absolutideas

The article is worth your time. Protect your wealth, your future matters.

Zero Hedge:

the article focuses on the two most troubling developments for private market players as a result of flawed policy after flawed policy: i) the notion that the government may be permitted to disrupt financial transactions between parties in ways that frustrate the unambiguous expectations of the parties and ii) the idea that the government need not honor its own promises in dealing with private individuals.

Regardless, as the imminent unwind occurs (not if - when), it is always the equity tranche that will take the first loss, despite the novel development of the creeping equitization concept for companies such as Citigroup (and soon Bank Of America) where dilution and value destruction of senior capital tranches is only voluntary because the administration deems it so - the loaded gun of total system collapse pointed at one’s temple can be a persuasive mechanism. In the meantime, as equities become obliterated, private creditors will likely never again participate (absent massive incentives) in a market in which they have no faith in the rule of contracts, which serve as the foundation for any capitalist system.

Why Constitutions Matter

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