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Zombies in the Financial Times

January 8, 2013

Financial Times has posted two “zombie” articles today:

Companies: The rise of the zombie” by Michael Stothard
and
Central banks face zombie nightmare” by Chris Giles.

Those two writers also shared the byline in November for FT: “Zombie companies stalk UK economy” – see Zombielaw “Zombie British Companies”

Today, Stothard writes that the US has had “creative destruction” but cites fears that “the continent could be following the path of Japan“. He quotes Sony Kapoor, head of a Brussels think-tank called Re-Define:

“Behind the scenes there is an emerging policy debate about how many zombie companies there are and how bad the problem really is”

Giles writes similarly (also mentioning Japan) and begins:

Zombie companies are always filed on the “nightmare” shelf in public policy, as authorities struggle to calibrate the right level of corporate liquidation.

Speaking of “liquidation” recall ZombieLaw on Alcohol – and though that is sort of only a joke play on the language, note that Stothard’s article starts with a quote from Andrew Mellon – portrayed by the ever-lovable James Cromwell in this past season of HBO’s Boardwalk Empire.

“Liquidate labour, liquidate stocks, liquidate farmers, liquidate real estate . . . it will purge the rottenness out of the system. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less enterprising people” Andrew Mellon, US Treasury secretary, 1929

Then see HuffPo: “Zombie Economics Explains Inflation/Deflation Split” by Max Keiser argues we need a rise in interest rates because borrowing is too easy for the political class and they are printing more money but not noticing the effects of “zombie-deflation” effects on those living on payday loans:

The entire political class and ruling Wall Street class are zero percent interest zombies

Note that the quote above from Andrew Mellon was advice given to President Hoover (see Wikipedia > Andrew Mellon > Great Depression) Also note from Wikipedia: “Roosevelt hated Mellon, as the embodiment of everything that was bad about the 1920s” – See more ZombieLaw about FDR who spent time in Haiti as Assistant Secretary of the Navy prior to his presidency.

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