The big lie from Wall Street and the Automakers regarding compensation has always been,If you cut our salaries, our talent will leave and the firm's value will take a substantial hit. I have always maintained this was a big lie, with no basis in fact for the following reasons:

• Talent is overrated- if one is truly superstar talent, people will knock on your door and try to poach you regardless of the economy
• Talent is in abundance-there are more talented people without jobs who sit in Starbucks all day than people who are employed.
• The unemployed talent would love to take your job for less money.
• Executives under pay scrutiny have basically two options- take a haircut in pay or start your own firm. Option 2 costs money which most don't have

Today's NY Times confirms this big lie. Here are some excerpts:

“For months, Wall Street banks and the troubled automakers feverishly protested that their top executives would flee if they were not lavishly rewarded for their talents. New data, however, suggests the departures were more of a trickle than a flood.

Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data.

The relative stability, at least within the executive suite, suggests that a soft job market, corporate loyalty and personal pride helped deter the feared management exodus at the companies hardest hit by the pay rules.”

"You've got to accentuate the positive Eliminate the negative Latch on to the affirmative Don't mess with Mister In-Between You've got to spread joy up to the maximum Bring gloom down to the minimum Have faith or pandemonium Liable to walk upon the scene" written by Johnny Mercer/Harold Arlen.

The above lyrics sum up the Pollyanna talking heads on CNBC. Buy, Buy, Buy!!! Its a bottom! I have heard more about bottoms than in a J. Lo music video. Then when something tragic happens its a surprise, because Wall Street is programmed to lie. Lie about solvency, lie about risk, sweep all potential negativity under the rug. Well now Lehman is belly up, Merrill is taken over, Wamu is on the ropes as is AIG. But if we went to the videotape and pulled the CNBC appearances over the past 12 months, all you would hear is, "There's value here. Its an overreaction. There is plenty of capital available. Buy! Buy! Buy! This watershed event will convert the Pollyannas, make them panic. Then and only then can we buy, buy buy---when these shameless imbeciles are on the unemployment line.

The Dow undercut its March and then its January lows settling around 11,346. The Dow is down almost 1700 points since mid May. The transports have cracked 5000 though this index is holding up much better. Banks and GM are finally being downgraded to sell. Only weeks ago you heard the mantra, stocks are cheap, its close to the bottom and all that other crap. Now reality has set in. Some hedge funds which are highly leveraged and bet wrong have to be in trouble. The VIX is no where near panic levels. Barron's has resigned itself to the belief that the financials won't recover until 2010. Wall Street analysts are biased, and therefore worthless. The only truth is in the charts. While a rally could surface some time in July, it should be a bear market rally which should be used to sell stocks and originate new shorts. A Dow rally into the 11,800 to 12,100 area would be the sweet spot for this action plan.