Escape From The Zombie Economy

The Covid-19 pandemic has made this worse; subsidies have been given to large publicly quoted zombies such as United Airlines (Nasdaq: UAL) often with low returns on capital and poor prospects even before Covid-19, while small but intrinsically profitable privately-owned companies go bankrupt in their thousands.

The small business sector, which finances itself primarily from the entrepreneur’s own resources and those of the people who know him best, is generally the key to growth, employment, and innovation and is very rarely zombified – how could it be, subject as it is to the full rigors of the market with no “easy money” bond issues, bank lenders or private equity magnates scrambling to fund it? That sector was recovering under President Trump until January 2020; it will go into permanent decline under the zombie management of the Biden administration.

The zombies need to be killed off. Now! This can best be done by raising interest rates, suffering through the inevitable stock market collapse, and devoting any remaining resources to nurturing new small businesses, some of which will innovate. At this stage, however, that is probably only a distant dream for the next administration but one.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of "sell" recommendations put ...

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