COVID-19 Economic Zombification
The comments below are an edited and abridged synopsis of an article by Daniel Fernandez
More and more economists and finance specialists are warning of the potential arrival of a new ‘Minsky Moment.’ The last time this term was used with such conviction was in 2008 at the onset of the Great Recession. It seems that 2021–22 could have some parallels with the world’s last severe recession.
Up for discussion: The twenty-first century—the century of debt; what is a Minsky Moment; the economy has been zombifying for two decades; Covid-19 hit a zombie economy—now what; valuation of zombified companies; and conclusion.
“Markets are now extremely complacent. The fundamentals do not seem to justify their optimism. Zombie companies, which were already a problem in 2019, have not only not been killed off but have multiplied. The zombie apocalypse could be closer than we imagine, and we do not have enough Will Smiths in the world to save us.”
“In a future article, we will analyze the impact of restrictive monetary policy (tapering) on zombie companies.”