According to the New York Times, during the pandemic,along with the sharpest economic downturn in history, the solution by most companies has been to take on more debt.
- Why does this borrowing binge turn conventional wisdom on its head?
- Does the article make it sound like there will be many defaults to the Fed on these loans or fewer near bankruptcies or a little bit of both?
- Why are the banks currently earning hefty fees?
- What has happened to bond prices?
- What are the zombie companies and what are they doing in the market?
Phillips, M. (2020). Businesses Are Supposed to Cut Debt in a Downturn. Why Not Now? The New York Times, July 20 (Retrievable online at https://www.nytimes.com/2020/07/20/business/corporate-debt-federal-reserve.html )