Daily Archives: September 18, 2008

Nicholas Kristof: Need a Job? $17,000 an Hour. No Success Required.

Are you capable of taking a perfectly good 158-year-old company and turning it into dust? If so, then you may not be earning up to your full potential.

You should be raking it in like Richard Fuld, the longtime chief of Lehman Brothers. He took home nearly half-a-billion dollars in total compensation between 1993 and 2007.

Last year, Mr. Fuld earned about $45 million, according to the calculations of Equilar, an executive pay research company. That amounts to roughly $17,000 an hour to obliterate a firm. If you’re willing to drive a company into the ground for less, apply by calling Lehman Brothers at (212) 526-7000.

Oh, nevermind.

I’m delighted to announce that Mr. Fuld (who continues to lead Lehman since it entered bankruptcy proceedings this week) is the winner of my annual Michael Eisner Award for corporate rapacity and poor corporate governance. The award honors the pioneering achievements in this field of Mr. Eisner, the former Walt Disney chief.

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Posted in * Economics, Politics, Economy, Stock Market

Sales up, prices down as foreclosures flood Southern California home market

So many foreclosed homes are for sale in Southern California that these distressed properties will soon dominate the market, forcing prices down even further.

About half the homes sold in the region in August had been repossessed, according to figures released Wednesday by the real estate tracking service MDA DataQuick, driving prices down 34% over the previous year to a median of $330,000….

“We’ll certainly see more than 50% foreclosures,” said Sean O’Toole, chief executive of ForeclosureRadar, a seller of default data.

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Posted in * Economics, Politics, Economy, Housing/Real Estate Market

Sarah Hey: Scoring the Bishops’ Actions at this HOB Meeting

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Posted in * Anglican - Episcopal, Episcopal Church (TEC), TEC Bishops, TEC Conflicts

Kite Surfing in a Hurricane

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Posted in * General Interest, Weather

Galveston residents anxious to see what’s left

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Posted in * General Interest, Weather

A Local Newspaper Editorial: Good for McCain, and Obama

John McCain and Barack Obama disagree on a lot. Lately, they’ve been especially disagreeable in their disagreements over who deserves the most blame for the presidential campaign’s ongoing descent into the trivial and the downright misleading. But they rightly concur that American institutions of higher learning should allow Reserve Officers’ Training Corps programs on campus.

Both White House candidates stated the position last Thursday night during a forum on public service at Columbia University in New York City, a few hours after they made a joint appearance in a 9/11 memorial service at Ground Zero.

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Posted in * Culture-Watch, * Economics, Politics, Education, Military / Armed Forces, US Presidential Election 2008

David Frumm: The Government Helped to Create this Financial Mess

From every side we suddenly hear people calling for more regulation of financial markets. The calamity on Wall Street has brought to public attention the frightening risk-taking of firms like Lehman Brothers, which lent money against assets at a rate of 35 to 1.

Something must be done! The government must put a stop to this!

But in the excitement of scapegoat-hunting, something important is forgotten: Wall Street was doing exactly what the government wanted it to do. Almost all the exotic credit instruments now wreaking havoc trace back to the simplest of all assets: the single-family home.

Insurance giant AIG, for example, held almost $100 billion in mortgage-backed securities when the market began to fall last year — and almost one-third of those securities were based on subprime loans.

The United States takes pride in high home ownership rates. Over the past decades, administrations of both parties encouraged ever looser lending standards in order to push the home ownership rate higher and higher still.

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Posted in * Economics, Politics, Economy, Housing/Real Estate Market, Stock Market

Barry Ritholtz: How SEC Regulatory Exemptions Helped Lead to Collapse

As we learn this morning via Julie Satow of the NY Sun, special exemptions from the SEC are in large part responsible for the huge build up in financial sector leverage over the past 4 years — as well as the massive current unwind

Satow interviews the above quoted former SEC director, and he spits out the blunt truth: The current excess leverage now unwinding was the result of a purposeful SEC exemption given to five firms.

You read that right — the events of the past year are not a mere accident, but are the results of a conscious and willful SEC decision to allow these firms to legally violate existing net capital rules that, in the past 30 years, had limited broker dealers debt-to-net capital ratio to 12-to-1.

Instead, the 2004 exemption — given only to 5 firms — allowed them to lever up 30 and even 40 to 1.

Read it all–you need to click to get the former SEC director quote.

Posted in * Economics, Politics, Economy, Stock Market

The Latest from Intrade on the Race for President


Posted in * Economics, Politics, US Presidential Election 2008

Kai Ryssdal: How'd we get in this mess? A look back

Alan Greenspan, of course, saying in that way he has that he’s going to keep interest rates low as long as it takes. When he gave that congressional testimony five years ago, he was about to lower the Fed short-term interest rate to 1 percent and leave it there for more than a year. That, in and of itself, wasn’t a bad thing. It’s what people did with all that cheap money that’s gotten us into trouble.

They borrowed. They borrowed a lot. And then they got creative, using things like collateralized debt obligations to bundle risky mortgages into something they could sell off in the markets. But when the value of the houses behind those mortgages began dropping? Well, here’s financial analyst Peter Cohan.

PETER COHAN: Nobody knows what’s in these bundles of mortgages. And they have a very, very low value because nobody can open them up and figure out which ones are paying and which ones are not paying. It’s like Superman trying to look inside of a box that’s wrapped in lead. You just can’t see inside.

If there’s one thing we’ve learned over the past year-and-a-half, when the markets don’t know what’s inside. they just stop. They stop lending. They stop buying. Nobody trusts anybody. And, presto, a credit crisis.

There’s an argument to be made — and lots of really smart people have made it — that all those financial innovations, things like CDOs, were inevitable. That once you had basically free money, thanks to Alan Greenspan, and a crowd on Wall Street that’s always looking for an edge, abuses were bound to happen. That what we’ve got here is a failure of regulation.

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Posted in * Economics, Politics, Economy

Abroad, AIG Bailout Is Seen as a Free Market Detour

Is the United States no longer the global beacon of unfettered, free-market capitalism?

In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad.

“I fear the government has passed the point of no return,” said Ron Chernow, a leading American financial historian. “We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams.”

The bailout package for A.I.G., on top of earlier government support for Bear Stearns, Fannie Mae and Freddie Mac, has stunned even European policy makers accustomed to government intervention ”” even as they acknowledge the shock of the collapse of Lehman Brothers.

“For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example,” said Mario Monti, the former antitrust chief at the European Commission. “They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior.”

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Posted in * Economics, Politics, Economy, Stock Market

Anatole Kaletsky: If this new HBOS-Lloyds merger fails, it will take down all Britain's banks

The wonder of financial crises is how events can move straight from impossible to inevitable, without ever passing through improbable.

Two weeks ago nobody would have imagined that, before the end of the month, the Bush Administration would have nationalised the world’s biggest insurance company, that two of the four biggest global investment banks would be out of business and that the US Government would take responsibility for three quarters of the country’s new mortgage loans.

Sadly, the events of the past two weeks may be only the prelude, not the climax, of this amazing crisis. Even the apparent rescue of Halifax Bank of Scotland may result in a bigger crisis, if the drowning HBOS drags down its rescuer, Lloyds TSB. If this happens, every big bank in Britain, except possibly HSBC, will have to be nationalised, Northern Rock-style.

The same would become inevitable in the US if market speculators who have been richly rewarded by the US Government for taking down Fannie Mae, Lehman Brothers and AIG, turn their attention to the next group of stumbling financial institutions in the firing line: Washington Mutual, Wachovia, Bank of America, Morgan Stanley and Citibank. If any of these wounded giants collapses, the others will fall like dominoes and the entire US financial system will have to be nationalised. In a financial crisis, the impossible can become inevitable in one day, as we saw in Britain on Black Wednesday.

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Posted in * Economics, Politics, * International News & Commentary, Economy, England / UK, Housing/Real Estate Market, Stock Market

Anglican Covenant Could Be Operative By May 2009

Adoption of the proposed Anglican Covenant could be completed much sooner than the 10-year time frame mentioned frequently during the Lambeth Conference, according to one of the two Covenant Design Group members from The Episcopal Church.

Basing on submissions received from bishops attending the Lambeth Conference, the Rev. Ephraim Radner predicted that only a small minority of provinces would fail to approve the Covenant. Prof. Radner, who teaches historical theology at Wycliffe College in Toronto, said the Covenant Design Group is scheduled to disband after holding a second meeting sometime after the first of the year. From there, the Covenant is scheduled to be considered by the Anglican Consultative Council (ACC), which meets next May in Jamaica.

Prof. Radner told The Living Church it is not clear whether the ACC would be asked to hold an up-or-down vote on the final language drafted by the Covenant Design Group or whether they would be encouraged to propose amendments before a vote.

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Posted in * Anglican - Episcopal, Anglican Covenant

Visiting Georgia, the Presiding Bishop offers praise

Jefferts Schori described the Georgia Diocese as “healthy” and one that “represents the broad range of the church across the nation.”

“There’s room for everyone who wants to be a part of this body, and I think this diocese is a good example. There is room for people who want to use the 1928 prayer book, and there is room for Integrity,” she said, referring to a national Episcopal group that supports the blessing of same-sex couples and the ordination of people who are openly gay.

“The difficulty can be when one member of the body says another can’t be a member.”

Jefferts Schori briefly addressed the church’s pending lawsuit against Christ Church Savannah, a 275-year-old congregation known as “the mother church of Georgia” that voted in 2007 to leave the Episcopal Church but keep its historic downtown property.

“I’ve heard you say you need to protect the property of the Episcopal Church, that it’s your fiduciary responsibility,” said Robert Lundy, spokesman for the theologically conservative American Anglican Council based in Atlanta. “At what point is it just not worth it to sue people who believe they are Christians just like you do?”

“We’re not suing people because they believe they’re Christians,” Jefferts Schori said. “I lament that, and I would bless that journey. But it’s not my right to send with them the family heritage.”

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Posted in * Anglican - Episcopal, Episcopal Church (TEC), Presiding Bishop

One Frequent Traveller Invents Something to Make Long Layovers Easier

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Posted in * Culture-Watch, Travel