After months of secretly working with the FBI, Bernard Madoff's right-hand man emerged in federal court on Tuesday and pleaded guilty to conspiracy and other charges, contradicting claims by the disgraced financier that he acted alone.
Now if only we can jail the bankers being paid to fraudulently hide junk assets on their balance sheets. Nah, forget that, regulators would rather just ask them to be more discreet when cashing their chaecks:
Bonuses are already set to rise next year, according to New York-based pay consultant Johnson Associates Inc. The incentive compensation for employees in fixed-income divisions of banks may jump 40 percent to 50 percent from last year, the New York- based firm said. Bonuses at asset management firms may fall as much as 35 percent, the report showed.
Last time I checked, mortgages are considered to be fixed-income instruments. That's how they're rated, packaged, and marketed to CMBS buyers. The co-conspirators (banks' fixed-income credit analysts) in hiding the banks' fictionally performing mortgage assets are thus planning to pay themselves even more next year.
What are the crooks rewarding themselves for? Cooking their books, of course. Analysts and auditors who falsely portray non-performing mortgage loans as high-quality assets succceed in delaying inevitable home foreclosures. That gives a whole bunch of unemployed homeowners the impression that the economy isn't getting worse. Does it feel like a bottom? A lot of people are fooling themselves into thinking so:
Optimism on U.S. equities climbed the most since April, according to the Bloomberg Professional Confidence Survey. Investors expect equities to rise during the next six months in a record seven countries, with indexes in Brazil, Italy, the U.K., France, Mexico, Japan and Switzerland forecast to advance.
Good luck, folks. I'm not one for self-delusion. There is no economic recovery. Commercial real estate harbors the next set of defaults to hit the economy. When those hit, we'll be right back in a credit crunch.
I'm staying short.
