 All right, let's talk a little bit about the companies that some of the companies that are most susceptible to this, although they're not necessarily the only companies that are susceptible to this, but the companies that are most susceptible to this. There's something called zombie companies out there. Now, I came across the term zombie in the 1980s, early 1990s, well really in the 1980s, early 1990s. In those days, it was referred to zombie banks. And what is a zombie? A zombie is the living dead. That is something that's dead, but it somehow remains animated, remains somehow quote alive. Zombie companies are companies that basically should be bankrupt and somehow still running. And I'd say that in the 80s and 90s when zombie banks were being talked about, the reason that these companies were not bankrupt, even though they should have been bankrupt, was purely regulatory. So in the case of banks, for example, a bank can't go bankrupt unless the government decides that the bank is bankrupt. That is the decision of whether a bank is bankrupt or not is purely political. So they have been during financial crises and during economic crises. There have been many times banks that have been basically from an economic perspective bankrupt. Bankrupt means they couldn't pay off their liabilities. That is if they sold all their assets, if they liquidated everything they had, they couldn't actually pay back their liabilities. They'd still owe more. That's bankruptcy. That's the definition of bankruptcy. And usually what happens in a situation like that is, you know, you fall for bankruptcy, you go into, there's a whole process. There's usually a committee of the bondholders, the people who you owe money to, and they basically take over the company and they start running it, and they try to sell off the assets in a way that they get as much as they can. And the stockholders, shareholders, owners get zero, get zero. Banks, on the other hand, because the primary people they owe money to are depositors, right? You go to the bank, you deposit your money, put in a checking account, the bank takes that money and lends it out, and they owe you the money. Well, you are guaranteed. You have a government guarantee until $250,000 in your bank account. And if you're a big bank and you have too big to fail, then the government is guaranteed all your deposits. And if that's the case, then who's going to push you into bankruptcy? Nobody. Because the people who you owe money to know they're going to get their money. Because if you can't pay it, well, then the government will. So banks that couldn't pay their depositors, their money back without government help are zombie banks. They continue to run because nobody has an incentive to stop them from running. Sometimes the government does, but for the most part they just let them run. And when the government, of course, bails them out, that's socializing the losses. That's diffusing the losses across all of us, not just the depositors. But zombie banks are banks that are bankrupt, but it kept alive through regulation, through government. Now, the term has been expanded to zombie companies. An idea of zombie companies is these are companies that don't make enough money and don't have enough growth prospects, but have a lot of debt that owe a lot of money. And where in some cases, the debt servicing cost, the interest that they pay on the debt that they have is larger than their profitability. So the only way they can pay off the debt is by taking on more debt. Now, there are not a lot of companies that are that bad, but there are a variety of different definitions of zombie. But the basic idea is it's a company that cannot really pay off its debt, cannot really pay off its debt. And to pay off its debt has to raise other debt to pay it off, right? Other debt to pay it off. Now, notice that as interest rates go up, debt gets more and more expensive. More and more companies have the potential to become zombies. If their revenues are not matching the rise in interest rates, then, but their debt service is going to, because the interest rates are going up, so they have to pay more, then more and more companies, as interest rates go up, become zombie companies, become companies, they can only repay their debt by taking on more debt. And as the economy starts softening, how are they going to get more debt? Banks are not going to lend them, bondholders are not going to buy their debt, and more and more of these companies are going to go bankrupt. Now, in a free market, you'd expect a few companies to be zombie-like, maybe hard to tell. But what creates, I think, the fact that zombie companies are a thing, is government regulations and government control of interest rates and the low, low, low interest rates that we have. So, for example, Japan is known for zombie companies, companies that shouldn't be around, but because the banks in Japan historically are being arms of the government, the banks won't force these companies into bankruptcy and they'll keep feeding them credit to keep them going. State-owned enterprises in China are zombie companies, many of them are zombie companies. They cannot pay their debt, the only way they pay off their debt is by taking on more debt. And why are the banks lending them more money? Well, because the government forces them to, because they are basically parts of the government. Banks in Europe are funded zombie companies when they're in trouble. So, banks that are in distress have an incentive to do risky things for a variety of reasons, which I can get to if somebody wants to ask. But banks when they approach bankruptcy, when they approach trouble, they tend to do very risky things. Well, in Europe, banks are being distressed for quite a long time, particularly in the mid-2000s after the Greek financial crisis, and banks funded a lot of zombie companies. But the fact is in the United States, because banks are not on the credit side, not arms of government, they don't actually follow the guidelines of government or who to lend for the most part. There's some of that going on, but for the most part. Banks will not lend to zombie companies once interest rates start going up and they think that the zombie companies can't afford to pay it back and we might be hitting into a recession and the revenues might go down. So, banks in the U.S. are less susceptible to funding and bond markets in the U.S. are less susceptible to funding zombie companies than other countries. The exception to that, of course, is when the Federal Reserve is bailing out everybody, but the Federal Reserve is trying to do the exact opposite, exact opposite. So, what we can expect is it's about, oh, in terms of how many, it depends, about 10 to 20 percent of publicly traded companies in the United States are zombie firms. Now, they tend to be smaller. They tend to be manufacturing in retail. About five percent of private companies are zombie bank, zombie companies. You know, it depends on how you define zombie, different people define it differently. So, somewhere between 10 to 20 percent are public, somewhere between four to eight percent are private. That's a significant number, particularly if that number grows as interest rates go up, as it will, because, again, debt servicing costs will increase as interest rates go up. So, that piece of expenses for companies will increase. So, we can expect over the next year, as interest rates are going up, bankruptcies to start itching up, at some point accelerating up. A lot of these zombie companies going away. A lot of other companies that might not be zombies today becoming zombies and then ultimately going away. A lot of companies today are distressed, becoming really distressed by going bankrupt. And I think the crisis you're going to see is a crisis of bankruptcy, which means people being laid off, which means unemployment going up, which means people having less money to spend, which is, you know, and companies not being able to borrow to produce, and which results in a spiral that creates really economic distress. So, I don't usually do economic forecast, but I'm predicting a recession late this year, early next year. I don't think it's going to be a minor recession. You know, economic prediction is the fullest game, but what the hell? I won't be surprised if this is a deep recession. I won't be surprised if the stock market has quite a bit more to fall. You know, you could easily see the markets go down another 30%, which is a lot. So, if you have money to buy on dips, hold on to it, because there are going to be some dips. Interest rates are going to go up dramatically if they want to have the kind of impact on inflation that they want them to have. Small increases in interest rates will not have the impact, you know, because part of the problem is supply has continued to be constrained because of China, because of the war in Russia, because of regulations in the United States. If you really want to combat inflation, what you would do right now, what I would do right now, if I were president of the United States, there's a job for me, I would lower tariffs to zero. That will reduce prices across the board in the United States and make American companies more competitive across the board. It doesn't matter what country it's coming from. It doesn't matter what product it is. I would reduce tariffs, all tariffs to zero unilaterally. I would start massive deregulation. I would pick whole sectors and deregulate them on large scale, particularly in business. Banking is more complicated to deregulate. You'd have to do that as well, but banking is more complicated to deregulate. Those are the things I would do. Those are the first things I would do. I would get rid of all business subsidies. I would get rid of all business favors, but more importantly, I would get rid of all of the, as many regulations as I could, as quickly as I could. As quickly as I could. That would create economic expansion in spite of the fact that interest rates were going up. It would create business activity in spite of the fact that interest rates were going up. It would create new businesses in spite of the fact that interest rates were going up. I'd encourage all governors in all states, instead of, I don't know, giving people a tax holiday, how about giving, how about eliminating licensing laws? I would eliminate the federal minimum wage law and encourage states to eliminate the minimum wage laws. I'd eliminate a lot of the labor laws so that we could have a more flexible labor economy. These are the kind of things that have to happen so that inflation gets reduced. I've said before, a big part of the health economy coming out of the 80s and certainly in the 90s was the deregulation that happened in the late 1970s, early 1980s. So get the government out of the way. Taxes is the last thing I would deal with. And even there, my main priority with taxes would be to make them simple and flat, less interested in lowering them while we've got this massive deficit and more interested in not using taxes like the Santas in Florida to incentivize, to motivate, to get people to do this or that or something rather than just abolishing the income taxes way down the road. It's not a high priority. Cutting them at spending is a high priority. But that's a different story. You'd have to restructure it. So security and Medicare, that would be after deregulation, my second highest priority is to restructure the entitlements so that you can slowly phase them out. And only then would you talk about cutting taxes. All right. Thank you for listening or watching the Iran book show. If you'd like to support the show, we make it as easy as possible for you to trade with me. You get value from listening. You get value from watching. Show your appreciation. You can do that by going to youronbrookshow.com slash support by going to Patreon, subscribe star locals and just making a appropriate contribution on any one of those, any one of those channels. Also, if you'd like to see the Iran book show grow, please consider sharing our content. And of course, subscribe, press that little bell button right down there on YouTube so that you get an announcement when we go live. 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