Hostess as a Cautionary Tale: The US is on the Same Path

You’ve probably heard about Hostess Brands requesting to liquidate the company. A dispute with the bakers union ultimately led to the decision: the union wouldn’t back down on their request to lessen Hostess’s desired pay cuts, so Hostess shut the whole thing down. Tyler Durden at Zero Hedge has a story about how this bankruptcy isn’t what it seems. AFL-CIO boss Richard Trumka said this was a repeat of the Bain Capital-style vulture capitalism, with the rich getting richer, and the workers getting dumped on. Durden’s article points out that the private equity investors in Hostess gained access through their connections with Democrat legilators, and consultants. Read the whole thing, it’s interesting.

Near the very end of the article, Durden says something that caught my attention (my bold emphasis).

End result: a near total loss for everyone involved, except the secured creditors of course, who will now get pennies on the dollar, or perhaps even par, for their claims when all is said and done.

Sadly, in many ways Hostess is now indicative of that just-as-insolvent larger corporation, the USA, whose insurmountable balance sheet liabilities will be the eventual catalyst for its collapse, but only once the Income Statement and the Cash Flow sheet join in. For now, the Fed provides the flow needed to avoid the day of reckoning, but everything ends eventually.

We’re on the same path as Hostess, but about half of the country doesn’t want to know it.