Jan 18, 2009

A new menace to the economy: zombie debtors

Posted by: Marian Salzman In: recession

Feeding zombies is a deadly move but how is government to know which debtors are tomorrow’s writeoffs?  The article (link below) is currently one of the most downloaded on BusinessWeek.com.  Peter Coy writes, “When a big employer runs into trouble, it’s tempting to keep it going at any cost. Economists call this ‘lemon socialism’—the investment of public money in the worst companies rather than the best. The impulse is misguided, says Yale University economics professor Eduardo M. Engel.  ‘You don’t want to protect the jobs,’ he says. ‘What you want to protect is workers’ income during the transition from one job to another.’”

A New Menace to the Economy: Zombie Debtors - BusinessWeek.

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