NOW LET US LOOK AT THE EVENTS HAPPENNING IN AMERICA;”Unprecedented U.S. corp. defaults seen for ’09
Tue Sep 29, 2009 11:43am EDT

Reporter’s Notebook

Private equity seeks creative distressed deals
Hilco’s Lipoff sees retail M&A pickup
Buoyant markets won’t fix all European firms
Opportunities in restructuring for private equity
More Restructuring … Email |Print | Reprints[-] Text [+] By Chelsea Emery and Emily Chasan

NEW YORK (Reuters) – U.S. corporate debt default rates are expected to hit “unprecedented” levels in 2009, even though the economy may be past the halfway mark of the U.S. recession, according to a forecast unveiled on Monday at the Reuters Restructuring Summit.

“There is a lot of pain left — we are only just half way through the 600 or so defaults in this cycle,” said Phil Kleweno, a partner at Bain’s corporate renewal group.

The forecast for the 2009 corporate default rate has risen to 12 percent to 14 percent, from a May forecast of 11 percent to 13 percent, according to Bain’s corporate default outlook. That suggests a total of about 180 to 210 companies could default on their debt this year.

“Our ongoing gross domestic product models are calling for a softer and longer climb out” of the economic decline than previously thought, said Kleweno.

Defaults will rise to 500 to 600 in the period between 2008 and 2011, up fivefold from the previous four-year period.

About 50 percent of defaults to-date have occurred in media, entertainment, automotive, chemicals and packaging industries. Going forward, there will be little relief for these sectors, he said.

“Consumer facing companies will continue to be at a higher risk of default,” said Kleweno.


More defaults will come from debt exchanges — meaning a company agreed with its bondholders to exchange old debt for new debt and equity — rather than from corporate bankruptcies, according to the study.

Distressed debt exchanges have occurred 40 percent more often than bankruptcies so far this year.

“People are being proactive,” said Kleweno. But he added that these amendments are only buying time. Rather than fixing the balance sheet, the amendments and lender negotiations tend to kick the can down the road and defer the problem, he said.

Though Bain expects the U.S. economy to bottom by the end of this year, corporate default pressures will remain as many companies continue to struggle to meet interest payments on heavy debt loads.

Bain expects the default rate in 2010 to be around 9 to 11 percent of debt issuing companies, or about 140 to 160 defaults.


A spike of maturities beginning next year will cause the next wave of financial distress, according to the Bain study. Continued…—Unprecedented U.S. corp. defaults seen for ’09
Tue Sep 29, 2009 11:43am EDT

Reporter’s Notebook

Private equity seeks creative distressed deals
Hilco’s Lipoff sees retail M&A pickup
Buoyant markets won’t fix all European firms
Opportunities in restructuring for private equity
More Restructuring … Email |Print | Reprints[-] Text [+] Debt maturities are expected to rise 50 percent in 2010, from the year before, to $62 billion, then almost double again the following year, to $117 billion.

“As debt matures over the next couple of years, speculative grade refinancing will prove difficult,” according to the Bain study.

(Reporting by Emily Chasan and Chelsea Emery; Editing by Tim Dobbyn”———-2.)US Concerned About China’s Military Modernization
By Meredith Buel
29 September 2009

PLA’s type-03 long-range rocket guns
October 1, 2009 is the 60th anniversary of the People’s Republic of China, and the nation’s armed forces will take part in a massive program celebrating the Communist Party’s takeover in 1949. U.S. officials have carefully watched China’s efforts to modernize its military in recent years and are concerned it could pose a threat to America’s military power in the Pacific.

For more than a decade, China has been rapidly modernizing the People’s Liberation Army. And U.S. officials have expressed concern about how Beijing might use its expanding military power.

China’s Defense Minister, Liang Guanglie said recently that his country’s armed forces have made such huge strides in modernization that China’s fighter jets, tanks, warships and ballistic missiles equal or come close to matching the arsenals of Western nations.

The United States uses fleets of aircraft carriers, submarines, and other military assets to project power in the Pacific region.

Military analysts warn that China is trying to develop a new anti-ship ballistic missile that could threaten the U.S. Navy’s ability to stage operations close to China.

Roger Cliff focuses on Chinese military strategy at the RAND Corporation here in Washington.

“U.S. surface ships, including U.S. aircraft carrier strike groups that are within about 1,000 miles of China’s coast, are going to be vulnerable to attack by aircraft, surface ships and submarines,” said Roger Cliff.

While China’s relations with Taiwan have improved in recent months, Beijing continues to add to the hundreds of missiles it has pointed at the island.

But the Pentagon’s 2009 report on China’s military power ranks the country’s defense technology below that of the United States.

Retired U.S. Navy Rear Admiral Eric McVadon is Director of Asia-Pacific Studies at the Institute for Foreign Policy Analysis.

“It is a very difficult thing to imagine a two-pronged campaign – one against Taiwan and one against an intervening American force, of course, the world’s only superpower,” said Eric McVadon. “So China does not have the experience and the forces and so forth to expect to be able to do that very effectively. That would be truly a daunting challenge.”

China says its military budget for this year is $70 billion, although the U.S. Defense Department estimates it could be as high as $150 billion.

The Pentagon says China’s ability to sustain military power at a distance is limited. But top officials are concerned about Beijing’s increased focus on nuclear, space and cyber warfare.

U.S. Defense Secretary Robert Gates:

“Their investments in cyber- and anti-satellite warfare, anti-air and anti-ship weaponry, and ballistic missiles could threaten America’s primary way to project power and help allies in the Pacific – in particular, our forward air bases and carrier strike groups,” said Secretary Gates.

But Beijing says China’s military modernization is purely defensive in nature and aimed at protecting the country’s security and interests.

Bernard Cole of the U.S. National Defense University.

“I really believe that the number one national security goal in China is simply keeping the Chinese Communist Party in power,” said Bernard Cole.

The United States and China recently renewed military-to-military cooperation, which, in the past, has involved U.S Navy ships visiting Chinese ports and meetings between officers.

The Commander of U.S. forces in the Pacific, Admiral Timothy Keating, says he would like to go a step further to include joint military exercises.

“I happen to believe that partnership is an essential element of stability throughout the Asia-Pacific region,” said Admiral Keating. “And a way of demonstrating that is to operate on a multilateral basis, with forces from the People’s Liberation Army, Navy and Air Force.”

Analysts also suggest the U.S. and Chinese militaries cooperate to provide humanitarian assistance and disaster relief during emergencies as a way to build trust and confidence between the two nations.

Eric McVadon of the Institute for Foreign Policy Analysis:

“For the moment, we have to hedge,” he said. “Both sides have to hedge because we are fearful that a conflict could arise. But the more that we cooperate and engage, maybe the less important it becomes to hedge. So that is my optimistic viewpoint for the future.”

U.S. defense officials have long expressed concerns about the lack of transparency in China’s military affairs.

In an attempt to better communicate its military intentions, China’s Defense Ministry recently launched its first Web site in Chinese and English that contains numerous links to military news, photographs and videos. “—–3.)”

Gore Vidal: ‘We’ll have a dictatorship soon in the US’

The grand old man of letters Gore Vidal claims America is ‘rotting away’ — and don’t expect Barack Obama to save it

Gore Vidal

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A conversation with Gore Vidal unfolds at his pace. He answers questions imperiously, occasionally playfully, with a piercing, lethal dryness. He is 83 and in a wheelchair (a result of hypothermia suffered in the war, his left knee is made of titanium). But he can walk (“Of course I can”) and after a recent performance of Mother Courage at London’s National Theatre he stood to deliver an anti-war speech to the audience.

How was his friend Fiona Shaw in the title role? “Very good.” Where did they meet? Silence. The US? “Well, it wasn’t Russia.” What’s he writing at the moment? “It’s a little boring to talk about. Most writers seem to do little else but talk about themselves and their work, in majestic terms.” He means self-glorifying? “You’ve stumbled on the phrase,” he says, regally enough. “Continue to use it.”

Vidal is sitting in the Connaught Hotel in Mayfair, where he has been coming to stay for 60 years. He is wearing a brown suit jacket, brown jumper, tracksuit bottoms; his white hair twirled into a Tintin-esque quiff and with his hooded eyes, delicate yet craggy features and arch expression, he looks like Quentin Crisp, but accessorised with a low, lugubrious growl rather than camp lisp.

He points to an apartment opposite the hotel where Churchill stayed during the Second World War, as Downing Street was “getting hammered by the Nazis. The crowds would cheer him from the street, he knew great PR.” In a flash, this memory reminds you of the swathe of history Vidal has experienced with great intimacy: he was friends with JFK, fought in the war, his father Gene, an Olympic decathlete and aeronautics teacher, founded TWA among other airlines and had a relationship with Amelia Earhart. (Vidal first flew and landed a plane when he was 10.) He was a screenwriter for MGM in the dying days of the studio system, toyed with being a politician, he has written 24 novels and is hailed as one of the world’s greatest essayists.

He has crossed every boundary, I say. “Crashed many barriers,” he corrects me.

Last year he famously switched allegiance from Hillary Clinton to Barack Obama during the Democratic nomination process for president. Now, he reveals, he regrets his change of heart. How’s Obama doing? “Dreadfully. I was hopeful. He was the most intelligent person we’ve had in that position for a long time. But he’s inexperienced. He has a total inability to understand military matters. He’s acting as if Afghanistan is the magic talisman: solve that and you solve terrorism.” America should leave Afghanistan, he says. “We’ve failed in every other aspect of our effort of conquering the Middle East or whatever you want to call it.” The “War on Terror” was “made up”, Vidal says. “The whole thing was PR, just like ‘weapons of mass destruction’. It has wrecked the airline business, which my father founded in the 1930s. He’d be cutting his wrists. Now when you fly you’re both scared to death and bored to death, a most disagreeable combination.”

His voice strengthens. “One thing I have hated all my life are LIARS [he says that with bristling anger] and I live in a nation of them. It was not always the case. I don’t demand honour, that can be lies too. I don’t say there was a golden age, but there was an age of general intelligence. We had a watchdog, the media.” The media is too supine? “Would that it was. They’re busy preparing us for an Iranian war.” He retains some optimism about Obama “because he doesn’t lie. We know the fool from Arizona [as he calls John McCain] is a liar. We never got the real story of how McCain crashed his plane [in 1967 near Hanoi, North Vietnam] and was held captive.”

Vidal originally became pro-Obama because he grew up in “a black city” (meaning Washington), as well as being impressed by Obama’s intelligence. “But he believes the generals. Even Bush knew the way to win a general was to give him another star. Obama believes the Republican Party is a party when in fact it’s a mindset, like Hitler Youth, based on hatred — religious hatred, racial hatred. When you foreigners hear the word ‘conservative’ you think of kindly old men hunting foxes. They’re not, they’re fascists.”

Another notable Obama mis-step has been on healthcare reform. “He f***ed it up. I don’t know how because the country wanted it. We’ll never see it happen.” As for his wider vision: “Maybe he doesn’t have one, not to imply he is a fraud. He loves quoting Lincoln and there’s a great Lincoln quote from a letter he wrote to one of his generals in the South after the Civil War. ‘I am President of the United States. I have full overall power and never forget it, because I will exercise it’. That’s what Obama needs — a bit of Lincoln’s chill.” Has he met Obama? “No,” he says quietly, “I’ve had my time with presidents.” Vidal raises his fingers to signify a gun and mutters: “Bang bang.” He is referring to the possibility of Obama being assassinated. “Just a mysterious lone gunman lurking in the shadows of the capital,” he says in a wry, dreamy way.

Vidal now believes, as he did originally, Clinton would be the better president. “Hillary knows more about the world and what to do with the generals. History has proven when the girls get involved, they’re good at it. Elizabeth I knew Raleigh would be a good man to give a ship to.”The Republicans will win the next election, Vidal believes; though for him there is little difference between the parties. “Remember the coup d’etat of 2000 when the Supreme Court fixed the selection, not election, of the stupidest man in the country, Mr Bush.”

Vidal says forcefully that he wished he’d never moved back to the US to live in Hollywood, from his clifftop home in Ravello, Italy, in 2000. His partner of 53 years, Howard Austen, who died in 2003, collated a lifetime’s-span of pictures of Vidal, for a new book out this autumn, Gore Vidal: Snapshots in History’s Glare (an oddly clunky title). The cover shows what a beautiful young man Vidal was, although his stare is as hawkish as it is today.

He observes presidential office-holders balefully. “The only one I knew well was Kennedy, but he didn’t impress me as a good president. It’s like asking, ‘What do I think of my brother?’ It’s complicated. I’d known him all my life and I liked him to the end, but he wrecked his chances with the Bay of Pigs and Suez crises, and because everyone was so keen to elect Bobby once Jack had gone, lies started to be told about him — that he was the greatest and the King of Camelot.”

Today religious mania has infected the political bloodstream and America has become corrosively isolationist, he says. “Ask an American what they know about Sweden and they’d say ‘They live well but they’re all alcoholics’. In fact a Scandinavian system could have benefited us many times over.” Instead, America has “no intellectual class” and is “rotting away at a funereal pace. We’ll have a military dictatorship fairly soon, on the basis that nobody else can hold everything together. Obama would have been better off focusing on educating the American people. His problem is being over-educated. He doesn’t realise how dim-witted and ignorant his audience is. Benjamin Franklin said that the system would fail because of the corruption of the people and that happened under Bush.”

Vidal adds menacingly: “Don’t ever make the mistake with people like me thinking we are looking for heroes. There aren’t any and if there were, they would be killed immediately. I’m never surprised by bad behaviour. I expect it.”

While materially comfortable, Vidal’s was not a happy childhood. Of his actress and socialite mother Nina, he says: “Give her a glass of vodka and she was as tame as could be. Growing up is going to be difficult if the one person you hate is your mother. I felt trapped. I was close to my grandparents and my father was a saint.” His parents’ many remarriages means that even today he hasn’t met all his step-siblings.

He wrote his first novel, Williwaw, at 19. In 1948, he was blacklisted by the media after writing The City and the Pillar, one of the earliest novels to deal graphically with homosexual desire. “You’ll be amazed to know it is still going strong,” he says. The “JT” it is dedicated to is James “Jimmy” Trimble, Vidal’s first love and, he once said, the love of his life. “That was a slight exaggeration. I said it because there wasn’t any other. In the new book there are wonderful pictures of him from our schooldays. He was a great athlete.” Here his voice softens, and he looks emotional, briefly. “We were both abandoned in our dormitory at St Alban’s [boarding school]. He was killed at the Battle of Iwo Jima [in 1945] because of bad G2 [intelligence].”

Vidal says Trimble’s death didn’t affect him. “No, I was in danger of dying too. A dead man can’t grieve a dead man.” Has love been important to him? “Don’t make the error that schoolteacher idiots make by thinking that gay men’s relationships are like heterosexual ones. They’re not.” He “wouldn’t begin to comment” on how they are different.

In 1956 he was hired by MGM, collaborated on the screenplay for Ben Hur and continued to write novels, most notoriously Myra Breckenridge about a transsexual. It is his satires, essays and memoirs — Live From Golgotha, Palimpsest and most recently, Point to Point Navigation — which have fully rounded our vision of this thorny contrarian, whose originality springs simply, and naturally, from having deliberately unfixed allegiances and an enduring belief in an American republic and railing sadness at how that ideal has been corrupted.

Vidal became a supportive correspondent of Timothy McVeigh, who blew up the Alfred P. Murrah Building in Oklahoma City in 1995 killing 168 people. The huge loss of life, indeed McVeigh’s act of mass murder, goes unmentioned by Vidal. “He was a true patriot, a Constitution man,” Vidal claims. “And I was torn, my grandfather [the Democrat Senator Thomas Gore] had bought Oklahoma into the Union.” McVeigh claimed he had done it as a protest against tyrannical government. The writer Edmund White took the correspondence as the basis for a play, Terre Haute (the jail McVeigh was incarcerated in before he was executed in 2001), imagining an encounter between the bomber and Vidal charged with desire.

“He’s a filthy, low writer,” Vidal says of White. “He likes to attack his betters, which means he has a big field to go after.” Had he wanted to meet McVeigh? “I am not in the business of meeting people,” Vidal says. “That play implies I am madly in love with McVeigh. I looked at his [White’s] writing and all he writes about is being a fag and how it’s the greatest thing on Earth. He thinks I’m another queen and I’m not. I’m more interested in the Constitution and McVeigh than the loving tryst he saw. It was vulgar fag-ism.”

Vidal says that he hates labels and has said he believes in homosexual acts rather than homosexual people. He claims his relationship with Austen was platonic (though they reputedly met at a legendary New York bath-house). He was once quoted as saying that he’d had sex with a 1,000 men by the time he was 25. It must have been a little strange for Austen, Vidal’s life companion, to source those pictures of Trimble, his first, perhaps only, love.

Vidal puts on a scornful, campy voice. “People ask [of he and Austen], ‘How did you live together so long?’ The only rule was no sex. They can’t believe that. That was when I realised I was dealing with a public too stupid by half. They can’t tell the difference between ‘The Sun rose in the East’ and ‘The Sun is made of yeast’.” Was sex important to Vidal? “It must have been yes.”

He is single now. “I’m not into partnerships,” he says dismissively. I don’t even know what it means.” He “couldn’t care less” about gay marriage. “Does anyone care what Americans think? They’re the worst-educated people in the First World. They don’t have any thoughts, they have emotional responses, which good advertisers know how to provoke.” You could have been the first gay president, I say. “No, I would have married and had nine children,” he replies quickly and seriously. “I don’t believe in these exclusive terms.”

Impaired mobility doesn’t bother him — he “rose like a miracle” on stage at the National — and he doesn’t dwell on mortality either. “Either you accept there is such a thing or you’re so dumb that you can’t grasp it.” Is he in good health? “No, of course not. I’m diabetic. It’s odd, I’ve never been fat and I don’t like candy, which most Americans are hooked on.”

There is a trace of thwarted ambition about him. “I would have liked to have been president, but I never had the money. I was a friend of the throne. The only time I envied Jack was when Joe [Kennedy, JFK’s father] was buying him his Senate seat, then the presidency. He didn’t know how lucky he was. Here’s a story I’ve never told. In 1960, after he had spent so much on the presidential campaign, Joe took all nine children to Palm Beach to lecture them. He was really angry. He said, ‘All you read about the Kennedy fortune is untrue. It’s non-existent. We’ve spent so much getting Jack elected and not one of you is living within your income’. They all sat there, shame-faced. Jack was whistling. He used to tap his teeth: they were big teeth, like a xylophone. Joe turned to Jack and he says, ‘Mr President, what’s the solution?’ Jack said, ‘The solution is simple. You all gotta work harder’.” Vidal guffaws heartily.

Hollywood living proved less fun. “If there was a social whirl, you can be sure I would not be part of it.” He does a fabulous impression of Katharine Hepburn complaining about playing the matriarch in Suddenly Last Summer, which he wrote. “I hate this script,” he recalls Hepburn saying . “I’m far too healthy a person to know people like this.” Vidal snorts. “She had Parkinson’s. She shook like a leper in the wind.”

I ask what he wants to do next. “My usual answer to ‘What am I proudest of?’ is my novels, but really I am most proud that, despite enormous temptation, I have never killed anybody and you don’t know how tempted I have been.”

That wasn’t my question, I say. “Well, given that I’m proudest that I haven’t killed anybody, I might be saving something up for someone.” A perfect line: we both laugh.”—–NOW TELL ME IF THAT MAN(ELIJAH MUHAMMAD IS ON TIME!!!

Is he happy? “What a question,” he sighs and then smiles mischievously. “I’ll respond with a quote from Aeschylus: ‘Call no man happy till he is dead’.”

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