“Europe has been laid low by a heady brew of bureaucracy, over-regulation, over-taxation and debt. A crisis of political leadership has in turn produced a deficiency of bold, innovative ideas, a shortage of vision and a huge expansion of government intervention.”
The result is a proliferation of what have come to be known as zombie companies.
“The Bank for International Settlement’s defines a zombie as “any firm which is at least 10 years old, publicly traded and has interest expenses that exceed the company’s earnings before interest and taxes”.
“These companies are in a kind of limbo – neither productive, nor seeking to enter formal insolvency proceedings. The zombies are plagued by large amounts of debt, low levels of profitability, negative margins and no capital for growth, meaning they effectively produce nothing. They survive because they get some sort of cash, often from the government, which enables them to pay the interest on their debt. Creditors allow them to continue existing for as long as they continue to pay interest.”
Like the European monetary authorities, the Bank of Canada is now scooping up around half of current bond issues in an effort to prevent interest rates from soaring like a homesick angel. One does not have to think too long to come up with a list of Canadian companies which might fit the definition of zombies, and this must necessarily include any number of crown corporations and provincially run utilities.
Is it mere coincidence that Manitoba Hydro recently issued 100 year, interest-only bonds? I think not.
Describes the Country of Canuckistan pretty well, let alone companies within its borders.
How many of those in canada?
Bombardier?
SNC Lavelin?
others?
Why are these companies not being short-sold into oblivion?
regulations, of course…
A number of companies in the Canadian oil & gas sector fit the general description.
Correction:
“A number of companies in the Canadian oil & gas sector have been forced into near-bankruptcy by federal government policy.”
China is said to have this problem as well.
As the country starts opening up, and the Velocity of Money picks up, inflation is going to kick in hard…
https://www.aier.org/article/16-states-are-now-following-the-science/
Part of why we love Canada more than Michigan ehh.
How long do you think people should be locked up under Fake Medical Martial Law. 2 years, 5 years, 10 years, raise your whole family and never take them to the beach or camping? CRIMINALS.
“Europe has been laid low by a heady brew of bureaucracy, over-regulation, over-taxation and debt. A crisis of political leadership has in turn produced a deficiency of bold, innovative ideas, a shortage of vision and a huge expansion of government intervention.”
Every word of this sentence is wrong.
— The whole point of bureaucracy, is to regulate EVERYTHING to death
— The whole point of bureaucracy, is to tax more, spend more, and never stop
— The whole point of “political leadership”, is to produce crises, so that more bureaucrats can be hired, more royal commissions, more inquiries, more sole source contracts, …
I’ll cut to the chase.
It’s a feature not a bug.
Canadian Business biggest burden is the size of government. This is also the citizens biggest problem.
In 1998 Canada at all 3 levels of Government had created 550,000 Pages of regulations, rules and laws. They have been adding 15-20000 each year since. All of this to control 36M Inmates. All of this is shuffled around by Unionized Government Employees earning more in wages and benefits of any of the Inmates of the Canadian Gulag.
40% of Canadian workers work for some level of Government in Canada. So the biggest ZOMBIE is Governments followed by their favored PARASITIC Companies that would never exist in the real world. Plus all the Media Welfare Queens. CBC etc . We are well and truly FOOKED.
And none of it can be changed by voting. Think of the death grip they have on the Tax Payers Throat as if they were a ZIP TIE that only ratchets tighter and tighter. The sooner Canada COLLAPES the better off for the Citizens at the Oars of the Slave Ship Canada.
Bingo! Watcher, you da seer! Have talked to many lately and all are convinced the the Gummint is gonna help them forever. Dolts.
… a good example of what you say. In going through my dad’s old files, I came across his tax return from 1947. The whole return fit on one side of a sheet of paper, letter size, not legal size please note. The instructions took up another side of paper.
A new country,within the borders of,certain rules shall apply.
Is our only hope.
Can Ahh Duh is done.
Reform is impossible.
Only collapse can result from the current kleptocracy.
We must choose the territory we are able and willing to defend.
When a bandit chief lets you pass safely through his fiefdom,for a “Small Protection fee”,this is extortion.
When Government “permits you to build and occupy” your own property,this is called regulation..
So the definition of extortion depends on who is doing it.
So much of the life we used to enjoy is now deemed illegal by the minions of regulation…But it is OK when they do it.
As any stockman knows,when the parasites multiply unchecked,the stock is at risk.
The Host,being actual productive persons and ways of doing business,have been crushed by the sheer mass of parasites and their excrement,new rules,more regulation,more Officials,more punishments..
I do not joke when I refer to the Parasitic Overload.
It cannot be supported now.
It has been unsupportable for decades,that immense national debt did not create itself.
But the Canadian Sheep look up and bleat;”You can’t fight city hall”.
Which is very true,until you are ready and willing to exterminate.
As is happening on an escalating level.
Killdozer Man,now there was a man who knew how to pack a grudge.
As we drift further into Just Us and away from justice,the choices shrink.
The arrogant refusal to address the election fraud of Nov 3rd,ups the stakes ever further.
It no longer matters if actual fraud stole that election,the perception now dominates.
Our political animals and the enlightened idiots we call our elites,have made it plain,they are quite willing to sweep election fraud and corruption under the rug.
And very happy to abandon all pretence of individual rights of citizens,when they believe they hold power,cause Covid emergency..
Because the Government must be seen to be free of corruption,they are the only organization that must be assumed guilty until found innocent.
The consent of the governed is a very fragile thing.
For that force that government commands,demands that government justify every use.
“The lower interest rates are, the higher the misallocation of capital by governments, the more these companies will expand, until they asphyxiate the economy, fully zombifying it. But interest rates will not remain this low forever – when they start rising, that is when the consequences will be felt.”
To put it another way, eventually the Chinese will no longer be content to allow their western debt-slaves to get away with not paying a good return to their masters.
Interest rates have been so low for so long because of what economists coyly call a “global savings glut.” The CCP has laundered profits from slave labour and intellectual property theft into western government obligations. No western government dares take the chance of Beijing cashing out and leaving them unable to pay the big men with guns who stand between them and the deplorables.
So they jump when the dragon says hop, and the dragon agrees not to eat them that day.
But one day he’ll get too hungry to help himself.
I worry much more about the governments’ own printing presses than I do about China. Canada and its various provinces (especially Newfoundland), and municipalities/cities are “selling” about fifty-percent of their debt to the Bank of Canada. China is just a relatively minor lender.
We have a giant mountain of debt! The higher we climb up that mountain, the further and harder we’ll fall. Just saying…..