Mike Swanson discusses the continuing economic fallout from the coronavirus, focusing in particular on what are sometimes called “zombie companies.” These firms stay afloat largely because of easy money available at low interest rates, even though their business may be fundamentally unsound. Crucially, the government response to the coronavirus has continued to enable this behavior by bailing out firms that would otherwise go bankrupt. Swanson argues that in a healthy environment such firms should be allowed to go bankrupt—a vital feature of any market economy—as would huge sectors of American business that have been kept alive by decades of artificially low interest rates. Scott and Swanson worry about the powder keg created by years of unwise policy by the U.S. government, and about the spark that could be provided in the form of the coronavirus shutdowns.

Discussed on the show:

“Here’s one more economic problem the government’s response to the virus has unleashed: Zombie firms” (The Washington Post)

“The Age of Magic Money” (Foreign Affairs)

Big Debt Crises

David Stockman’s Contra Corner

Mike Swanson provides investment advice at wallstreetwindow.com and is the author of The War State: The Cold War Origins Of The Military-Industrial Complex And The Power Elite. He also works with the Neopolis Media Group, a group of historians, educators, authors, researchers, and free speech advocates who endeavor to provide original and engaging content, including The Ochelli Effect, and The Lone Gunman Podcast.

This episode of the Scott Horton Show is sponsored by: NoDev NoOps NoIT, by Hussein Badakhchani; The War State, by Mike Swanson; WallStreetWindow.com; Tom Woods’ Liberty Classroom; ExpandDesigns.com/Scott; Listen and Think Audio; TheBumperSticker.com; and LibertyStickers.com.

Donate to the show through Patreon, PayPal, or Bitcoin: 1KGye7S3pk7XXJT6TzrbFephGDbdhYznTa.

https://www.youtube.com/watch?v=EjEjf0e5IF4

The following is an automatically generated transcript.

Show TranscriptScott Horton 0:10

All right, y'all welcome it's Scott Horton Show. I am the director of the Libertarian Institute editorial director of antiwar.com, author of the book Fool's Errand: Time to End the War in Afghanistan. And I've recorded more than 5000 interviews going back to 2003, all of which are available at ScottHorton.org. You can also sign up to the podcast feed. The full archive is also available at youtube.com/ScottHortonShow. Alright guys on the line I've got the great Mike Swanson while he wrote the war state, all about the Truman Eisenhower and Kennedy years there and the rise of the military industrial complex after World War Two. Have you read that man? It's great. Oh yeah. Also, he's a former hedge fund manager. Very successful guy on Wall Street and now he gives investment advice at Wall Street window calm. Yes, of course is a sponsor of this show, and has great stuff to say about money issues all the time. Welcome back. How are you doing, Mike?

Mike Swanson 1:14

Oh, I'm doing great. Scott, how are you?

Scott Horton 1:16

I'm doing okay. I'm a little bit worried about the future of the country, to be perfectly honest with you. I think when the washington post is talking, like Mark Thornton, that I should be really worried. And they did. I sent you this piece. I'm sure you probably saw it anyway. The Washington Post says, here's one more economic problem. The government's response to the virus has unleashed zombie firms. troubling rise in number of US companies that can't make enough profit to cover debt payments. So obviously the thesis of the story here is the lockdown, among other things, the virus itself and other economic pressures and whatever have resulted in these massive bankruptcies.