This case
typifies several phenomenon at once: growing state capitalism, increasing corporate indebtedness in the U.S. economy since the 2008 bust in which many zombie companies remain in the real economy, and of course crony capitalism among connected “essential” MIC providers and/or well-connected crony capitalist money lenders.
Earlier shareholders in YRC have long been wiped out. Well-connected bond holders took over the corporation, and are now being both protected and partially replaced by government “ownership.” Of course the partial government “ownership” will eventually be liquidated — one way or another.
The fact that YRC was long a favorite military logistics company, is mostly unionized and based in Middle America, has expanded by buying into Chinese logistics companies (apparently adding to debt and not returning hoped for profits), just adds color to the story. Other companies could easily take over YRC business if the company was just liquidated via bankruptcy, but political factors clearly complicate this. The unions have already taken extreme wage cuts. Why the other two large YRC competitors are doing better is not explored in any of the articles I read.
Wikipedia reports only that “YRC reported a net loss of $974 million for its 2008 fiscal year. In 2009 it again reported a net loss of $622 million. Towards the end of 2009, YRC narrowly averted having to file for bankruptcy protection by successfully persuading its bondholders to exchange their $470 million in bond notes for roughly 94% of the company’s shares..... Nonetheless its share price declined in year 2010 more than 80%, raising in 2011 suspicions of
Death spiral financing. In September 2011 the company completed a financial restructuring that has essentially wiped out any shareholder equity. All employees, Teamsters included, took massive pay cuts in order to keep YRC in business.”
Without Uncle Sam and the Federal Reserve bailing out over-indebted “zombie corporations” in both the real and “private equity” economy, which is a process that has only been sped up (and covered up) by the COVID-19 contraction, thousands of small, medium size and “too big to fail” U.S. corporations would already have failed. U.S. dollar supremacy and our over-weight position in world economy would also long since have been profoundly shaken and reduced.
Call it what you will.
edition.cnn.com
