Thursday, Apr 16, 2009
Nouvelle Vague
Yahoo Finance: Mall operator files for bankruptcy protection
The company had about $29.6 billion in assets and more than $27 billion in liabilities as of Dec. 31, according to documents filed with the U.S. Bankruptcy Court in the Southern District of New York
A story worth following as a steer as to what will happen when commercial properties co's need to roll over debt over here. Will the state step in? If not its a fire sale and the problem is revisted on the banks.
Posted by bellwether @ 11:47 AM (375 views) Add Comment
4 Comments
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1. mark wadsworth said...
As I have been saying for ages, the best way to unwind the credit bubble is debt-for-equity swaps, i.e. the banks swap their loans to these highly leveraged companies for shares and take over the company (see also Channel Tunnel and countless others), and the bondholders and other creditors of banks (SPVs and pension funds and so on) swap their loans to banks for shares in the bank. With a bit of tough negotiation, we could fix the whole financial system in six months.
By analogy, when mortgage borrower can't pay his mortgage and is in nequity, the bank swaps its loan to the borrower for equity in the house.
2. general congreve said...
Mark @1 - Your idea is not desirable for the public in the longer run. The corrupt banks would avoid defaulting on their own liabilities by ending up with a controlling stake in loads of businesses and property. Allowing this, just so marginal businesses don't fail and over-stretched tenants don't get kicked out would be crass stupidity. If this happened wholesale, the banks would end up owning everything and we'd all be wage/debt slaves to them forever. Don't work for the NWO do you Mark? ;)
3. bellwether said...
But if the problem is that debt is far greater than the inferred capital that justified the borrowing how does the swap work.
4. general congreve said...
Bellwether @3 - The banks could just collude with the govt. to effectively become owners/landlords of the swapped businesses/property and mark it to market with fictional figures, hey presto. If they possess enough of the market and won't relinquish control then it'll be difficult for the remaining players to set the true lower price for their assets in the market place. Hence competition is stifiled and market prices are kept artificially high. Consequently everyone needs a massive unrepayable loan to buy a house, car etc. (if they aren't already renting from the bank as part of the swap) and low and behold every man, woman and child will be a debt slave for ever and ever, amen. NWO wins.