If it was corporate senior or subordinate debt, the cutting off interest payments is usually followed by a restructuring that often includes conversion of debt to equity. Quite difficult (if not impossible) to do here. So much for those AAA ratings.
UPDATE: Difficult to repossess plasma TVs from within bundled loans too.
Prices are headed up. What a landmark piece of news! The Los Angeles Times reported Wholesale Prices Increase 0.3%. Not exactly a scoop.
Prices increase and decrease in trends. Traders (and the Fed) know this, but the government uses these funny little reports like the colored sign at Homeland Security.
We created a huge ATM network with real estate HELOC’s (home equity lines of credit), allowed the dollar to slide to pathetic levels, subsidized the food producers until we choked on our own gratuity, and gorged on foriegn goods supposedly in the name of cheaper prices, so this recent pop should come as no surprise.
Unfortunately, it didn’t need to happen that way, and Greenspan knows it.
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Tags: economy, inflation, interest, liquidity, rates |
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