> >Since most of the
> >companies, particularly the ones in the telecom sector (4 of which -
> Global
> >Crossing, Adelphia, NTL, and WorldCom make the all time top 10 bankruptcy
> >list), are comprised of almost worthless assets due to immense
> over-capacity
> >post dereg in 1996, the banks have little hope of retrieving anything,
> even
> >after long drawn out bankruptcy court hearings.
>
> You know, it's hard to believe all this is just "accidental". I mean, how
> can you build 98% more than what you need....and not notice? I mean, how
> can you call a system "efficient" that does this? And, all in all, it
> reminds me of the S&L bailout ...which was also a crisis of overinvestment
> in commercial real estate. Now, that was done on the back of
> FDIC-guaranteed acounts (i.e. the taxpayer). This is being done on the back
>
> of ...pension plans/retirement accounts?
>
The combination of deregulation (and it was global - in '96 by the
Clintonians, '98 by the WTO) and gleeful capital raising by WallStreet
created capacity glut. The total bankruptcies in teleco are now 4X those in
the S&L crisis. And if AT&T falls will be 7X. If you take a look at the
biggest fiber optic culprit - Global Crossing - you'll see a company run by
an ex-Drexel Burnham junk bond salesman, who couldn't give a shit about
growth, employees, or investors if he could cash out quickly (Gary Winnick
made $750mln, his cronies another $4.5bln, his company shredded more docs
than Enron and he's yet to be invited in front of the SEC.)
The system was geared to short term gain over long term viability - a massive corporation - Wall Street collusion. The fees raised for mergers, acquisitions and debt underwriting for the telecom industry alone totaled $13bln. The WorldCom- MCI merger, which was opposed by every single consumer group, netted Wall Street $70mln. Corporations raised debt because they could. In the case of companies that were investment grade (at one time) like Enron and WorldCom - pension funds and retirement funds who followed bond indices had no choice but to buy. State pension funds (like NY, CA,) are going the class action suit route.
> Oh, and one more thing, since the capitalists are doing so well at
> destroying capital, why do they need a war? To contain the political
> fallout?
>
They couldn't have been more sytematic at destroying capital if they planned
it.
And still no meaningful sounds of reform from the Hill.
Nomi
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