"No empty threat: Credit-default swaps are pitting firms against their own creditors", The Economist, 06.20.2009, 79.
Bankruptcy codes assume that creditors always attempt to keep solvent firms out of bankruptcy. Six Flags and others are finding that financial innovation has undermined that premise.
Some investors take an even more predatory approach. By purchasing a material amount of a firm's debt in conjunction with a disproportionately large number of CDS contracts, rapacious lenders (mostly hedge funds) can render bankruptcy more attractive than solvency.
About two years ago Henry Hu of the University of Texas began noticing odd behavior in bankruptcy proceedings - one bemuse courtroom witnessed a junior creditor argue that the valuation placed on a firm was too high. With default rates climbing, he sees perverse incentives as a looming threat to financial stability.
[Perverse Incentives, Unintended Consequences]
"Like father, like son: There is a benefit in looking like dad", The Economist, 06.20.2009, 85.
There are few more foolish actions, from an evolutionary point of view, than raising another male's progeny.
The result, published in the latest edition of Animal Behaviour, is that children who looked and smelled like their fathers did indeed enjoy more paternal care than those who did not. They averaged +1 on the paternal investment index. The 'non-resemblers', those adjudged by outsiders not to smell or look like their fathers, averaged -1. This mattered, for there was also a strong connection between paternal investment and a child's nutritional state. Children whose index was +2 had an average BMI of 16.5. Those whose index was -2 averaged a BMI of 15.