The Mayan End of an Age isn’t our only worry: Hoards of bonds come due for businesses in 2012

By Monica Davis

When pundits predict the end of the world using the Mayan Calendar, with 2012 as the lynch pin of a new age, one wonders whether they were predicting the possibility of an economic tsunami which will change the world.  Given the fact that a bunch of junk bonds and mortgage rates will come due in 2012, it is quite possible that this economy will go down the tubes, regardless of which political party is driving the train.

The year 2012 is the beginning of a cycle fueled by $700 billion in high risk bonds which will come due.  As noted by the New York Times, perhaps we should take financial disaster into account when describing possible 2012 calamity.

Huge bills are about to come crashing down on the business section, a segment of the economy which has already been hit by consumers who can’t pay their bills, or keep the economy afloat with purchases of big ticket items. Businesses, such as the newspaper industry, which have been in trouble for years, are increasingly at risk of bankruptcy, downsizing, or closure.

Consider the irony: the New York Times has been reporting on the nation’s funky financial position for years.  It has covered the Wall Street implosion, the real estate catastrophe, and the economic fall out of the BP oil deluge in the Gulf of Mexico. Now, the paper, considered the flag ship of alleged liberal papers, plans to issue $200 million in bonds to refinance a debt and repay a loan which doesn’t come due for 3 years.

New York Times Co. plans to sell $200 million of six-year bonds to refinance debt as the publisher of the namesake newspaper seeks to repay a loan from Mexican billionaire Carlos Slim three years ahead of schedule.

If you are a person who has a lot of faith in the economy’s ability to recover, now is a great time to pick up on some great deals. Interest rates are at historic lows and the housing market is so far down the tubes that people who would never think of investing in real estate may jump in these shark-infested waters and hope to make a killing.

Bloomberg notes that

The average cost to borrow high-yield, high-risk debt fell to 7.62 percent on Oct. 29, the lowest since May 2007, according to Bank of AmericaMerrill Lynch’s U.S.High Yield Master II index. Times Co.’s outstanding notes due in March 2015 have a coupon of 5 percent, and its debt maturing in September 2012 has a 4.61 percent coupon.

So, if an investor has cojones of steel, and faith that the end of the world as we know it, either ain’t gonna happen, or is a good thing for investors, then “now is the time to buy.”

On the other hand, if you are a Nervous Nellie, or a professional Doomsdayer, then perhaps we should put our heads between our legs and kiss our financial wrecked behinds goodbye.

Is the glass half empty, or is it half full.  Is this really the End of the World as We Know It (EWWKI), or is it the beginning of an enlightened age? Are the economy and our way of life about to come to a crashing end, taking economic and political stability along with it?  Who knows.

Perhaps all of this speculating on what is coming down the pike is a good thing: if we learn our lesson and change our ways.  Then again, since history repeats itself over and over, perhaps we are no better or no worse than any of our predecessors.  Disaster’s coming down the pike, Noah’s building his own ark, and the rest of us unprepared dweebs are about to get drowned by a sea of change.