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Zombie Company
In political economy, a zombie company is a company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal. Description Zombie companies are indebted businesses that, although generating cash, after covering running costs, and fixed costs (wages, rates, rent) only have enough funds to service the interest on their loans, but not the debt itself. As such, they are generally dependent on the refinancing of maturing debt for their continued existence, and may face solvency risks should interest rates rise or investors withdraw from further financing. History The term "zombie company" was applied to Japanese firms supported by Japanese banks during the period known as the " Lost Decade" after the collapse of the Japanese asset price bubble in c.1990. Japanese banks continued to support weak or failing firms. The retailer Daiei is an example of a large company that expanded greatly during the period ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Political Economy
Political economy is the study of how Macroeconomics, economic systems (e.g. Marketplace, markets and Economy, national economies) and Politics, political systems (e.g. law, Institution, institutions, government) are linked. Widely studied phenomena within the discipline are systems such as Market economy, labour markets and Financial market, financial markets, as well as phenomena such as Economic growth, growth, Distribution of wealth, distribution, Economic inequality, inequality, and International trade, trade, and how these are shaped by institutions, laws, and government policy. Originating in the 16th century, it is the precursor to the modern discipline of economics. Political economy in its modern form is considered an interdisciplinary field, drawing on theory from both political science and Neoclassical economics, modern economics. Political economy originated within 16th century western Ethics, moral philosophy, with theoretical works exploring the administration ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
National People's Congress
The National People's Congress of the People's Republic of China (NPC; ), or simply the National People's Congress, is constitutionally the supreme state authority and the national legislature of the People's Republic of China. With 2,980 members in 2018, it is the largest legislative body in the world. The National People's Congress meets in full session for roughly two weeks each year and votes on important pieces of legislation and personnel assignments among other things, and due to the temporary nature of the plenary sessions, most of NPC's power is delegated to the Standing Committee of the National People's Congress (NPCSC), which consists of about 170 legislators and meets in continuous bi-monthly sessions, when its parent NPC is not in session. As China is an authoritarian state, the NPC has been characterized as a rubber stamp for the Chinese Communist Party (CCP) or as only being able to affect issues of low sensitivity and salience to the Chinese regime. M ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Debt
Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The debt may be owed by sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity. The term can also be used metaphorically to cover moral obligations and other interactions not based on a monetary value. For example, in Western cultures, a person who has been helped by a second person is sometimes said to owe a "debt of gratitude" to the second person. Etymology The English term "debt" was first used in the late 13th century. The term "debt" comes ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Corporate Debt Bubble
The corporate debt bubble is the large increase in corporate bonds, excluding that of financial institutions, following the financial crisis of 2007–08. Global corporate debt rose from 84% of gross world product in 2009 to 92% in 2019, or about $72 trillion. In the world's eight largest economies—the United States, China, Japan, the United Kingdom, France, Spain, Italy, and Germany—total corporate debt was about $51 trillion in 2019, compared to $34 trillion in 2009. Excluding debt held by financial institutions—which trade debt as mortgages, student loans, and other instruments—the debt owed by non-financial companies in early March 2020 was $13 trillion worldwide, of which about $9.6 trillion was in the U.S. The corporate bond market historically centered in the United States. The U.S. Federal Reserve noted in November 2019 that leveraged loans, corporate bonds made to companies with poor credit histories or large amounts of existing debt, were the fastest growing ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Vulture Fund
A vulture fund is a hedge fund, private-equity fund or distressed debt fund, that invests in debt considered to be very weak or in default, known as distressed securities. Investors in the fund profit by buying debt at a discounted price on a secondary market and then using numerous methods to subsequently sell the debt for a larger amount than the purchasing price. Debtors include companies, countries, and individuals. Vulture funds have had success in bringing attachment and recovery actions against sovereign debtor governments, usually settling with them before realizing the attachments in forced sales. Settlements typically are made at a discount in hard or local currency or in the form of new debt issuance. In one instance involving Peru, such a seizure threatened payments to other creditors of the sovereign obliger. History Sovereign debt collection was rare until the 1950s when sovereign immunity of government issuers started to become restricted by contract terms. Thi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Too Big To Fail
"Too big to fail" (TBTF) and "too big to jail" is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and that they therefore must be supported by governments when they face potential failure. The colloquial term "too big to fail" was popularized by U.S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation's intervention with Continental Illinois. The term had previously been used occasionally in the press, and similar thinking had motivated earlier bank bailouts. The term emerged as prominent in public discourse following the global financial crisis of 2007–2008. Critics see the policy as counterproductive and that large banks or other institutions should be left to fail if their risk management is not effective. Some critics, such as economist Alan G ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Crony Capitalism
Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class. This is often achieved by the manipulation of relationships with state power by business interests rather than unfettered competition in obtaining permits, government grants, tax breaks, or other forms of state intervention over resources where business interests exercise undue influence over the state's deployment of public goods, for example, mining concessions for primary commodities or contracts for public works. Money is then made not merely by making a profit in the market, but through profiteering by rent seeking using this monopoly or oligopoly. Entrepreneurship and innovative practices which seek to reward risk are stifled since the value-added is little by crony businesses, as hardly anything of significant value is created by them, wit ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Lemon Socialism
Lemon socialism is a pejorative term for a form of government intervention in which government subsidies go to weak or failing firms (''lemons''; see Lemon law), with the effective result that the government (and thus the taxpayer) absorbs part or all of the recipient's losses. The term derives from the conception that in socialism the government may nationalize a company in its entirety, while in lemon socialism the company is allowed to keep its profits but its losses are shifted to the taxpayer. Such payments may be made with the intent of preventing further, systemic damage to what might otherwise be considered a free marketplace. For example, the bailout that followed the 2008 financial crisis may be described as lemon socialism. The pejorative arises from the belief among free market economists that in a functional free market, failing companies would be replaced by better functioning companies in response to market demand. The term may also be used to describe governme ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Zombie Bank
A zombie bank is a financial institution that has an economic net worth less than zero but continues to operate because its ability to repay its debts is shored up by implicit or explicit government credit support. The term was first used by Edward Kane in 1987 to explain the dangers of tolerating a large number of insolvent savings and loan associations and applied to the emerging Japanese crisis in 1993. A zombie can continue to operate and even to grow as long as creditors remain confident in the relevant government's ability to extract the funds needed to back up its promises from current or future taxpayers. But when this ability seems doubtful, zombie institutions face runs by uninsured depositors and margin calls from counterparties in derivatives transactions. Etymology In an article published in the Mar/Apr 1992 issue of ''Society'' entitled "The Savings and Loan Insurance Mess," Edward Kane expanded on the source of the analogy. "Although the Savings and Loan (S&L) d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Overproduction
In economics, overproduction, oversupply, excess of supply or glut refers to excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment. The demand side equivalent is underconsumption Underconsumption is a theory in economics that recessions and stagnation arise from an inadequate consumer demand, relative to the amount produced. In other words, there is a problem of overproduction and overinvestment during a demand crisis. The ...; some consider supply and demand two sides to the same coin – excess supply is only relative to a given demand, and insufficient demand is only relative to a given supply – and thus consider overproduction and underconsumption equivalent. Overproduction is often attributed as due to previous overinvestment – creation of excess productive capacity, which must then either lie idle (or under capacity), which is unprofit (economics), profitable, or ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bailout
A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global systemically important financial institutions (G-SIFIs) are forced to participate in the recapitalization process, but taxpayers are not. Some governments also have the power to participate in the insolvency process: for instance, the U.S. government intervened in the General Motors bailout of 2009–2013. A bailout can, but does not necessarily, avoid an insolvency process. The term ''bailout'' is maritime in origin and describes the act of removing water from a sinking vessel using a bucket. Overview A bailout could be done for profit motives, such as when a new investor resurrects a floundering company by buying its shares at firesale prices, or for social objectives, such as when, hypothetically speaking, a wealthy philanthropist reinven ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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