Friday, April 16, 2010

Great Week for Cynics

Posted By on Fri, Apr 16, 2010 at 1:43 PM

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Reporters are often accused of being cynics and naysayers, and sometimes some of us are. But we are strictly bushleaguers when compared to the cynicism of some bond traders and investment bankers, who would happily find a way to profit from Armageddon if they could.

It would be called a "Doomsday Short" or some such thing — short being the term for taking a position that the price of something is going down. And the technical term would be "collateralized doomsday debt product." The hedge would be a private spaceship to Mars.

If this sounds far fetched, see the New York Times story on Goldman Sachs and the housing bubble and investments in subprime mortgages. The customers got one story, the big guys knew it was crap, and made billions. The Securities Exchange Commission is on the case.

The last time we heard from the SEC it was a few days ago in connection with Morgan Keegan and a fraud allegation against mutual funds run by James Kelsoe Jr. Who says Memphis ain't big league?

A colleague and I disagree on what this means. He thinks Goldman Sachs takes the heat off Morgan Keegan, which will get off easy. I see a coordinated SEC strategy against giants and regionals, with a target painted on both of their backs and a resolve that isn't going away.

On another story . . . I smell an exit strategy in the making over at the Riverfront Development Corporation. As my colleague Mary Cashiola wrote this week, one possible end game would be finishing Beale Street Landing at full price on public funding and finishing off the RDC at about the same time, in 2011.

What's wrong with that? In my opinion, everything. One, an extravagant boat landing and park amenity would get another $7 million in local public funds. I think the thing can be done for less than that, or private sources can be tapped for the money, as they were in Chattanooga. Show us a rendering of a restored cobblestones and a scaled down BSL. And how this will impact Memphis in May and Tom Lee Park, where the fences are going up even as I write this, just as Memphis gets really beautiful.

Second, it lets RDC president Benny Lendermon off without accountability. Last year Lendermon told the Memphis City Council the project would cost $31 million when documents showed it would be at least $33.4 million. Now it's more than that. For his $216,969 salary, Lendermon owes the council and public an explanation of the overruns and money spent so far and why the boat dock is needed when there are no overnight riverboats.

The exit strategy is to let the Center City Commission swallow the RDC or give its maintenance duties to a private contractor or the city parks department. The retired city directors on the RDC get their pensions and live happily ever after. The CCC is looking for a new leader. Among the candidates are current employees, current and former city council members, and former city administrators. The CCC has its own identity crisis on its hands, but that's another story.

Finally, the Newspaper Guild representing editorial employees at The Commercial Appeal is running a PR campaign against management. They — the guild — have my sympathies. I gripe as much as anyone about The CA but I think it's a pretty good newspaper, important to Memphis, and key people like reporter Marc Perrusquia and news editor Louis Graham probably don't make nearly as much as they should for the talent they have and the stress they put up with.

But I think the guild has to do two things.

First, better reporting about the financials of the E.W. Scripps Company, the parent of The Commercial Appeal, and a public company. The financials aren't broken out for individual newspapers, but the Scripps newspaper division reports its numbers, and readers can make an educated guess about The CA's share. Historically, the CA has either ignored Scripps reports or done scant reporting on them. Or employees have leaked rumors, gripes, and newsroom scuttlebutt to this newspaper in hopes that someone else would stick their neck out and do the dirty work.

Second, if the issue is pay and outsourcing of jobs, then the guild has to tell the public how much its members are making and how much they want if they want to make this a public fight. Not fun, but that's the price of making a union fight news — and the very reason it doesn't happen that often. The public reaction, a sampling of which can been in comments on this website, may well be either apathy, "welcome to my world," or "so go on strike."

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