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Zombie firms, Irish Hotels, Chinese

August 23, 2013

Bloomberg: “Irish Zombie Hotels Revive as John Malone Checks In: Mortgages” by Finbarr Flynn & Neil Callanan (and edited by Andrew Blackman and Douglas Lytle):

In Ireland, the zombie hotels dotted across the landscape are beginning to revive or die. … Four years ago…That’s when zombie hotels emerged, slashing room rates to stay alive and keep tax breaks granted during the boom. …Even so, many of the hotels built between 1997 and 2007 stayed in business. That’s because the owners received a tax break that depended on the hotel operating for at least seven years. Now, though, the zombie properties are beginning to disappear because the owners no longer have a financial incentive to keep them open

Similarly, at Action Institute Power Blog: “Pro-Market is Anti-Zombie” by Joe Carter quoting economist Luigi Zingales:

For every “zombie” firm that survives because of government assistance, several innovative start-ups don’t get the chance to be born.
zombie luigi zingales

And in China, Reuters: “Insight: Zombie borrowers haunt China’s shadow banks” by Gabriel Wildau:

The risk of pervasive debt rollovers is that China could follow the path of Japan in the “Lost Decades”, creating a permanent class of “zombie borrowers” who have little hope of turning a profit but survive through continual injections of fresh credit. … in the long run, zombies suck the lifeblood from the economy.

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From → debts, economics, money

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