In financial lingo, zombies are debtors that have little hope of recovery but manage to avoid being wiped out thanks to support from their lenders or the government. Zombies suck life out of an economy by consuming tax money, capital, and labor that would be better deployed in growing companies and sectors. Meanwhile, by slashing prices to generate sales, zombie companies can drag healthier rivals into insolvency.
You would think that once was enough, that the failure of the first round was obvious, but no, Congress has done it again. They have released the second half of Paulson’s $700 billion and that shuffling sound you are hearing is the sound of zombies, coming at the smell of freshly-spilled money.
According to Peter Coy, writing for BusinessWeek: “The Bush Administration has already ladled out billions o... [Read Full Article]