Leveraged Buyout Mania...Mish notes that while LBO's benefit shareholders, "Typically, private equity firms and other takeover artists issue large amounts of new debt to finance LBOs, often borrowing at least two-thirds of the purchase price. The increase in debt frequently pushes the ratings of the acquired companies' debt lower, and often they end in speculative, junk status. Naturally, this chain of events is painful for investors who deliberately bought high-grade bonds in the first place to avoid speculative risk." Apparently holders of bonds existing before LBO's are executed have little recourse regarding the devaluation of their bonds. In my view, the risks to all bonds, whether pre-LBO or those issued for LBO's go up radically in the case of an LBO. Basically, the shareholders and LBO initiators are giving the shaft to existing bondholders...
Washington Mutual: Riskiest Portfolio in U.S...."A Wall Street Journal study released today says Washington Mutual Inc. was the #1 U.S. lender to investors and second-home buyers -- which are considered riskier loans than loans to primary occupants. 15% of WaMu's loans were non-primary residence, vs. 13% for Countrywide, 11% at Wells Fargo, 9% at JP Morgan Chase, and 5% at Citigroup"...
FRBSF: The Economic Outlook...a plethora of charts to go along with the views of John C. Williams of the Federal Reserve Bank of San Francisco...
On Luxury Cars and World Class Cities...a debate at Seattle Bubble on whether Seattle can be considered a "world class city"...
University research labs being held back by home run mentality, report finds..."Universities spend so much energy trying to get huge payoffs from a handful of their researchers' technology developments that lots of other technologies never get a chance to be patented, licensed, commercialized or used"...
Shin Bet uncovers Iranian attempts to recruit Israeli spies...that's not too surprising...what's interesting is this fact stated in the article in Haaretz: "Iran is not legally defined an enemy state, and Israeli citizens are permitted to travel there." Also, with regard to the person detained ""We are not planning to press charges as all of these espionage attempts were intercepted and foiled," the official said without giving further details on the alleged spies."
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