As businesses take on increasing amounts of debt, the percentage of “zombie firms“—corporations whose debt servicing costs are higher than their profits but are kept alive by relentless borrowing—is now close to 20 percent.
Capitalism’s crises are clearly becoming deeper and more severe. After the crash of 2007-08, the United States (and much of the rest of the world) was subjected to the Second Great Depression, the worst economic downturn since the depression of the 1930s. Now, in the midst of the novel coronavirus pandemic, business activity has ground to a halt and unemployment has soared to levels reminiscent of the first Great Depression.
Not surprisingly, both Main Street and Wall Street firms have once again turned to the U.S. government to be bailed out through a series of programs that dwarf anything the world has seen before. The Federal Reserve and the Treasury Department have stepped in with a broad array of actions to keep capitalist enterprises afloat, including up to $2.3 trillion in direct lending to support employers and financial markets (including loans to 24 large financial institutions known as primary dealers)…
View original post 806 more words