John Edwards: I Did A Lot That Was Wrong

I wonder what would happen to me if I filtered a million non-profit dollars through a shell corporation to a glorified hooker…?

Greensboro, North Carolina (CNN) — A federal jury in North Carolina acquitted former Democratic presidential hopeful John Edwards on one count of violating campaign finance law Thursday and deadlocked on the five other counts against him.

U.S. District Judge Catherine Eagles declared a mistrial on the remaining counts, leaving prosecutors to decide whether to refile the charges against the onetime North Carolina senator.

Jurors said Thursday afternoon — their ninth day of deliberations — that they had reached a unanimous verdict on only one count, which involved allegations that Edwards had accepted illegal campaign contributions in 2008. Eagles ordered them back into the jury room to continue deliberating, but they returned less than an hour later to announce they were deadlocked.

“This was win for John Edwards, and there will be a lot of questions about why this case was brought,” CNN legal analyst Jeffrey Toobin said after the announcement.

Edwards had been charged with four counts of accepting illegal campaign contributions, one count of falsifying documents and one of conspiring to receive and conceal the contributions. The charges could have carried a maximum sentence of 30 years in prison and a $1.5 million fine.

I can understand if you don’t own Banco Santander (STD +1.33%) or Banco Bilbao Vizcaya (BBVA +1.60%).

The euro debt crisis just seems to drag on and on, getting scarier with each day. And Spain is the current center of that crisis and Spanish banks are the focus of the Spanish crisis. So owning these two stocks, even if they’re the best banks is Spain, feels very risky on most days recently.

So why do I own them in my portfolios? Let me explain my reasoning on these two stocks right now. (I own Banco Bilbao Vizcaya in my Jubak’s Picks portfolio and Banco Santander in my Dividend Income portfolio.)

At current prices I think both stocks have pretty much discounted all the risk of a meltdown in their portfolios — short of the very unlikely event Greek-style de facto default by Spain on its sovereign debt. For example, Credit Suisse has run a scenario that looks at a full write-off of the property portfolios of Spain’s banks. For Banco Santander that would result in a loss of 16 billion euros — no mean sum — and although the bank would take a big hit to earnings from a need to add about 8 billion euros to its provisions against losses, it would not need to raise additional capital. Neither would Banco Bilbao where the loss would be $10.9 billion euros and the bank would need to add $6.5 billion euros to its provisions for losses.

How could these two banks take a 100% loss on their property portfolios and still come out so well? Because while each of these banks is headquartered in Spain, most of their assets aren’t in Spain. For example, only 25% of Banco Santander’s loan book is in Spain. About 50% of Banco Santander’s profits come from Latin America and Spain accounts for just 33% of Banco Bilbao’s income.

That geographical exposure has let these two banks build up comfortable capital cushions — Banco Santander showed a 9.1% core capital ratio at the end of 2011, for example, by the strict European Banking Authority standards — and to show relatively low ratios of non-performing assets (4% at Santander.)

That doesn’t mean these two bank stocks aren’t without risk — it’s just that at this point in the trashing of their stocks — shares of Banco Santander are down 49% in 2012 through May 29 and shares of Banco Bilbao Vizcaya are down 46% — I think the big risks are political. It’s the uncertainty of what the Spanish government might do — and especially the possibility that the government might force these two relatively healthy banks to acquire some of Spain’s worst banks — that links these banks to the Spanish banking crisis and sends their share prices tumbling whenever there’s bad news about another Spanish bank such as Bankia.

My read is that the odds of this kind of move by the Spanish government are very low. I don’t think the government of Prime Minister Mariano Rajoy is looking in that direction and I think these two big banks have the political muscle to head off that alternative.

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When former Apple (AAPL -0.25%) executive Ron Johnson was hired as CEO of struggling retailer J.C. Penney (JCP -2.92%), he outlined a strategy that spurned the company’s previous highly promotional approach in favor of more straightforward pricing.

To that end, the company implemented a three-level selling plan and scrapped its numerous sales and promotional events. The new approach was announced in January.

In the first leg of the strategy, J. C. Penney cut prices on all of its merchandise compared to last year’s regular pricing and called this “Every Day” low prices. Additionally, the company implemented sales that last a month, called “Monthly Value” discounts. J.C. Penney also holds sales on certain merchandise marked for clearance on the first and third Friday of each month. These sales, known as “Best Price” deals, coincide with many consumers’ paydays.

At the time of the announcement, Johnson was firm in his conviction about the change in strategy at the retailer. “We have made the decision to change our pricing strategy, and we’re going to stick to it,” Johnson said in January. After a disastrous first-quarter, however, it now appears that J.C. Penney is looking to revert back to a more promotional stance. The company held a Memorial Day weekend sale and is reported to be planning a Black Friday event. In all, the retailer has planned an additional five Friday sales this year, expanding its “Best Price Friday” program.

The catalyst for the move appears to be the company’s dismal first-quarter where total sales plunged 20% and same-store sales fell 19%, helping drive a steep operating loss in the period. The results sent JCP shares down nearly 20% on May 16 and have raised questions about whether the brand is fundamentally broken. In light of the new information from the company about additional sales, it is clear that Johnson and his management team are feeling the pressure.

The company told Charles Grom, retail analyst at Deutsche Bank (DB +0.93%), that it would be holding five extra strategically timed “Best Price Friday” events this year, including one on Black Friday, according to the Wall Street Journal. The other special Friday sales may be held during the Christmas and back-to-school seasons, the Journal speculated. According to Grom, the change — occurring so soon after the implementation of the straightforward pricing approach — could backfire.

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MORELIA, Mexico (AP) – Banners signed by a cult-like Mexican drug gang say that cartel members launched firebombing attacks on a PepsiCo. subsidiary because they believe the snack company let law-enforcement agents use its trucks for surveillance.

Five Sabritas warehouses and vehicle lots were attacked Friday and Saturday in the Mexican states of Michoacan and Guanajuato. Officials say four alleged members of the Knights Templar cartel have been detained in the case, which they link to extortion. At least 10 banners hung around the city of Apatzingan on Thursday accuse Sabritas of ferrying government agents.

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Updated at 4:34 p.m. ET — Capping a day of dramatic turnarounds, the jury in the campaign finance trial of former presidential candidate John Edwards found him not guilty on Thursday one one count and said it was deadlocked on the remaining five charges.

U.S. District Judge Catherine Eagles then declared a mistrial on the remaining charges. It was not immediately clear if prosecutors intend to seek a retrial on those charges.

The count on which the jury reached a “not guilty” verdict involved contributions from Edwards’ contributor Rachel “Bunny” Mellon.

WNCN, reported that when the decision came, Edwards closed his eyes, rubbed his face and smiled at his daughter, Cate. He then hugged his daughter and his elderly parents while whispering to them, “I told you this would be OK,” it said.

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Earlier, the jury of eight men and four women told Eagles that it had reached a verdict on all six felony accounts against Edwards. But after the jury returned to the courtroom, the foreperson stated that jurors had reached a unanimous decision on only one count. Eagles then sent them back to the jury room to resume deliberations.

The charges against Edwards, 58, arose from about $1 million in donations while he was in the midst of the 2008 race for the Democratic presidential nomination from two wealthy donors, Fred Baron and Mellon, a billionnaire banking heiress. The money was used to support and hide Edwards’ pregnant mistress, Rielle Hunter.

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MACKINAC ISLAND — For the first time in recent history, Detroit’s executive and legislative branches of government quashed potential squabbles over the city’s budget and agreed to make $250 million in cuts in an effort to steer Detroit back toward fiscal stability.

Detroit Mayor Dave Bing this morning said he intends Friday to formally adopt the budget, which contains key public lighting, transportation and public safety initiatives. Bing is attending the Mackinac Policy Conference on Mackinac Island.

“My administration fundamentally agrees with City Council’s recommendations for the 2012-2013 budget,” Bing said, speaking this morning from the porch of the Grand Hotel. “This budget supports my financial and operational restructuring plan that will restore fiscal stability to the city of Detroit.

“I believe this budget is a key indicator of our efforts to collectively transform Detroit and will help to spearhead our efforts to improve core services and the overall quality of life of Detroiters,” he said.

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WASHINGTON — U.S. Transportation Secretary Ray LaHood will be in Detroit on Monday to discuss the future of a proposal to build a light-rail line along Woodward Avenue.

His visit follows a federal review of the investors’ plans.

If LaHood announces money for the plan it could jump-start the rail project that supporters see as a way to revitalize the core of Detroit.

Rip Rapson, head of the Kresge Foundation, said he’ll be there and supporters Roger Penske and Quicken Loans’ Dan Gilbert changed travel plans to attend.

“I assume that wouldn’t be happening if LaHood is coming to give us bad news,” Rapson said.

The Kresge Foundation pledged $35 million toward the M1 Rail project.

The meeting is set for Detroit Mayor Dave Bing’s office; Gov. Rick Snyder and several investors in the M1 Rail group are expected to be on hand, a U.S. Transportation Department official confirmed.

Chris Brown, Bing’s chief operating officer, said he is “cautiously optimistic to see where things are going.”

“At the end of the day you’ve got to show a capital plan that works and how long-term operations and maintenance can be funded,” he added.

Private sector investors including Penske Corp., Quicken Loans, the Ilitch family and Peter Karmanos’ Compuware have contributed to the effort to build a 3.3-mile light-rail line on Woodward Avenue from downtown Detroit to New Center. The group submitted plans to federal officials in April, saying it raised most of the $137 million needed to build it and promising 80% of the estimated $5.1-million annual cost of operating it through 2025.

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Fremont, California (CNN) – In a tightly-guarded surprise campaign stop, Mitt Romney visited failed energy company Solyndra Thursday and invoked the building as a symbol of what he called President Obama’s misuse of taxpayer dollars.

The visit – kept a secret by the campaign until shortly before the candidate and the press arrived at the site – offered a hulking visual to accompany Romney’s repeated criticism of Obama over the Solyndra scandal.

Standing on a gritty embankment across the street from Solyndra’s edifice, Romney called the glass-fronted building the “Taj Mahal” of corporate headquarters and a symbol “gross waste” and accused the president of cronyism.

“This building, this half a billion-dollar taxpayer investment, represents a serious conflict of interest on the part of the president and his team,” Romney said. “It’s also a symbol of how the president thinks about free enterprise. Free enterprise to the president means taking money from the taxpayers and giving it freely to his friends.”

The solar energy company based outside San Francisco went bankrupt less than two years after receiving a $535 million loan in 2009 from the Department of Energy.

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NEW YORK (CNNMoney) — Internet addresses are about to expand way past .com and .org, and Google wants in. It applied to grab not only .google, but also fun suffixes like .lol.

The company said it would like to operate “domains we think have interesting and creative potential,” citing .lol as an example.

Google (GOOG, Fortune 500) is just one of the hundreds of companies that have applied for new generic top-level domains (gTLDs) — the “.com” part of website addresses — in an upcoming massive expansion of the Internet’s infrastructure. The full list of applicants, and their proposed new domains, will be announced on June 13.

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The judge in former North Carolina Sen. John Edwards’ federal corruption trial has ordered jurors to continue deliberations after they announced they had reached a verdict on only one of six counts.

The judge will soon issue an “Allen charge,” which is essentially a request from the court for the jury to go back into deliberations and try again to reach a unanimous verdict on all counts.

The Spanish city was given a pass on downgrade do to their commitment to budgetary discipline – however long that will last them.

The refinancing burden of unrated European leveraged buyouts (LBOs) remains challenging, says Moody’s investors Service in a new Special Comment published today showing that 254 companies face EUR 133 billion in LBO-related debt maturing through 2015. At least a quarter of these companies could default with the figure doubling if external factors close the high-yield market for extended periods.

The new report, entitled “Unrated European LBOs Remain Under Pressure from Refinancing Burden,” is now available on www.moodys.com. Moody’s subscribers can access this report via the link provided at the end of this press release.

“Over half the debt maturing through 2015 is concentrated in 36 companies, each of which has over €1 billion of debt, says Chetan Modi, Head of Moody’s European leveraged finance and author of the report. “While this debt is broadly dispersed across industries, there is a concentration of debt to be refinanced in 2014.”

The results of Moody’s study are consistent with the rating agency’s previous analyses, but these companies are now one year closer to the 2014-15 refinancing peak. This refinancing peak remains worrisome, given the weak macroeconomic environment and the generally low credit quality of this debt.

In the report, Moody’s notes that the key factors determining the type of refinancing method companies choose will be the amount of debt and its credit quality. Many larger companies will seek to refinance with high-yield bonds, however they will need to be sufficiently creditworthy to achieve this.

The openness of both European and US high-yield markets will largely determine how this refinancing burden is navigated. Market access will remain in “windows”, and Moody’s expects new-issuer pricing to remain expensive.
Moody’s anticipates that more companies will attempt to amend-and-extend (A&E) loans in 2012. Lending options for European collateralised loan obligations (CLOs), including for A&Es, will become increasingly constrained, particularly from 2013, as their reinvestment periods end. This restriction will precipitate more fundamental debt restructurings for weaker credits.

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Public-employee unions in Wisconsin have experienced a dramatic drop in membership — by more than half for the second-biggest union — since a law championed by Republican Gov. Scott Walker sharply curtailed their ability to bargain over wages and working conditions.

Now with Mr. Walker facing a recall vote Tuesday, voters will decide whether his policies in the centrist state should continue — or whether they have gone too far.

The election could mark a pivot point for organized labor.

Mr. Walker’s ouster would derail the political career of a rising Republican star and send a warning to other elected officials who are battling unions. But a victory for the governor, who has been leading his Democratic opponent in recent polls, would amount to an endorsement of an effort to curtail public-sector unions, which have been a pillar of strength for organized labor while private-sector membership has dwindled.

That could mean the sharp losses that some Wisconsin public-worker unions have experienced is a harbinger of similar unions’ future nationwide, union leaders fear. Failure to oust Mr. Walker and overturn the Wisconsin law “spells doom,” said Bryan Kennedy, the American Federation of Teachers’ Wisconsin president.

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Yeah, every major technology corporation should build a fucking smart phone. They won’t engross each other’s market share at all…

Facebook (FB -9.62%) plans to release its own smartphone next year, according to New York Times tech writer Nick Bilton, who cites several Facebook employees and allies.

This wouldn’t be the newly public social network’s first stab at building its own smartphone, or even its second, and not everyone thinks it’s a good idea.

“Hardware is an extraordinarily difficult, low-margin, commodity business” that “Facebook knows absolutely nothing about,” says Henry Blodget at Business Insider. But chief executive Mark Zuckerberg seems determined, reportedly hiring more than half a dozen former Apple (AAPL +1.77%) engineers who worked on the iPhone.

Here, five reasons Facebook would actually be wise to build its own handset:

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A U.S. senator announced Tuesday he would introduce a bill stripping Pakistan of all foreign aid unless the doctor imprisoned for helping the CIA track Usama bin Laden is released. The Obama administration, meanwhile, appeared unwilling to budge from its talking points on the issue, despite an impassioned plea for U.S. intervention from Dr. Shakil Afridi’s family.

“The blame has been placed on my brother because of America,” Shakil’s brother, Jamil, told Fox News during an interview in Pakistan. “We should get justice and protection.”

Jamil Afridi claimed his brother had been tortured by Pakistani authorities.

In Washington, Sen. Rand Paul, R-Ky., said he would introduce a pair of bills next week to address Afridi’s plight. One would strip Pakistan, which received $2.1 billion from the U.S. for the current fiscal year, of all foreign aid until Afridi’s 33-year sentence is overturned and he’s allowed to leave the country; the bill other would grant Afridi U.S. citizenship.

The measures would go beyond the vote by a Senate panel last week to strip Pakistan of $33 million in aid.

“Pakistan must understand that they are choosing the wrong side. They accuse Dr. Afridi of working against Pakistan, but he was simply helping the U.S. capture the head of Al Qaeda. Surely Pakistan is not linking their interests with those of an international terrorist organization,” Paul said in a statement. “Foreign aid has been an abysmal failure precisely for this reason — we give the aid to governments who then turn and work against our national interest. That must end.”

Administration officials have made a similar case, saying repeatedly that Afridi was working against Al Qaeda, not the Pakistani government.

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A General Motors Co. (GM) lawyer demanded the widow of a car-crash victim drop a plan to seek punitive damages from the auto maker, even though the company’s government-brokered overhaul doesn’t bar plaintiffs from going after such legal penalties.

The GM lawyer in a March 3 email told a lawyer representing the widow of a man killed in a GM-made U-Haul truck that GM couldn’t be sued for punitive damages in the case. Other lawyers say that assertion stretches beyond what they believe is GM’s legal exposure in product-liability cases. Even so, after receiving the email, the widow’s lawyer abandoned plans to make a claim for punitive damages against GM.

Punitive damages are intended to punish corporations and others for reckless or intentional wrongdoing, such as selling products despite knowledge of their dangerous defects. Their goal is to deter future wrongdoing by the defendant or others poised to engage in misconduct.

The dispute highlights questions now arising over how much legal protection GM and Chrysler Group LLC have in certain product liability cases following 2009 government rescues that exceeded $70 billion. A bankruptcy judge allowed Chrysler to immunize itself from new punitive-damage claims arising from alleged manufacturing defects in vehicles sold before its restructuring. Chrysler’s immunity was the subject of a Page One article in The Wall Street Journal on April 5.

The skirmish in the widow’s case raises complex legal issues involving federal bankruptcy rules that sometimes allow companies to discard product liability or other risks, overruling state laws that give consumers rights to sue for damages.

GM received a $50 billion government rescue at the height of the financial crisis and then sold its best assets to the U.S. Treasury in a 2009 bankruptcy sale–making it a new auto maker legally divorced from the company that manufactured the U-Haul and millions of other vehicles. The newly formed GM posted a record $7.6 billion profit last year.

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NEW YORK (CNNMoney) — The payroll tax cut you’ve enjoyed since last year may be going away in January.

And for most Americans, it’s one of the most concrete pieces of the so-called fiscal cliff — $7 trillion in tax hikes and spending cuts set to take effect next year.

The payroll tax cut — worth 2% of the first $110,100 of one’s wages — started in 2011 and remains in effect until Dec. 31. It noticeably increased paychecks for workers. A person making $50,000 has enjoyed roughly $83 extra a month, while someone making $110,100 has been taking home an extra $183.50 a month.

Unless Congress decides to extend the policy for another year, workers’ take-home pay will be reduced by similar amounts starting in January. That’s because the payroll tax rate — temporarily set at 4.2% — will revert to its original 6.2%.

The cut in the payroll tax — which funds Social Security – was intended to temporarily bolster consumer spending and therefore help the economic recovery.

If it expires as scheduled, the Congressional Budget Office estimates that federal revenue will increase by $95 billion next year.

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(CNN) — After the first competitive elections in Egypt’s history, many Egyptians find themselves straddling the divide between the deposed regime of Hosni Mubarak and its 84-year-old Islamist adversary, the Muslim Brotherhood. Polarization has long been a problem for Egypt. Now there is more of it than ever.

The two candidates who received the most votes will face off in the second round in mid-June. The Brotherhood’s candidate, Mohamed Morsi, is trying to get liberals and leftists to hold their noses and vote for him. Ahmed Shafiq, the last prime minister of the old regime, promises to save Egypt from the “dark forces” of Islamism. He is a largely unreformed autocrat who cites Mubarak as a “role model” and says the “strongest thing should be the state.”

The fault lines that run through Egyptian politics are ones that often appear during democratic transitions. In Eastern Europe after the fall of communism, for example, there was widespread concern over the so-called “Red Return” — the election of former communists to power. In most cases, the old autocrats distanced themselves from past abuses and repackaged themselves as newly believing democrats.

In Egypt, however, many members of the old regime, like Shafiq, remain unrepentant. He was prime minister while protesters were being killed during Egypt’s revolution, and now may become its first post-revolution president. This very real possibility raises the question: Should politicians of the old regime be allowed to return to government and serve in senior government posts in the new Egypt?

As Yale University’s Ellen Lust argues, “Retaining space for local elites helps to ensure that they buy into democracy instead of trying to subvert it.” But what if these elites use the democratic process to subvert it from within?

In Tunisia, by contrast, the transitional government banned elites of the old ruling party from running in elections. A Shafiq victory, if it comes to pass, may prompt other transitional countries to carefully consider how to use legal channels to block an electoral “restoration” of the old order.

A second fault line in Egypt is between majoritarianism and consensus-driven politics. Many liberals believe that the Muslim Brotherhood betrayed the spirit of the revolution by trying to assert full control over the country’s elected institutions. Most controversial was the formation of the constituent assembly, which was dominated by the Brotherhood as well as ultraconservative Salafis. Liberals responded by withdrawing from the assembly.

The presidential election results have provoked a similar debate, with liberals calling on Mohammed Morsi to commit to sharing power with the two runner-up candidates by appointing them as co-presidents or vice-presidents with considerable powers. Others have called on the Brotherhood to appoint a technocratic government with a non-Islamist prime minister.

The Brotherhood, meanwhile, believes in a distinctly majoritarian form of democracy. It won 47% of seats in the lower house of parliament and more than 50% in the upper house, the Shura Council. Where liberals argue that one party should not dominate both the parliament and the presidency, the Brotherhood, in the run-up to elections, argued the opposite: Because the legislative branch remained relatively weak, the group needed the presidency to fulfill the promises it made to the electorate.

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(AP) – U.S. consumer confidence fell sharply in May and is at the lowest level since January, according to a survey released Tuesday by the Conference Board.

The findings contradicted Friday’s survey by Thompson Reuters/University of Michigan, which showed consumer sentiment at its highest level in four and a half years.

Neither is wrong, economists said. They were taken at different times during the month and were affected by a range of changes in the economy, including slower job growth, lower gas prices and volatility in the stock market.

Economists say the two indexes usually track each other over time, though occasionally they diverge.

Brian Bethune, an economist at University of Amherst, said the two indexes will likely converge in the coming months.

“The truth probably lies somewhere in between,” he said.

Read the ways surveys differ here:

Apple CEO Time Cook will be having a chat Tuesday night at the D10 conference — in only his second public interview in recent months.

In February, Cook appeared at the Goldman Sachs annual Technology and Internet Conference in San Francisco where he discussed Foxconn workers, Apple’s product line, and the company’s long term financial outlook. Today’s talk at D: All Things Digital, an annual gathering of technology insiders in Ranchos Palos Verdes, Calif., is expected to cover similar themes.

Some are hoping the discussion will shed light on Apple’s product pipeline: the buzzed about iPhone 5, Apple’s game-changing TV (wherever it is), or maybe even an iPad mini.

Just don’t get your hopes up. The iPhone-maker doesn’t typically announce major products at non-Apple events, and Apple’s own World Wide Developers Conference, where it has introduced new iPhones in the past, is just weeks away.

Cook, despite efforts to stamp his personal brand on the company, has respected certain traditions, notably the company’s infamous secrecy.

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