After years of cheap loans the zombies are dying. Problem is that the banks will be left with the bill:
It’s 2008 all over again! Get the printing presses work overtime.
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Only the banks that lent money to zombies (or to companies that would become zombies because they never generated sufficient cash flow to pay back the loans). Any bank that extends credit to someone at 3%, knowing that prevailing rates are usually 6%, either needs to run the credit assuming a 6% interest rate schedule (even if it starts at 3%), or needs to decline loaning money at the abnormally low rate in the first place.
The same holds true for the opposite case. Any lender that can lock in unusually high rates should do so. For example, if you ever see 30-year bonds in the double digits like we saw in the early 80s, grab as much of them as you can get. Or if you see TIPS at 4+% as we saw around 1999/2000.
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And we have the clowns you wanted.
Everyone I know is figuring out how to make money in a downturn.
Getting rid of TikTok means more kids will play video games.
Bob,
That chart makes sense. We have had the beginnings of demand side econ since 2008 but it was stymied in Congress out of ignorance. We see the 2009-11 spike because of Supply-Side policies.
Demand side economics is so much more successful rates of bankruptcies have fallen dramatically.
But with all the lies possible to be spouted we will have one more completely failed attempt at supply-side economics.
At the same time, there was also a massive two-decade decline starting back in the mid-80s. I believe you would call that the supply-side era.
DB2
I was wondering about that myself. Do you have a link for that graph with numbers?
DB2
That particular graph came from this article, tho there are similar articles around. This article also has a graph of the number of IPOs per year, which has declined, a lot, since the 90s.
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We have a problem here with different data. For example, the percentage of US companies that are exchange listed is only 10-15% and has changed over the years. Also, what size companies are included? The pub down at the corner? The plastics injection company on the edge of town?
DB2
Reasonable point. Chew on this, percentage of employees working for small businesses. This would imply that small business accounts for a shrinking part of the economy, relative to large companies. So, while the number of listed companies shrinks, they account for a greater percentage of employment.
Net change in number of small businesses, by year, since the late 70s. Less business formation, fewer to go bankrupt.
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eh? Same chart?
You’d need a longer term chart for that claim.
The chart shows a rise into the 90s. The 1981 to 2020 period is supply side but it should have been 1981 to 2008. Unfortunately very selfish people have a say to screw up.