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How Unprofitable Companies Stay In Business

• At least 10% of publicly listed companies in the US are zombie firms, which economists define as firms that are overly indebted and consistently display negative sales growth.

• Zombie firms are a growing problem around the world and are detrimental to healthy firms that compete in the same sector.

• The share of zombie firms has been increasing over time, and banks and governments keep zombie firms alive when they bail out unviable businesses.

• The Fed's swift interest rate hikes are making long-suspected zombie firms go bankrupt.

• The US financial system may be propping up zombie firms, and the pandemic could have left more of them.

• Zombie firms can appear in any sector where debt is involved, and they are smaller in size, have lower returns on assets, hold less cash, and have lower investment opportunities than their non-zombie counterparts.

• Zombie firms are failing businesses that manage to stay open for years due to cheap credit.

• Governments stepped up during the pandemic, but the support was initially mostly untargeted and may have kept pre-pandemic zombie firms alive for longer.

31 Year Old Man Faces 115 Years in Jail (SBF)

Major Headlines

Important AI News and Trends.

• Apple CEO Tim Cook calls AI a fundamental technology (AppleInsider)

• UK invests $273 million in AI supercomputer to not be left behind (CNBC)

• Now you can generate 3D models with Stability AI's latest tools (TC)

• Amazon enters the open-source LLM game with the help of Mistral (HF)

• Apple CEO on Generative AI: 'We're Investing Quite a Bit' (MacR)

Quote of the Day

“You are confined only by the walls you build yourself.”

-- Andrew Murphy

How Two Families Shaped American Politics (& War) For Their Profit