But I don't really want to talk about the living dead (humans) form of Zombies, I want to talk about Zombie firms.
Zombie firms (AKA The Walking Dead) should technically go away / die, because they have failed for whatever reason, Sure there is a litany of reasons including easy money from ZIRP, stimmies you name it. Additionally, the US Gov. being Mr. Nice Guy provides several layers of safety nets (AKA Bailouts) that allow these firms to continue on. The problem is they are at your expense, via tax payer funding. Traditionally, these types of firms would disappear during a recession and most certainly during a depression style economic reset. However, the Fed has not allowed the underbrush to be burned out so the next HUGE economic problem we have all these zombies are going to be left standing when the tide goes out. (Apologies too many analogies in that one sentence). But you get the picture, most of the time they are hidden in plain sight.
I can honestly say I am feeling the next economic flash point in my bones and its gonna be fueled by all sorts of underbrush (Commercial Backed Mortgage securities, Derivatives, Excessive leverage, Underwater banks that invested heavily in 0% Bonds, too much consumer debt on Credit Cards). I believe that current high Fed Interest rates are putting massive strain on zombies in all stages of failure. You know Zombies have probably been restructuring loans for years and in the past two years those rates have gotten rather punitive putting further strain on the ole enterprise treasury; don't you think?
Wonder how many Zombie firms hide in the shadows?
Check out my previous article about Shadows https://www.publish0x.com/financial-stewardship/wtf-with-all-these-shadows-xoqgjrq
Top of the Fed's mind in '21
https://www.federalreserve.gov/econres/notes/feds-notes/us-zombie-firms-how-many-and-how-consequential-20210730.html
Yep, even a website showing zombie firms https://www.investing.com/pro/ideas/zombie-companies-list
And it was addressed by Seeking Alpha as well https://seekingalpha.com/article/4587611-us-zombie-firms-with-highest-potential-credit-risks
Don't listen to me, I am not a PHD trained economic just some ordinary guy putting the pieces to the puzzle together on his own. They make it difficult for a reason, they don't want you to understand what is going on! Keep in mind there are a lot more Zombie firms out there and they are a danger to your portfolio! When the anvil drops look out below!
Credits - Bloomberg for Zombie snippet
