Covid-19 and the Next Great World Depression

The world is much more deeply in debt, now, than it was in 2008.

Instead of household and bank debt it is massive corporate debt.

Instead of subprime loans there are the “zombies”— companies that earn
too little even to make interest payments on their debt, and survive
only by issuing new debt.

These zombie companies are starting a chain of defaults just like subprime mortgages did in 2008.

The world economy is more vulnerable than it was in 2008.

Since ‘The Great Recession’ gave way to the great economic expansion for the rich,
lenders have become reckless and criminally lax in extending cheap loans
to companies with questionable finances.

Today the global debt burden is at an all-time high.

The level of debt in America’s corporate sector amounts to 75 percent
of the country’s gross domestic product, breaking the previous record
set in 2008.

Among large American companies, debt burdens are
precariously high in the auto, hospitality and transportation sectors —
industries taking a direct hit from covid-19.

In the $16 trillion corporate debt market is a lot of zombie “junk.”

Signs of debt stress are now multiplying in industries impacted by the
coronavirus, including transportation and leisure, auto and, perhaps
worst of all, oil.

Slammed on one side by fear that the
coronavirus will collapse demand, and on the other by fears of a supply
glut, oil prices fall.

The price of oil has become far too low for
many oil companies to meet their debt and interest payments.

Fracking is a business built on attracting ever-more gigantic amounts of
capital investment, while promises of huge returns have yet to bear

Parallels have been drawn between the fracking industry’s lofty projections and the Enron scandal of 2001.

This industry does not make money.

It is a huge debt bomb.

Over the last decade China’s corporate debt swelled fourfold to over
$20 trillion — the biggest binge in the world.

The International
Monetary Fund estimates that one-tenth of this debt is in zombie firms,
which rely on government-directed lending to stay alive.

Airline and cruise line companies, are struggling to pay their
debts as customers cancel trips and hunker down at home.

The shutdown of

of driving around in your car

is shrinking demand for gasoline, precipitiouly.

The numbers are enormous.

Having binged
on borrowing, companies that are outside the financial sector owe $9.6
trillion in the United States — up more than 50% in a decade.

Worldwide, companies have issued $13 trillion in bonds.

That’s twice what they owed in 2008.

Add in what companies owe banks and other creditors, and their debts
come to $75 trillion worldwide, up from $32 trillion in 2005.

DONNIE P.P. PUSSYGRABBER and the G.O.P./KKK are trying to do corporate bail-out like the bank bail-out of 2008.

This must not happen.

We must do ‘The Iceland.’

In 2008 Iceland refused to bail out the banks. Instead they bailed out the people of Iceland.

And those who recklessly, criminally created the conditions for economic collapse, were tried, convicted, and sent to prison.


LOCK ‘EM UP!!!!!

Sam Libby

Sam Libby (a.k.a. Rabbi SchmuDawg) currently resides in Terranas, Dominican Republic and is completing a collection of Central American stories entitled 'The Gonzo/Kukalcan Papers', to be published in spring 2021.

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