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Fox Business brings back Zombie Economy

December 13, 2012

Elizabeth MacDonald at Fox Business has just brought the “Zombie Economy” back in a big way in “The Federal Reserve’s Zombie Economy“:

zombie elizabeth macdonald

U.S. Treasuries and mortgage-backed securities is creating lemon socialism, a U.S. economy filled with the financially undead.

and

Give bailouts to zombie companies and zombie consumers to start spending money again by making money really cheap. The financially undead who can only just barely pay their fixed operating expenses and interest costs only on their debts (and not reduce principal).

and

we have zombie companies and zombie banks and zombie government balance sheets in a zombie-land economy growing at just around 1.5% annually.

Look at the zombie resurrection of GM (GM), Citigroup (C), Fannie Mae, Freddie Mac, and AIG (AIG), the still-dead insurer just barely walking.

Look at the federal government’s zombie balance sheet. A big stake in GM that’s still underwater; bad student loans that will never be repaid; green energy assets on the government’s dialysis machine, including solar energy and wind farms; empty federal buildings littering the landscape; loans to zombies Amtrak and the U.S. Postal service, and much more

The Federal Reserve’s hundreds of billions in mortgage-backed debt rotted through with delinquent payments.

The Federal Reserve and the U.S. Treasury have kept afloat “zombie” companies at a very high cost to U.S. taxpayers and consumers, not just due to coming inflation.

“Crony capitalism” and

The Federal Reserve has been keeping zombie banks alive, too, in order to help banks continue to buy U.S. Treasury debt.

and

Look at the U.K., where an estimated one in 10 businesses are really zombies and now stalk the British economy, resuscitated with central bank help [citing FT]

and

Ernst & Young’s U.K. division has already warned zombie companies in Britain are grabbing market share from healthy companies that now can’t grow because of the detritus.

“creative destruction” and

China’s breakneck growth of more than 10% annually in the mid-‘90s up until late last decade (a country also now loaded with zombie banks and companies).

and

Japan went hog wild buying all sorts of property and bad assets. That bubble burst, and for nearly three decades now Japan has been in a juggling act trying to keep afloat zombie companies while still fixing bad balance sheets.

and

Japan’s politicians now stare morosely at this debt, while accepting slower economic growth

Concluding with two quotes:

Stephen Cecchetti: “We’ve been saying this for years”
and
Stephen Roach: “policymakers are doing everything they can to forestall rational economic adjustments”

Please note that saying something for years does not make it true (see also zombie ideas)
And rationality is in the eye-of the beholder (Pink Unicorns DO Exist).
And see also this previous ZombieLaw mention of Mr. Roach mixing health and economy metaphors:
zombie stephen roach

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From → economics, politics

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