CanWest files for court protection, Aspers set to lose bulk of stake

It wasn't long ago that the way of doing business was to take over companies, and take on a ton of debt to do so. No one was afraid of debt.

Now one of the biggest companies in Canadian media, Canwest, can't even pay the interest on its debt. Does anyone think that Canwest is the only huge company that can't pay the interest on its debt. Peacenik doesn't. Now all that debt is toxic and lethal. It can't be paid off. It can't be ignored. It can't be reasoned with. It doesn't feel pity. It is a black hole. And it is sucking the whole economy into it.

Grant Robertson, Tavia Grant and Andrew Willis

CanWest Global Communications Corp. (CGS.A-T0.19----%) filed for bankruptcy protection Tuesday after Canada's biggest media company told a judge in Toronto it was now insolvent.

The Winnipeg-based company, which owns the Global Television network, more than a dozen daily newspapers across the country and several specialty TV channels, expects the court ordered restructuring of its debt will take four to six months.

The decision to file for protection under the Companies' Creditors Arrangement Act comes after a year of negotiations with creditors that saw CanWest no longer able to make interest payments on much of its $4-billion debt. The decision to file was made after a board meeting held late Monday.

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Bankrupt Auto Parts Suppliers Seek $100 Million In Executive Bonuses

How business ever sold to the public the necessity or fairness of obscene executive pay and bonuses is a bit of a mystery. But just like the sheeple will defend their right to not have universal health care, the sheeple will defend the right of executive over-compensation. The media and politicians of course are fully supportive of executive over-compensation. It seems to Peacenik that companies only exist to enrich the managers. The sheeple was silent if there was stock price appreciation. But now we see that these genius managers ran companies into the ground and ripped off the shareholders and the public. Bankrupt companies, propped up by public bailouts, are still handing out bonuses, based on the old discredited rationale, and the sheeple are silent. Peacenik says its time to roll back executive over-compensation, confiscate past over-compenstation, and jail executives who have committed crimes.

by Mish Shedlock

In every corner, greed continues to amaze. Please consider Bankrupt suppliers seek exec bonuses.

A growing number of bankrupt auto suppliers are seeking court approval to pay tens of millions of dollars in bonuses to key executives, as they shed employees and cut costs.

Some of the bonuses have come under sharp criticism from General Motors Co. and Ford Motor Co., as well as the trustees named by the Justice Department to monitor bankruptcy cases.

"Considering the condition of the automotive industry and the adverse effect on auto suppliers, it is unclear why payments are even needed to retain employees who may have limited options to find employment elsewhere," said Diana G. Adams, the U.S. trustee in objecting to a plan by Lear Corp.

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Message To The President

Dear Sir:

You and your team have very little time left to pull an "about face" on your fatally flawed plans to save the world. Your tactics, including spending trillions "stimulating" a dying economy, doing anything in your power to save the insolvent corpse of a banking system and to prop up a failed automobile industry, feigning confidence and strength in the face of devastation, will not work. They cannot work. The numbers, unlike you and your team, cannot conceal the truth for much longer. You are the President of the United States of America, and yet you are behaving, as all of your predecessors seem to have behaved before you, like the President of Bullshit Nation. Unfortunately for you, the bullshit cannot alter the coming realities.

Sir, virtually all of the banks of the world are, essentially, bankrupt. They have no capital. Capital has been summarily destroyed over the years by falling interest rates, rampant bond speculation and governmental check-kiting, fraudulent accounting, fraudulent valuation, the elimination of reserve ratios, the creation of money by federal decree (fiat currency), hidden off-book "assets" in the tens of TRILLIONS of dollars, a shadow banking system driven by derivative betting scams that globally reach toward half a QUADRILLION dollars in scope, etc. As Secretary Geithner embarks on his supposed banking "stress tests", and if he does so in earnest, you'd best be fully prepared for what you must uncover: Trillions upon trillions of pieces of worthless paper. If Assets = Liabilities + Equity---and in a world where many if not most of these institutions are leveraged 30:1, 40:1 and beyond---then the majority of assets currently held by the world's banks are worthless. Are you ready to tell the people the truth, sir? I fear not.

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Peacenik wonders what would happen if Obama stepped up and stated the truth. The truth as Dan W. sees it in this post. Dan W. and Illargi, and Mish and Soros are talking about the need to create a whole new system. Scary times. Who do you trust to create a new system? And how wrecked does the present system have to be before you can start building a new system? The fringe bloggers are talking about systemic collapse happening very quickly and soon. Obama and his advisors are acting like they believe the same thing. Obama and our leaders are acting like they are holding on to the edge of the abyss by their fingernails. They are not making Peacenik confident about tomorrow....or today.

Why Bankruptcy For Autos But Not Banks?

The news this morning would be amusing if it weren’t so sad.

The Obama administration is undergoing a battle between its own good instincts with those of its Treasury Secretary.

Away from Treasury, on the side of intelligence, new policies, a clean break from the Paulson/Bush plans — I believe during the campaign, it was called CHANGE — and inevitability, are prepackaged bankruptcies, clean balance sheets, and a fresh start. This is reflected in the Fed exploration of $40 billion in bankruptcy funding for GM.

On the side of more of the same, bad decision making, regulatory capture, worshiping sacred cows, and a hard-to-understand goal of saving the banks rather than the financial system, is the utterly absurd proposal to somehow spend 10X the market cap of Citigroup for a 40% stake in the apparently insolvent firm.

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The fact that this discussion about the bankruptcy of GM and Chrysler and the insolvency of CITI and BofA is not surprising is the biggest surprise of all. Just months ago, the economy was sound according to our lying leaders. Just months ago, the banking system was strong according to those same leaders. Just months ago GM and Chrysler had survival plans: they were going to sell 10 million vehicles this year. They will be lucky to sell 2 million.

Peacenik wants to know the following answers: Will those who know the truth and have the facts start telling the truth? Would someone start cataloguing the lies we've been told? Is the Canadian banking system solvent? Are Canadian pension plans solvent? What happens to GM and Air Canada and countless other pensioners if their pensions go poof? It is time for citizens to be told the truth. It is time for citizens to demand the truth.

California, Almost Broke, Nears Brink

By JENNIFER STEINHAUERPublished: February 16, 2009 LOS ANGELES —

The state of California — its deficits ballooning, its lawmakers intransigent and its governor apparently bereft of allies or influence — appears headed off the fiscal rails.

Since the fall, when lawmakers began trying to attack the gaps in the $143 billion budget that their earlier plan had not addressed, the state has fallen into deeper financial straits, with more bad news coming daily from Sacramento. The state, nearly out of cash, has laid off scores of workers and put hundreds more on unpaid furloughs. It has stopped paying counties and issuing income tax refunds and halted thousands of infrastructure projects.

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This is or was the 5th biggest economy in the world. This is not Iceland, or Latvia. Events are running out of control. By the time Peacenik posts this, Ireland could have defaulted, and GM could have declared bankruptcy. The inability of politicians to compromise, or face reality is shocking. This is what happens when the ideologues rule. Here's what Krugman's says on his blog:

"Apocalypse now"
"Everyone should be paying attention to the political/fiscal catastrophe now unfolding in California. Years of neglect, followed by economic disaster — and with all reasonable responses blocked by a fanatical, irrational minority.
This could be America next."

Can any country survive a default by America? Or California? This is Canada's biggest trading partner. Peacenik neeeds to calm Peacenik. Peacenik is not a Doomer. Peacenik is not a Doomer. Peacenik is not a Doomer.

January 21 2009: There is no time

Ilargi: Yesterday's post, The Shortest President, got me a lot of flack. And that is not a surprise, nor is it unwelcome. By all means, let's talk. Part of it may have been that we have a lot of new visitors these days, who don't yet know what we do or why we choose to do it the way we do. I suggest you all read a bunch of the primers you can find in the right hand side column. And then there are many people who feel that Obama's party was a good reason to focus on something else than economic trouble, if even just for one day. I hope you understand that I don't see that as my role, and that I also think the problems are too large and too imminent to act for even one day as if they don't exist. Plus, I think that the day when everyone focused on Obama is a very good time to explain the issues I have with his approach of the economy. Finally, I have the nagging feeling that many people still don't fully grasp the depth of the downfall, both so far and ahead of us.

I didn't say Obama would be the president with the shortest term in history, only that if he doesn't act now, there's a risk he might be. And by that I don't mean to bring up the risk of physical aggression against him, I abhor it and don't think he deserves that at all. I’m talking political crisis. The fact remains, though, that he is now responsible, and that his choices and appointments for his finance team are highly dubious, and that's putting it very mildly. Tim Geithner today in his conformation hearing had nothing to say about toxic debt than that it is "very hard to value". And from what I can tell, no-one pushed him to clarify his, or Obama's position. And that is just plain dangerous territory.

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Yesterday there was a small inaugural rally in the markets. The pundits on CNBC were loving it. Obama has restored confidence in the markets. Peacenik just checked the Dow and TSX. Both are down almost 200 points. The banks sold trillions of dollars worth of worthless assests. They reaped millions of dollars in profit. And it was all an illusion. A fraud. A Ponzi Scheme. The game is almost up. Illargi thinks there is no way out. Peacenik hopes Illargi is wrong, for once.