From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

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Nasty religious right pastor arrested for stealing nearly $300,000

He said he was breaking away from the Episcopal Church because the church was too pro-gay. In fact, it now appears he left in order to hide his embezzlement of somewhere between $300,000 and $400,000.

The conservative Colorado Springs pastor who broke away from the Episcopal Church to form a new Anglican congregation in May 2007 now is accused of stealing $291,000 from Grace Church and St. Stephen's Parish....

When [Don] Armstrong left the Episcopal Church, he said the split was over theological differences, such as his opposition to gay marriage and the church's ordination of openly gay clergy.

But Colorado Episcopal Diocese officials countered that they believed Armstrong, who had been Grace's pastor for 20 years, had left to escape reckoning for embezzlement uncovered by diocesan officials. The diocese notified police of its suspicions in May 2007.

In fall 2007, an Ecclesiastical Court in Denver found Armstrong guilty of financial and pastoral misconduct that included theft of almost $400,000.

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Paulson didn't understand complex securities

And why would he? So what if that's what plumped up his fat bonus money while at Goldman Sachs. Heck, I doubt anyone on his team ever could have figured out this market either. Why would they even bother to have anyone around with such knowledge? The Paulson imagine repair tour may have hit a roadblock. The Atlantic:

I'd like to offer a bit of analysis, but all I've got is bewilderment. The reason I find the revolving door between Wall St. and Washington somewhat acceptable is that I think it's important that those who govern Wall Street understand it. But Paulson, by his own admission, didn't really. Think about this: A guy whose $46 million compensation package was made possible by leaving during Goldman's mortgage-security boom "was not paying much attention" to the mortgage-security boom! I don't know if Paulson is fibbing, or if mortgage-securities were such a specialized and esoteric money machine that basically nobody understood what was going on, but either way, this seems devastating.

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Still not sure what the Obama administration's position on DADT is. But, we'll know next month if they're defending DOMA.

Some babble from the Chairman of the Joint Chiefs on "Don't Ask Don't Tell" yesterday on "This Week." I guess we should be comforted to know the military will follow the law if it changes:


In his weekly column on the Sunday shows, Jason Linkins deconstucted the Mullins interview for us:

What about Don't Ask Don't Tell? Mullen hems and haws on whether it should be tossed. The force is "under stress" at the moment, and he wouldn't want to add to that. But the military is always under a certain amount of stress. And let's face it, gays and lesbians are ALREADY SERVING IN THE MILITARY. They just do so whilst playing this parlor room game of looking the other way and pretending they aren't who they are. I'd prefer an all-hands-on-deck approach, and I certainly don't think that discharging another gay translator is going to keep us safer. The rule ought to be done away with. If this is truly the best military force that Mullen has ever commanded, they can handle it.

The Obama administration has done a very good job handling so many issues. Clearly, when the President makes a decision, he'll stand by it. But one of my friends captured their handling of gay issues in one word: amateurish. And, it's true. Most of us were willing to give the administration some time to save the economy and end the wars. But, they've brought the scrutiny about gay issues on themselves. We need some leadership here.

Pretty soon, we'll really know where this administration stands. A response is due on GLAD's lawsuit against Section 3 of DOMA by the end of June. Interesting that the defendant is the Office of Personnel Management, which is led by one of Obama's openly gay appointees, John Berry.

The administration will have to decide whether to defend the constitutionality of that law. This is going to be a seminal decision by the Obama administration, which is under no obligation to defend this particular law (hell, the Bush administration felt no obligation to obey any law). As Paul Sousa, who is leading a grassroots effort to convince Obama not to flip-flop on DOMA, noted:

A President has the authority to not defend a Congressional law that is unconstitutional on its face. Past Presidents have exercised this right ranging from Ronald Reagan in the case of INS v. Chadha (1983) to George Bush Sr. in Metro Broadcasting v. Federal Communications Commission (1990) and Bill Clinton in Dickerson v. United States (2000). There is no clearer example of a blatantly unconstitutional law than DOMA, which President Obama himself has called an "abhorrent law," and said that its repeal is "essential."

If DOMA is truly abhorrent, it shouldn't be defended in the name of Barack Obama. And our friends in the White House should know that, come this June, the statement we want from Obama is that he's not defending DOMA in the courts. Absent that, don't even bother proclaiming June "Gay Pride Month." It won't matter if you flip flop on DOMA.

Someone is giving this president very bad advice on gay issues. We need to see the Barack Obama of the campaign again -- and he needs to shut down the person or people giving him outdated advice. It's 2009, not 1993 or even 2004. It really is okay for our President to be in favor of civil rights for all Americas. Read More......

Monday Morning Open Thread

Good morning.

It's Memorial Day, 2009. The president is meeting with Gold Star Families at the White House this morning. That's a group to whom we all owe a huge debt. Someone in their family has made the ultimate sacrifice for this country. My grandmother was a Gold Star Mother. She lost her son, for whom I'm named, in World War II.

The North Koreans sure made this slow news weekend a lot more interesting -- and not in a good way. The President issued a statement at 2:10 a.m., which reads in part:

By acting in blatant defiance of the United Nations Security Council, North Korea is directly and recklessly challenging the international community. North Korea's behavior increases tensions and undermines stability in Northeast Asia. Such provocations will only serve to deepen North Korea⿿s isolation. It will not find international acceptance unless it abandons its pursuit of weapons of mass destruction and their means of delivery.

Not quite sure North Korea listens to anybody these days.

Let's roll. Read More......

Morgan Stanley to pay higher salaries

Their spin on this compensation change is that they are reducing the heavy bonus incentives so that bankers do not make poor, short term decisions in order to boost the much-loved bonus but this still misses the point. Across the board this industry continues to pay too much. The numbers are well above other industries and for what? Have we missed their brilliance? Is it hiding under a rock or is that where they left their ethics? Trimming the reliance on fat bonuses is great but increasing salaries? Sorry but moving sideways is not the answer. If anything, Wall Street compensation should be less than other industries until they figure out a way to provide profits instead of losses.

Marketwatch:

Morgan Stanley plans to raise the base salaries of its top executives to reduce its emphasis on bonuses and create a pay program balanced among fixed, short-term and long-term compensation, the bank said in a Securities and Exchange Commission filing.

The move reflects acknowledgment by Morgan Stanley and other Wall Street firms that their compensation structure was a factor in creating the financial crisis, The Wall Street Journal reported. The potential for big bonuses at a given year's end led traders and other employees to make riskier bets to maximize short-term profits.

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Royal Bank of Scotland in another payout fight

Compared to a year ago, the new plans sound reasonable. The general framework which is based on long term success makes perfect sense. The problem today is that being reasonable wasn't good enough at the end of the year for the banksters. Despite record losses last year they still paid out billions and justified their bloated pay plans. Politicians on both sides of the Atlantic - always afraid of their own shadows - went along with it. Sure, they complained but besides that they did very little. You'd almost not even know that in many cases the government is a majority shareholder or at a minimum at substantial minority. Ownership gives you power, in theory. If not, time to change the rules to reflect this position.

None of this gives an impression of a government interested in challenging the authority of the banks. The Guardian:

The latest controversy follows the award of shares worth £5m to four RBS bankers last week. The largest award was to Ellen Alemany, who runs the bank's US business and was given almost 6m shares, worth £2.4m based on Friday's closing price of 41p. Three other bankers had awards of about 1.8m shares each, worth about £750,000 at current share prices.

The shares were awarded during an ongoing review of the pay structure for Hester, parachuted in as chief executive when Sir Fred Goodwin was ousted last year. Goodwin's pension of £700,000 a year continues to cause controversy.

City institutions being consulted about the scheme for Hester, who earns £1.2m a year, are determined that strict performance criteria are attached. One investor said: "People are not entirely happy [about the deal for Hester] and have asked them to refine it. Its performance criteria are not sufficiently stretching. They have been told to think again."

Yes, think again. Nothing suggests much of a change in the attitudes of the bankers and they won't until they are forced to change. There remains plenty of people who are willing and eager to step in and step up so let the bankers complain and leave. That's the way the system works. Regardless of the cries of disaster from the banksters, we'll be just fine. Read More......

Berlusconi talks of "father-daughter" relationship with 18 year old model

Creepier by the minute. Even his story about knowing the young model via her parents sounds suspicious. This guy needs some serious psychological help.

But Letizia's former boyfriend, Gino Flaminio, 22, told La Repubblica newspaper yesterday that "Noemi's parents have nothing to do with this, the link was just with her". Letizia's father challenged his version of events as "gravely defamatory, because it attributes to Noemi things that have never been done, said or thought," and said he would take legal action.

After Berlusconi was photographed last month attending Letizia's 18th birthday party outside Naples, his wife said she intended to divorce him, accusing him of "frequenting minors".

Flaminio claimed yesterday that the prime minister had been passed Letizia's photographs by Emilio Fede, a newsreader on one of his television channels.

Flaminio claimed that Berlusconi tele–phoned Letizia on numerous occasions, complimenting her on her "angelic face", and developing a "father-daughter like relationship" with her, before flying her on a private jet to his Sardinian villa over the New Year period, where she joined "30 to 40" other young female guests who were put up in bungalows.

Ah yes, the daughter that he never had, except that he does already have three daughters. Read More......