We know everything about bankruptcy
19/09/2024
Thursday
19 September 
1970 Scott Fahlman proposed using emoticons as a way to express emotions on the Internet.
1970 The Council of People's Commissars of the RSFSR banned the export of art and historical monuments abroad.
1970 The first beauty contest was held in Belgium.
WHY USA PROVIDE FUNDING FOR LOSS-MAKING COMPANIES
The number of notionally dead companies is growing rapidly in the United States. This is the conclusion made by the experts analyzing the state's financial injections into American companies that generate losses. Some call the current state of the economy the beginning of a new Great Depression, while the others predict a financial collapse, a sign of which is the state of the leaders of the American economic model, such as Boeing, Carnival and Exxon Mobil.
One of the reasons for the growth in the number of unprofitable companies was the Federal Reserve System’s financial policy. The ability to live on debt without earning sufficient funds to cover expenses leads to an increase in the number of “zombie” companies in the US business structure. According to the experts from the Bank for International Settlements (BIS), in a number of cases, it becomes difficult for such organizations to find the money to service debts at rates close to zero.
One of the examples of such companies, which are close to bankruptcy, is the General Electric Corporation.
An additional factor aggravating the situation with “zombie” companies was the pandemic. According to Bloomberg, of the 3,000 largest public companies in the United States, about 15% (450 firms) are unprofitable enterprises with a capitalization of more than $ 300 million.
At the same time, urgent payments that the state makes in order to prevent mass bankruptcies lead to a shortfall of federal budget. Initially, the US companies received $ 3 trillion from the state treasury and now the government is thinking of subsidizing the economy by allocating another $ 1.5 trillion.
Experts point out that the debt of “zombie” firms that hinder the American economy from normal development has already reached $ 1.4 trillion. This debt is almost three times larger than the debts of 2008 crisis. At the same time, many companies, mired in debt, can no longer decide anything on their own, without constant subsidies from the state’s treasury.
Economists' forecasts are disappointing.
Instead of allowing unprofitable companies to shut down, the FRS’ low interest rates artificially prolong their agony. In the event of even a slight increase in the cost of loans, a decent part of such companies will be ruined, which will create the threat of a large-scale depression, similar to the events of 1929. In the meantime, the state continues to buy up corporate bonds, trying to prevent a wave of bankruptcies.
