The market for leveraged buyouts is collapsing

Shares of publicly traded buyout firms have collapsed and several mega-deals are falling apart.

The latest: A $19.4 billion deal by Thomas H. Lee Partners LP and Bain Capital Partners LLC to take over radio and billboard advertising firm Clear Channel Communications. It looks like the banks that so eagerly signed up to finance the transaction back in the "anything goes" period are balking at their commitments - so the PE firms are suing them.

Of course, it's easy to see why the banks are fearful: The value of leveraged loans is falling fast. These types of debts have already been marked down by about 15%, according to the Wall Street Journal, meaning the banks would be looking at a hit of a few billion dollars if the deal closed.

Collapsing deals are bad for bank and brokerage earnings. They also drain confidence in the market. Here's something else to think about: One reason the bulls cited for buying stocks in the past few years was the possibility you could catch a buyout bid. After all, private equity firms, loaded with cash and bank lines, were busy taking over companies left and right. We've clearly lost that support.