fox files

A primary warning indicator of impending disaster is the emergence of “zombie” businesses. These firms, also called “zombie companies,” are failing to pay even the interest on their loans due to their overwhelming debt.

According to recent Associated Press research, there are now roughly 7,000 of these financially troubled businesses worldwide, with 2,000 of them based in the U.S.

This trend indicates that a severe crisis is coming, as it highlights the possibility of widespread economic disruption.

The Retail Apocalypse and the Rise of Zombie Companies!

Businesses that haven’t made enough money to pay their interest during the last three years are known as zombie corporations.

The ten years of low-cost debt combined with persistently high inflation have caused borrowing costs to soar to levels not seen in many years, which is the cause of this increase.

According to the data, these financially troubled businesses have risen by more than 30% in several significant economies, including the U.K., Australia, Canada, Japan, South Korea, and the United States.
The nation as a whole is losing retail locations at an alarming rate. Should we maintain our current trajectory, the total number of closed stores in 2024 will surpass that of 2023 by about forty percent.

You would refer to that as a crisis! Meanwhile, a “restaurant apocalypse” is occurring nationwide, and banks are closing hundreds of branches nationwide.

Signs reading “space available” appear on once-prime commercial real estate buildings around us. Present this story to anyone who attempts to convince you that the U.S. economy is doing well and ask them why so many once-thriving companies are closing.

After that, it goes without saying that they will lose the argument.

According to the Daily Mail, around 2,600 store closures were announced in the first four months of 2024. Prominent brands such as Macy’s, Walmart, Walgreens, Foot Locker, and 7-Eleven have all announced store closures.

However, pharmacies like CVS and Rite Aid and bargain retailers like Family Dollar and the defunct 99 Cents Only have taken the brunt of the damage.

If this rate holds steady for the remainder of the year, we might reach 7,800 shop closure notices by the end of 2024. This is a glaring sign that our economy is having significant problems, not simply a minor bump on the map.

An Impending Financial Reckoning?

Numerous of these zombie businesses are about to face financial consequences. These corporations might be unable to repay hundreds of billions of dollars in due loans.
The managing director of Valens Securities, Robert Spivey, issues a warning, stating that the most vulnerable of these businesses will probably be “crushed” by their debt.

The number of U.S. corporations declaring bankruptcy has reached a 14-year high, a spike usually associated with recessions rather than economic expansions.

Corporate bankruptcies in Canada, the United Kingdom, France, and Spain have reached near-decade highs, indicating that the situation in other nations is similarly grave.

The True Price for Me and You…

The possible demise of these zombie businesses would affect hardworking individuals in the real world and be a financial concern.

These companies employ almost 130 million people in twelve different nations. Massive layoffs brought on by a spate of bankruptcies might further burden already fragile economies.

It’s not only a money problem; an impending economic catastrophe may cause mass layoffs and civil turmoil.

Local businesses that rely on the employees of these enterprises will experience a decrease in consumers and revenue, causing communities to suffer as well.

These closures may have a knock-on impact, resulting in additional bankruptcies and a decrease in the number of vital public services paid for by local taxes.

The psychological toll that families and individuals take and the possibility of a rise in crime and societal unrest emphasize how critical it is to be prepared.

There is a need to stress the importance of being aware of the impending financial catastrophe and acting quickly to safeguard your loved ones and yourself.

Wall Street’s Perilous Bet

Wall Street investors blindly invest in zombie companies, buying up their stocks and “junk bonds” as if there were no tomorrow despite the apparent warning signs.

“One stock market insider stated, “These motherf*@kers are playing with fire, gambling with massive risks, and turning a blind eye to the ticking time bombs they’re fueling.”

This capital infusion may provide these faltering companies with a short-term lifeline. Still, it’s really a band-aid solution for a deep wound.

An investment research firm source calls this unprecedented degree of gambling on the public markets insane.

By ignoring the ingrained financial instability of zombie organizations, these careless behaviors are preparing us all for the inevitable and disastrous collapse.

The Part Central Banks Play in Breeding Zombies

The origins of this zombie plague are the acts of central banks during the 2009 financial crisis and the 2020–21 pandemic.

Central banks reduced interest rates to almost zero to avert an economic catastrophe, encouraging an excessive borrowing spree. This tactic may have prevented a worldwide depression.

Still, it also gave rise to a credit bubble that is much more widespread than zombie businesses. Governments, consumers, and even healthier enterprises have piled up debt.

Increasing Interest Rates: A Lethal Strike

Rising loan rates are the leading issue zombie companies are currently facing. In contrast to more stable businesses, zombies frequently have shallow financial reserves, and many of their loans have changeable interest rates.

Their financial difficulties are made worse by the fact that interest payments rise along with interest rates. Zombies’ debt was mainly utilized for stock buybacks, which have depleted their cash reserves and made them susceptible, rather than for expansion or innovation.

Bed Bath & Beyond: A Word of Warning

Bed Bath & Beyond is one such instance. The retail firm, which had 1,500 locations and was once a booming enterprise, struggled to shift to digital sales and spent $7 billion on stock buybacks during a decade-long debt accumulation.

This tactic and the large executive compensation packages that accompanied it ultimately caused its demise and the loss of tens of thousands of jobs.

The More Wide-ranging Economic Effect

Wide-ranging consequences could result from a zombie company collapse, particularly if several companies fail simultaneously.

This situation might create a chain reaction that would bring down more stable companies and cause general economic turmoil.

Widespread financial collapse is possible because severely indebted households, governments, and even healthier firms are all involved.

The emergence of zombie businesses is a glaring indicator of the underlying financial instability in the economy.

As these corporations prepare for their day of reckoning, widespread economic disruption becomes more likely.

Sorry, but those are the hard facts.