The Crashing Right Wing Economy

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Buffets, a closely held company based in Eagan, Minnesota, didn't pay interest yesterday on its 12.5 percent notes maturing in 2014, according to Matthew Lee, a customer service representative at U.S. Bank National Association in St. Paul, Minnesota, the trustee for the debt.

The missed payment sparked concerns that corporate defaults are starting to escalate as the worst home sales market since 1981 slows the economy. Tousa Inc., the Florida homebuilder that lost 99 percent of its market value in the past year, also missed interest obligations on $485 million in debt, the company said in a regulatory filing yesterday.

``Default rates are going to start to increase'' this year, said Katalin Kutasi, a principal and the investment manager for distressed debt at hedge fund Kellner DiLeo & Co. in New York, which manages $300 million. ``A lot of them are going to be consumer-sensitive companies.''

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