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As predicted, Boeing blew all of its cash (and possibly much, much more) on buybacks and now has to borrow money to stay in business. First, it successfully sold $3.5 billion worth of bonds on Tuesday to buyers who are under the impression that the company is a very safe bet. Boeing also opened a $1.5 billion line of credit "with three U.S. banks." No one in the mainstream finance world it seems is at all surprised that a company that spent $20 billion on its own stock in 2018 suddenly needs "a boost of liquidity."

What makes this situation so spooky is the role played in this bond purchase by S&P Global Ratings, the Manhattan firm that four years ago paid $1.5 billion to settle lawsuits concerning its "overly rosy ratings" of obviously dodgy Bush-era mortgage-backed securities. Without these AAA ratings, it would have been much harder to pack so much dynamite into the markets that exploded in 2008. This rating company—one that essentially committed fraud to keep the value of stock prices up long enough for those who were ahead to leave the market filled with those who were behind—has maintained its A rating of Boeing's debt. Why? We have heard this tune not too long ago.

According to MarketWatch, S&P Global Ratings maintains that Boeing's debts are good because it's positioned "as one of the two global producers of large commercial jetliners and as one of the largest U.S. defense contractors.” This does sound very rosy indeed. In an unprecedented orgy of greed, Boeing wiped out all of its liquidity and is now borrowing on the belief that the grounding of its most popular, but badly designed, product, the 737 MAX, will be lifted soon. What is rosy about this? It is all muddy.

Now, you can believe you can fly if you want. The imagination is that free. But here are the facts: The situation for Boeing is so bad that the Federal Aviation Administration has turned to NASA to help it make sense of the ever-spreading mess. Also this week, Barclays, one of UK's big four banks, downgraded Boeing's stock because the end of its 737 Max troubles is very hard to see, and, to make matters worse, people do not want to fly the plane even if it returns to service. The 737 Max does not look like a jet to them, but a coffin with wings.

And there is more! Norwegian Air, an airline that was bleeding cash before the Boeing crashes, and is now bleeding more money after it grounded its 737 MAX fleet, is demanding compensation from the cash-strapped American airplane manufacturer (all of the real and virtual cash it used to have is now—and sorry to repeat this—in the pockets of execs and shareholders). Legal experts are expecting other airlines around the world to form a line behind Norwegian Air. The resulting lawsuits will be long and staffed by powerful lawyers. All of this will cost a very pretty penny.

But there is another great danger that is not being properly baked into the current value of Boeing's stock, which is still way too high, around $350 a share (it peaked $400 at the end of last year, after the company's five-year buyback blasts rocketed it out of the gravity of $70, the value it could not escape for first three years of this decade—and if I'm right, the cash for the buybacks in the second half of the decade was mostly borrowed). The real risk that's still external to the present value of Boeing's stock is a "smoking gun."

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If it is proved that the company's execs knew the planes were not safe or ignored important safety procedures in the rush for profits, then the lawsuits demanding compensation will have what Michael Y. Park calls a "smoking gun." S.V. Dedmon, an associate professor of the aeronautical science department at Embry-Riddle Aeronautical University explained to Park how all of this could go down. The Boeing lawyers representing pissed airlines or the dead of the crashes will be looking for this smoking gun everywhere. They are looking for it now. And though it will be hard to find, it's not impossible to find. The risk of finding this document is not imagery.

Park writes:

If such a smoking gun were to be uncovered, it would be a whole new ballgame. Boeing executives would be facing criminal charges for fraud, among other things, as well as significantly more punitive civil damages. Company officials would be facing potential prison time.
So far, FAA has received four calls from Boeing employee whistleblowers. This is what we know about. Those planes did not just fall out of the sky. They crashed because they were designed badly. And if they were designed badly, it looks like it's because execs wanted them to make cash fast, and the cash was badly needed to justify buybacks, a practice that transfers the spoils of production to those who had little or nothing to do with it. This is the vicious cycle that many blue chips are now in.

The A rating is bizarre. The only world it can make any kind of sense in is one where it represents a signal to the few who are ahead to leave the market and the many who are behind to enter, stay, and end up with no seats when the music suddenly stops.