Filed under: Debt, Fraud

When I heard the term zombie debt, I had to grab the post. My zombie story, “Five Places You Must Visit After You Die” is included in the new anthology, “Book of Dead Things.”

But those aren’t the zombies in question. Zombie debts are those old, unpaid debts owed companies that have given up trying to collect. Now, however, they are selling those debts to debt collectors, who miraculously bring them back to life and resume the pursuit. Of you.

Dayana Yochim, writing for The Motley Fool, has some savvy tips about dealing with phone calls from the dead (debt), the foremost being, admit nothing. State nothing that might indicate your recognition of the debt, because, like brains, your reaction feeds the zombie debt. Ask for details, check it against your own records.

That doesn’t mean you can ignore a valid debt, though. It can wreak havoc on your credit rating. So if you do in fact owe the debt, and substantiate that the debt collector is in fact the owner of that debt, you’d be well advised to make arrangements to clean up that particular dirty, lurching problem.

Because sunlight and baseball bats don’t work against this kind of zombie.

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Filed under: Debt, Saving, Shopping, Recession

Is it any wonder that the economies of the Asian manufacturing behemoths are beginning to wilt? Should we be surprised by the downwardly revised economic outlook for Japan? Does China’s burgeoning inflation rate give us pause to ponder the reasons why? Ha! They’re getting what they got coming to them. They asked for it and they’ve done it to themselves.

Since the 1940’s the Asian manufacturing block has built its economies upon the backs of hard working Americans, aided mostly by American corporations seeking out their sustenance hungry work forces which were willing to work for just pennies a day. Now, it’s coming back to bite them in the rumps. Cry me a river, won’t ya?

But there’s a silver lining to this cloud of contraction, and it plays into our American boiler plate strengths. We’ve been in a maintenance mode for almost a decade now. Yes, our standard of living has declined slightly overall, but we’re still in pretty good shape. We have the ability to weather a recession for a much longer time frame than those countries which are trying to maintain growth patterns based upon the paychecks of American consumers. The cash cow has been milked.

I saw this coming at least 20 years ago and It’s going to get far worse before it gets any better. My advice to you my friends is to keep playing it very tight with your paychecks. Remind the world just exactly who has been paying the bills. Show them the American workforce still holds most of the cards.

If the world wants our continued support for their economies, it’s about time they begin to give something back. In the meantime, my disposable income is going into American banks, except for those few expenditures which might raise my good old American income and an occasional gift of which my wife earnestly deserves.

Give my regards to Chairman Mao.

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Filed under: Raising money, Private equity industry, Investments

Egyptian buyout firm Citadel Capital might actually be coming public. A report out of DealBook from the New York Times discusses that the firm plans to raise $150 million to $200 million from a public offering later this year.

The firm currently manages $7 billion in assets and intends to use the capital for ventures in the energy, food and manufacturing industries.

This article also noted that according to managing director Mr. el-Houssieny, Citadel is in discussions with four undisclosed international banks regarding the offering. It also notes that it is looking into whether it should list in London, Cairo, or Dubai.

In 2007, the company bought Rally Energy Corp, a Canadian oil company, for $849 million and was involved in the Egyptian Fertilizer Co.’s $1.41 billion sale.

This would be an interesting change of pace. Imagine a private equity and LBO firm in the U.S. announcing it would come public. They would be told to go away until next year. Now imagine if you were selling this only to Americans and it was an Egyptian company wanting to do this. Maybe the decoupling argument isn’t as ludicrous as we think.

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Filed under: Raising money, Private equity industry

This week’s Barron’s reports that private equity funds are still raising plenty of money. The third quarter of 2007 saw a record level of money flowing into private equity funds, over $66 billion. The fourth quarter wasn’t far behind at $51 billion , suggesting that investor interest in private equity funds remains strong.

The huge change is the the size of the funds and the deals they do. Smaller funds set a record for money raised in the fourth quarter, while more massive funds saw their take fall by over 20%.

Even though these numbers seem to have surprised some analysts, they make sense. Conventional equity investing looks less attractive as corporate profits are prone to soften. As a result, sophisticated investors look for returns elsewhere, especially in smaller funds doing deals for lesser known companies. In times of market instability, private equity funds tend to see more not less investment.

So while the mega-deals of the last few years fade away for a while, anticipate to see more smaller deals for companies you’ve never heard of.

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