Crash- From Real Estate to LBO

The big news today is that the Bank of England is bailing out the big English real estate firm Northern Rock, aka Northern Wreck, to the tune of billions of pounds. So the B Of Eng is drawn into the mess as well. Country2ide Real Estate is now getting its THIRD bailout, going up another $12 billion, to $25 billion of bail out. This is while its stock market value has decreased by 60-percent.

The big giant that is beginning to make its entry is the LBO Debt problem. The big banks have almost $500 billion in LBO (Leveraged Buyout Debt) and they have to sell it off. But what are they or the Central Banks supposed to do? One crazy idea was to loan money to the "non-banks" (hedge funds) so they could then buy the LBO debt from the banks. So you could literally have the same bank have the same asset and debit for the same transaction on the books. Very interesting.