👉The Fed Propping up Zombie Companies with Cheap Credit and Free Stimulus Money !!

👉The Fed Propping up Zombie Companies with Cheap Credit and Free Stimulus Money !! After the pandemic, we have seen a surge of Zombie Companies. These are a category of companies that just like a virus, are sucking up the lifeblood out of government aid and cheap credit, thanks to the central banks. These are called Zombie Companies. They are Companies that are refusing to close their doors despite being unable to pay off their debts, instead of feeding off government aid or cheap credit from central banks. Zombie corporations are those who cannot cover their debt servicing costs from current profits over an extended period of time. Basically, companies that never made a profit never will make a profit and need Fed's cheap and easy money to survive. Every company that has to do with fracking, Tesla, WeWork, a few dozen tech unicorns in the IPO line, and probably a whole bunch of office REITs, hotels, and airlines for starters. If a company has had at least the past three years, during which the profits it earned were not enough to pay off its debts, we call it (that is the financial press calls it) a zombie company. It means that the company is in such trouble that not only does it not make the kind of profit it needs, but the profit isn't enough to pay off the debts. Today one in five traded companies (that is companies whose shares are traded in stock markets) is a zombie. That is double the number in 2013. So in less than seven years, we have doubled the number of zombie companies. The number of corporations rated Triple C by the rating agencies, which is a company in deep trouble, is now at an all-time high in history. It is no longer, for most American large corporations a matter of making profits. That's not how they survive. This is not any more profit-driven capitalism. It is debt-driven capitalism. What keeps the companies going is their ability to borrow money. That's how they survive. Otherwise, if they relied on the profit they earned, they couldn't pay their debts, and they would then have to declare bankruptcy. Now you can understand why the Federal Reserve announced a couple of weeks ago that it is going to be regularly buying the bonds issued by corporations to raise borrowed money. So it's not just that the zombies are no longer profit-driven and are credit driven, but the credit (the borrowing) is ultimately coming from the government. There is no more private enterprise. It's all public now. As these companies sink deeper and deeper into debt and to the dependency that debt puts a company, on its creditors, with or without government banking. Even before the pandemic, the zombie companies were increasing, but after the pandemic, their numbers have exploded. As the government has been pouring trillions into the economy and deciding who the winners and losers are with government aid to businesses such as the Paycheck Protection Program. Established as part of the history $2.2 trillion CARES Act in March, the program offered small business loans that could become grants if they were used to keep employees on the payroll and certain other expenses. The Fed opened up the high-yield market for almost everybody, and that raises the specter of zombie companies. The Government created an environment of low-interest rates and high liquidity; at the expense of the US Dollar purchasing power, which we will see more and more as they print more and more. The Feds bailed out the rich, but this time, they killed the middle class, and it won't be back anytime soon. The Fed in early April expanded its list of programs designed to support the U.S. economy as it grappled with the shock from the pandemic. The central bank said it might possibly buy exchange-traded funds of high-yield bonds, often called junk bonds. The Fed has not actually bought any yet. But it did provide investors the assurance that the Fed would be there if the market faltered. That has set corporate bond offerings on fire across all investment grades. This isn’t capitalism. The market should be left to freefall, and these companies fend for themselves. Systematic stock buybacks at all-time high stock prices may be legal, but it is absolutely bad behavior. Why do we want to pour government money, our money as taxpayers, into businesses that are not going to survive. The only way to do that is to let the market do its work. The fed is basically more powerful than a dictator. They can print money whenever they want for whoever they want without accountability or elections. They can hand $7 trillion to cronies and oligarchs while the rest of us watch our life savings wiped out. Printing money devalues the money average citizens own. This is enabled by fraudulent formulation of the CPI & PPI. Then everyone will face debt they can't pay, and they will whine they should be bailed out. Propping up zombie companies will create more zombies. Zombie companies eat the living and infecting other zombies. Zombies breed Zombies and Walking Dead. Corporate debt was over 10 Trillion. These companies were miss behaving. They need to pay the price, not the American poor and taxpayers. Capitalism without bankruptcy is like Religion without Hell. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Please take a second to click the like button. And as You know friends, I rely on your donations to keep this channel functional; as you know, it takes a crazy amount of research and time to bring you this content on a daily basis, so I hope you consider helping with whatever donation you can afford. Thank You. First the government destroys the economy, and then we expect him to save it. If the rich lose their companies and money, it is called a financial crisis. But if the Fed burns billions of people's money (which will devalue your savings), then it's just a normal bear market. Zombie companies are over 10% of registered companies to name. Firstly you wouldn't know about it. Secondly, those companies would not want you to know about them; the quieter, the better. Thirdly, no point naming companies that you cannot Google about but are in the registrar. They exist in name only to be able to utilize and execute financial transactions. The issue here is too difficult to identify zombies from real companies. Sadly these are companies that also qualify for aid. Even real businesses keep multiple dormant companies to split revenue, flat tax lines. The question is, how many times can such a company claim aid? Detecting such a company is close to impossible. Does splitting my company into six names means I should qualify for aid six times! The problem is the lack of understanding from the people; that's is why the problem exists. Personally I have seen such companies purely for purchase transactions but have no actual business. Better still, revenue can be forged when your main company just invoice the zombie company whatever amount they want as a form to create a fake business trail. With 10 million invoices in and 10 million worth of sales out, they can even register for tax refunds and claim the next tier of government aid. It is impossible to check if these transactions actually took place. The great Austrian economist Joseph Schumpeter asserted that recessions were necessary and ultimately good. This because sending poorly performing companies to the trash pile would free up resources for allocation to better performing entities. America needs to allow recessions to happen. Painful as they may be, they are ultimately the most efficient way to a healthy economy. Get the politicians out of the way! The problem is: The politicians that are in office when a recession happens get blamed for the recession (with rare exceptions) They then get voted out of office. All politicians want to get re-elected (with rare exceptions). So the easy button is. BRRRRRRRRRRRRR. It is a win-win all around. As long as it is the taxpayer’s monies. Kicking the can down the road, a worldly pastime. “Allowing zombie firms to proliferate in order to protect banks from the consequences of their bad lending practices and investors from the consequences of their bad investment choices doesn’t just reward — and by extension, incentivize — bad actions and decisions; it stores up bigger problems for the future.” Central Planners protect some at the expense of others. The unelected, by committee, suddenly in control of everything. And we thought the Communists were the threat. Jim Grant said, “That’s why they call them “corrections.” They separate the well-capitalized from the poorly capitalized, leaving conditions overall in a better place. Central Bankers have halted the concepts of business cycles and corrections. They believe as Hayek pointed out, they know better than the market. Their hubris is unbound. And so will be the damage they ultimately create. QE does nothing, just psychological manipulation.The day a Cent Dollar or Pound of that QE money enters the economy, We will get hyperinflation ina week.All they do now is buy bond and add it to bank reserves which can’t be withdrawn or used, it’s not even money, in reality, all smoke and mirrors.If people really knew and were not so brainwashed they would get out of this market quicker then you can say "crash". QE did zero in 2008 till now, absolutely nothing; all it did is create an illusion things are better, that is why debt went through the roof; debt drove the fake recovery, not QE. As long as all Central Banks continue printing in unison, it can continue as long as Joe-public believes their currency is accepted to buy what they need. Too much money chasing too few goods , and you can’t escape that reality. They never learn. The truth is, with deficits so high, and the debt parabolic, they can’t save anyone or anything. The end is here, like it or not; it’s all going down down down. This country’s, as well as most (if not all) of the world’s economies, are basically twisted into so many pretzels that it makes the Gordian Knot look simple. And if anyone tries to unravel it, the whole thing will just fall apart. We’re in a Brave New Economic World people.And who knows how this ride is going to end. It’s what I’ve said since this whole thing started- let big corporations fail. Save our people. A new company will take the place of those that die off. But you can’t replace the people who actually drive economies. My big issue with central banks has been one of policy implementation. Politicians/voters/consumers love easy credit with low-interest rates. Not realizing the consequences regarding currency erosion. The PPI & CPI of most countries is based on the periodic review of consumer and producer prices. They are entirely a symptom of inflation, not a cause. Too much paper in circulation inflates wishful demand while also causing an artificial expansion of supply capacity. The end result for the last thirty years has been an impoverished middle class relative to assets. The more you earn, the less it buys in hard assets. The way 2020 is going, zombies literally can be a thing. The year of murder hornets, a global pandemic, global protests, and ZOMBIES! The United States itself is now a zombie company with a zombie government. Zombie Apocalypse is here! This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my back up channels; I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe and healthy friends! Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics