<Why not just pick up the assets when the $16B+ of debt is swept away?>
Rob, my guess is that there is the world's biggest market clearing under way. Uncle Al will be too busy maintaining the US$ as a viable entity to keep interest rates low enough to rescue the creditors and therefore not the shareholders.
The market will divide into two camps:
Those with positive cash flow, profits, future markets, cash in the bank and a solid business in a frightened world.
Those with debts, technology under development but too long to go before they start selling, not enough money in the bank, luxuries, dodgy businesses and vulnerability to increases in interest rates.
QUALCOMM, Microsoft and others like them will go shopping when the debts are written off. As you say, there's no reason they should buy the stock or put money in unless, as with Vesper, the creditors accept their losses.
At some stage, the market and smoke will clear, assets will be on the block and there will be a grab. Guessing how low before the grabbing starts is the $6 trillion question.
QUALCOMM took Vesper. Global Crossing, Globalstar, Enron, Andersen, hordes of Internuts, and multitudes of other failing debts are in line.
When interest rates start going up again, inevitably and not too long from now, QUALCOMM, Microsoft and the like will do very well and those with debts will be dropping even further. There will be a very large shopping expedition.
Mqurice |
