Who is INSOLVENT?
LONDON (MarketWatch) -- Carlyle Capital, the bond fund affiliated with private equity firm The Carlyle Group, said Wednesday that its liquidators have found the fund's "substantial liabilities" are likely to exceed its assets and it's therefore considered insolvent.
Bear Stearns, shortly after giving their executives Billions in bonuses, gets taken over for effectively nothing shortly after giving the executives millions and millions in bonuses.
The funny thing is that analysts keep talking about earnings. Earnings may not matter when you are insolvent.....especially when you are not being candid with the fair market value of the assets of a business.
America is facing the biggest asset value contraction in history. The value of houses. The value of commercial real estate. The value of municipal bonds. The value of corporate debt. The value of just about anything we own or invest save commodities is declining in value...in some cases declining a lot.
Many of those assets are supported by debt. Much of that debt is seated in our financial institutions. As the debt defaults, so does the integrity of the financial system. At this point, debt is deteriorating so rapidly that no one knows what anything is worth. Our financial institutions are leveraged 5 to 1 or 10 to 1. The FED is throwing money at the system but little seems to be escaping into the economy. Fear has grown so high that the yield on a 30 day treasury is less than .20 percent.
As debt continues to default who is next to be insolvent? What sacrifices will be be asked to make?