Where Are All of the Bankruptcies?

We are constantly hearing about how so many firms are going bankrupt. So many tales of woe.

But the stories are off the mark. In reality, what has shocked me has been the dearth of bankruptcies. In fact, other than Linens & Things and Circuit City, there's really nothing big that has happened yet. And I have to wonder when it is going to happen if it hasn't happened yet.

Take the curious case of Textron (TXT - commentary - Trade Now). I look at this company, with severe monumental losses in finance and a big reliance on business jets plus a heavy auto component -- this company should have failed. It should have been forced to go bankrupt. Instead, like so many other troubled companies, it was able to do an equity offering and work its way through this period. Now it has an analyst meeting on Sept. 10, and JPMorgan said yesterday, "We continue to view Textron as one of the last value plays in the sector." Can you believe it? Deathbed to best buy!

You could say there are plenty of Textrons out there, a whole host of real estate trusts and insurers that were able to stay alive through equity offerings -- Lincoln (LNC - commentary - Trade Now) and Hartford (HIG - commentary - Trade Now) being the best examples of the latter. We also, amazingly, have companies like Radian (RDN - commentary - Trade Now), PMI Group (PMI - commentary - Trade Now) and MBIA (MBI - commentary - Trade Now) alive and kicking.

Incredible.

How could these guys not have gone belly-up? Isn't that the real question? Where are all the bankruptcies that these mortgage-related issues were supposed to cause? Where are the Chapter 11s? Even the leveraged companies don't seem to be having the problems I figured they would. Sure, Tribune, but that was an open secret that I said would go belly-up from the get-go and begged the Labor Department to stop it before the pensions were destroyed. Reader's Digest? When I read that international was separate -- the only growth business -- I couldn't believe that anyone thought the domestic company could bear that debt. Those deals were just plunder. But I think that we should have seen more players go under than the most levered in New York, Macklowe, or a couple of lightweighs in L.A.

That's certainly how I look at the "dilemma" of what "will" happen with the wave of bankruptcies. There should have already been a gazillion of them!

If bankruptcies were a stock, we would pronounce the following judgment: better than expected!

Random musings: I got a lot of heat yesterday for calling Ted Kennedy "one of the good guys." To which I say, you have to be kidding me. He had many personal failings, but to deny what he has done for the social welfare in this country is nuts. Only the super-rich who have never had health care expense problems or felt the pain of falling outside the safety net can possibly reach that conclusion. Did he cheat at Harvard? Yes. Did the Kopechne incident stink? Oh yeah. But even the darned Wall Street Journal called him a principled man who championed his agenda honestly and fairly.

At the time of publication, Cramer had no positions in the stocks mentioned.

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