[WOSG]

"And why in the world would I be interested in World Com bonds, of all things?"

It's a joke, as in "have I got a bridge to sell you".
If you really believe your line about "not liquidating dept" you'd go for it, they sell for 20% of par. A steal if debt was being propped up. It isnt.

But of course, WCOM *is* chapter 11, creditors *are* taking baths *huge* baths, on $400 billion in overinvestment in telecom and communications infrastructure. What you claim is not happening, in fact *IS* happening.

True story: I did lose near 6 figures on WCOM bonds and related asset classes. Ouch.

[Iris7]

OK, I see where you are coming from. Perhaps the rate of debt liquidation is adequate as you say, but I see the Fed pushing the money supply, buying financial assets to hold up the market, and counseling other central banks to do the same thing, and see this as a desperate attempt to curtail debt liquidation. The boom saw terrible malinvestment, and this investment, carried on the books at above current market values, has to be liquidated to write down the value to market. It is impossible to value these assets without selling them. This is resisted by anyone who stands to lose by this process, of course, and those who stand to lose include the rich and powerful as well as the foolish and poorly paid, and all in between. What people have is at dire risk as this process develops. Politicians feel the pressure more than most. The result is a long drawn out process that never has a chance to work fully and a short-circuiting of the "creative destruction of Capitalism".

Those persons at risk from derivatives, asset based securities, etc. will have to be very fully cleaned out. (This means "the banking system".) Unionized firms will have to fail. Job security for public employees will have to become less than private. Tax revenues will have to drop by an order of magnitude. People will vote in a Hitler, a Stalin, or at least a Peron or a Chavez.

To avoid this seeming calamity the Big Boys are running the program sketched in the first paragraph. The see this as a matter of no choice. However, this road we are taking leads inexorably to "serfdom", as Hayek put it, or at least a society of clients and patrons in the Roman Empire sense.