Now What

As each week passes, major tectonic shifts in the world's economy are taking place.

What will the next week have in store. The MSM articles dont do the trick. One has to dig deeper or have their ear very close to the ground.

Needless to say, this next week is crucial. Come Friday the 26th we could be almost anywhere on the map, or so it seems.

Reuters: More financial shock and awe?

U.S. Treasury Secretary Henry Paulson would have sweeping powers over the massive war chest and his decisions would not be reviewed by any court...

Democratic lawmakers, who control both houses of Congress, said they hoped to approve the bailout quickly but wanted changes such as more oversight, limits on executive pay at participating firms, and assistance for homeowners.

Some definitions

Deleverage - Companies will often take on excessive amounts of debt to initiate growth. However, using leverage substantially increases the riskiness of the firm. If leverage does not further growth as planned, the risk can become too much for the company to bear. In these situations, all the firm can do is delever by paying off debt.

Any sign of deleverage shown by a company is a red flag to investors who require growth in their companies.

Leveraged Buyout - The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.

In an LBO, there is usually a ratio of 90% debt to 10% equity. Because of this high debt/equity ratio, the bonds usually are not investment grade and are referred to as junk bonds