FU Virus Update
MeadWestvaco to close plants in Louisa, Va., and Puerto Rico
Chemtura, U.S. units file to reorganize in Chapter 11
Pacific Capital Bancorp to cut 300, or 22%, of jobs
Fairchild Corp. files to reorganize under Chapter 11
This is just a sampling of just this mornings headlines. It is clear that the FU virus continues to spread. People who lose their jobs often have a difficult time paying their bills if they can't find a replacement job quickly. Companies that file chapter 11 often extinguish their shareholders and stiff their creditors and vendors.
In other words, one FU can create another FU....not by choice, but by simply not having the ability to pay. A quick example: the customer can't pay the retailer who can't pay the retailer who can't pay the shopping center landlord who can't pay the bank who can't pay the shareholders who can't pay their taxes.
If there is one benefit to the FU virus, it destroys money as the Fed prints on the other side by judicial pen stroke. For example, before going into chapter 11, a company may owe millions to the bank.....and through the courts, that debt evaporates and the money disappears from the banks balance sheet as an asset.
Poof!!!! The money evaporates.
There is a multiplier effect to the FU virus because each time one contracts it...it can infect many more. Right now it seems to be spreading rapidly across the nation and the world. Until we find a cure...it is likely to keep spreading.