The present concern of the current Washington administration over Darfur in southern Sudan is not, if we look closely, genuine concern over genocide against the peoples in that poorest of poor part of a forsaken section of Africa.

No. “It’s the oil, stupid.”

China’s oil demand to fuel its booming growth has led Beijing to embark on an aggressive policy of - ironically - dollar diplomacy. With its more than US$1.2 trillion in mainly US dollar reserves at the Peoples’ National Bank of China, Beijing is engaging in active petroleum geopolitics. Africa is a major focus, and in Africa, the central region between Sudan and Chad is a priority.

This is defining a major new front in what, since the US invasion of Iraq in 2003, is a new Cold War between Washington and Beijing over control of major oil sources. So far Beijing has played its cards a bit more cleverly than Washington. Darfur is a major battleground in this high-stakes contest for oil control.

If the US government is able to get popular acceptance of the charge of genocide, it opens the possibility of drastic “regime change” intervention by the North Atlantic Treaty Organization (NATO) - read Washington - in Sudan’s sovereign affairs. The US government repeatedly uses “genocide” to refer to Darfur. It is the only government to do so.

The Bush administration keeps insisting that genocide has been going on in Darfur since 2003, despite the fact that a five-person UN mission led by Italian Judge Antonio Cassese reported in 2004 that genocide had not been committed in Darfur.

High leverage ratios could hurt companies with weak businesses, especially if rates rise or the economy weakens. And there are plenty of weak businesses. The percentage of companies at the lower-end of the junk bond market is rising. The percentage of junk bonds that carry a B-minus rating or lower is 49%. That’s up from 30% in 2003, 46% in 2004, 44% in 2005, and 43% in 2006, according to S&P data. “We can see the seeds of the next wave of defaults and distress being sown,” says Vazza.

That has bankruptcy and restructuring lawyers getting ready for a boom in business. “I agree that default rates are going to rise. They have been kept low, in part, by the use of ‘covenant-light’ debt,” says Jay Goffman, a senior partner at Skadden, Arps, Slate, Meagher & Flom. “That means there are few covenants to default on, short of not making payments. But that holiday often ends after two or three years.”

Decline in Lending Standards

Ross argues that the current wave of buyouts will end badly because some private equity firms have stripped too much value from some companies, leaving them ill-equipped to operate their businesses. “Only about 11% of [high-yield offering] proceeds have been for capital expenditures to enlarge the business, with the rest going for sponsor dividends, stock buybacks, refinancing of existing debt or LBOs—not the most exciting uses of proceeds,” Ross says.

He’s also alarmed by the decline in corporate lending standards, which he compares to the subprime mortgage meltdown. “I believe that credit markets have been recklessly permissive to the point where instead of traditional risk-adjusted rates of return the market is dealing with what I would call risk-ignored rates of return,” Ross said. “The rating agencies recently have begun to revise upward their forecasts for late ‘07 and ‘08 but are still a bit below mine.”

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