Monday, September 21, 2009

Economic Alert!: Climate Not Boding Well for the USA

Sunday, September 20, 2009
In CoLLapse Times, Life and Art Fuse
From Jenna Orkin:
CoLLapse (Movie) Reviews

CoLLapse (Reality) Previews
Europe Overtakes North America As Richest Region In the World
Gordon Brown Urges EU to Back New Economic Order
Warning: Deflationary Collapse Dead Ahead
Pension Plan Shocker Dead Ahead (from Rice Farmer)
China’s coming magnificent bubble
Bank of America's Harris Says Job Market Remains in `Severe Bleeding Mode'
We are near failure in Afghanistan
US abandons missile shield to Russia's delight
Venezuela Is Accelerating Dollar Sales, Chavez Says (from Rice Farmer)
Rift at Fed
Dairy Farmers Want Industry Probe
Info on toxicity of commonly used items.
Know Your Farmer; Know Your Food Initiative
Body bags disrupt Canada's flu-readiness message (from Rice Farmer)

Far left party wins German votes
In Norway, the Left Can 'Bribe' Voters with Oil Money
Funeral Industry Sees Profits Fall 35% (Russia)
Does this mean people aren't dying as often as they used to?

Pig-Farmer Investors in China Stockpile 50,000 Tons of Copper, Sucden Says
Saudi Arabia's `Never Go Bust' Families Mean an End to Easy Credit in Gulf
Temasek (Singapore) Profit Falls Record 66% as Bank Values Drop (from Rice Farmer)
Cancer villages in the wake of China's boom
Rumor: China May Ban Gold, Silver Expo

September 30th update
Fallout Begins? Alabama Firm Cites CIT for Bankruptcy
Published: Saturday, 18 Jul 2009 | 5:13 PM ET

By: Reuters

An Alabama hardware supplier has blamed financial woes at U.S. lender CIT Group for its bankruptcy filing, in an early sign of the effect a potential CIT bankruptcy could have on millions of small U.S. businesses.

* Slideshow: The Largest Bank Failures of 2009

In court documents filed in U.S. bankruptcy court in Birmingham on Friday, Moore-Handley said it was forced to seek bankruptcy protection "due to difficulties accessing funds" under their financing arrangements with CIT [CIT 1.21 -0.99 (-45%) ]. (Click Here for After-Hours CIT Quotes.)

CIT Group inc.
Photo by: Americasroof

The company said it had been negotiating its own strategic plan with CIT but that "the federal government's recent decision not to support CIT's reorganization has thrown CIT into disarray and casts substantial doubt on CIT's ability to continue to fund (Moore-Handley's) working capital requirements."

The company, which says it is the second largest independent hardware and building materials distributor in the United States, said in court papers that it owes about $17.5 million to CIT.

CIT, which services nearly one million small- and mid-sized businesses, has been in talks with a group of bondholders to seek $2 billion to $3 billion in rescue financing as it tries to avoid its own bankruptcy filing, a source close to the company said on Friday.

The impact of CIT's demise would likely pale by comparison with the collapse of investment bank Lehman Brothers last September, analysts have said. But the ripples of the lender's collapse could be widespread, hurting already struggling small businesses such as arts organizations and retailers.


Current DateTime: 05:05:36 03 Aug 2009
LinksList Documentid: 31983717

* CIT Could Hit Retailers
* Financing in Bankruptcy Possible
* Poll: Is CIT Too Small to Bail?

Moore-Handley, which was founded in 1882 according to its Web site, said it had net sales of $145.5 million in 2008, and expected a 20 percent decline in that figure for 2009 as residential construction activity in the Southeast declined.

The case is In re: Moore-Handley Inc, U.S. Bankruptcy Court, Northern District of Alabama, No. 09-04198.
Copyright 2009 Reuters. Click for restrictions.
Topics:Credit | FDIC | Bankruptcy | Federal Reserve | Federal Budget (U.S.)
Companies:CIT Group Inc
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CIT eyes debt exchange or prepack bankruptcy: sources (Reuters)
Wednesday, September 30th, 2009 | Finance News

NEW YORK (Reuters) –
CIT Group Inc (CIT.N) is planning to offer its unsecured debt holders two options: either exchange their debt voluntarily, or face a prepackaged bankruptcy, sources close to the situation said on Wednesday.

The commercial lender is struggling to reduce debt and raise equity to stay in business. But repairing its balance sheet is just one step toward returning to health -- it must still figure out how to fund future business, analysts said.

"At the end of the day, the business is not sustainable as it is," said Faris Saah, research analyst at Aladdin Capital in Stamford, Connecticut.

The exchange offer is likely to essentially turn the company over to bondholders, sources said Tuesday. Debt investors would get some combination of new debt secured by assets and shares in the company, and the company's overall debt levels would shrink. Little would likely be left for current shareholders, and CIT's shares fell 45 percent on Wednesday. Bonds also fell.

Engineering the exchange could be difficult. A debt exchange typically requires participation from owners of about 90 percent of the securities eligible to be swapped. For CIT, eligible securities would be roughly $32 billion of unsecured debt.

CIT plans to encourage bondholders to swap their notes by threatening a prepackaged bankruptcy, which could require holders of only about two-thirds of the company's total debt to sign on, sources familiar with the situation said.

CIT believes that a prepackaged bankruptcy could take one or two months, the sources said, asking not to be identified because the plan is not yet public. Some bondholders could do better in bankruptcy than a debt exchange.

Finance companies that file for the protection of bankruptcy courts are usually signing their own death certificate, but CIT believes it is an unusual case. The company has been around for more than a century, and many customers have signaled their loyalty to the lender, sources said.

And with credit generally tight for the small and mid-sized businesses that CIT caters to, there are few options for many of CIT's borrowers.

But a bankruptcy could still have some cost, noted Dan Fuss, vice chairman of Loomis Sayles, which oversees more than $140 billion of assets and owns some CIT debt. The company could lose future tax advantages from recent net losses if it files for bankruptcy, he said, which could hit its balance sheet.

"My preference for them would be the debt exchange because then they won't go through the disruption of a bankruptcy," Fuss told Reuters.

If the company files for bankruptcy, it may not be able to emerge as a going concern and might instead have to wind down its business, Aladdin Capital's Saah said.

CIT's longer term plan is to essentially turn itself into a bank. The company is one of scores of lenders and underwriters that relied on bond markets to fund its operations, only to suffer as the credit crunch has raged for two years.

Becoming a bank may not be easy, analysts said. CIT has a small bank subsidiary with about $5 billion of deposits, compared with CIT's overall assets of about $71 billion. Regulators have barred CIT Bank from accepting new deposits.

Although CIT received $2.3 billion in December under the Troubled Asset Relief Program (TARP), federal regulators this year declined further requests by CIT for funds.

In July, CIT bought some time to restructure with the help of an emergency loan from a group of bondholders.

CIT's board has yet to sign off on the restructuring plan, but the board is briefed frequently and knows what the management has been working on, the sources said.

Bond giant PIMCO, Centerbridge Partners LP, Oaktree Capital Management, Baupost Group, Capital Research & Management Co and Silver Point Capital were part of a group that provided a $3 billion loan to the lender this summer.

Under the terms of the $3 billion July loan, CIT must come up with a restructuring plan agreeable to lenders by October 1. That plan will likely include debt exchange offers, the company said in a regulatory filing in August.

If the company goes through a prepackaged bankruptcy, it would need a debtor-in-possession loan to finance it during the process. Banks including Bank of America, Barclays, and Citigroup have talked to CIT about providing financing, but it was not clear which bank was lined up for DIP financing.

CIT's notes maturing next year with a 4.75 percent coupon fell about 2 cents on the dollar to 69.375 cents, according to MarketAxess data.

Debt protection costs for CIT rose on concerns about the company's restructuring. CIT's five-year credit default swaps rose to an upfront payment of 36.2 percent the sum insured plus 500 basis points a year from 34 percent, according to CMA DataVision. That means it would cost $3.62 million to insure $10 million of debt plus $500,000 a year.

CIT shares fell 99 cents to close at $1.21.

(Reporting by Dan Wilchins and Paritosh Bansal; additional reporting by Jennifer Ablan and Walden Siew; editing by John Wallace, Matthew Lewis and Andre Grenon)

Related News

* CIT near plan to turn over company to bondholders: sources (Reuters)
* CIT creditor advisers seek bankruptcy option: source (Reuters)
* CIT courts creditors, plans large debt exchange (Reuters)
* CIT posts loss, completes debt exchange (Reuters)
* CIT extends CEO Peek’s contract for one year (Reuters)

The End of Surburbia (June 29, 2006)

Many energy ralated aspects are coming into our new reality. Energy Companies will manipulate any limitations in oil (perceived or otherwise). The more preparation people make now the batter our ability to survive both on an individual and collective basis. If people like Alex Jones (on the President Obama Top 25 Enemies List in his movie ">Endgame: Blueprint For Global Enslavement
, Dr. Stan Monteith

, Dr. Bill Deagle
, and Alan Watt eugenics is pervasive and will continue.

Naomi Wolf has a pessimistic view of the society many US citizens have known. She does not emphasize to the same degree of planning the overt detrimental and harmful conditions that will be imposed on people. However as you will see, her perspective is far from glowing.

Talk by Naomi Wolf "The End of America"

Where should the USA go from here? A current blog article
The Virtues of a Disorganized Resistance offers some carefully considered answers. In this article both organized and disorganized resistance are put into focus. Author Denis Jones sites failures of movements by Malcolm X, Martin Luther King, etc. and states they all often have extreme negative results. Jones believes disorganized opposition can yield far greater returns not just allowing for the message to be transmitted.


How is disorganized resistance superior?

In some societies, dissidents become heroes. In American society dissidents are systematically slandered, libeled, harassed, and villainized. If they become successful, they are murdered (e.g. Martin Luther King, Malcolm X). In the American experience, movements that look to leaders are decapitated. Leaders are a liability, not an asset.