Yellow Fever

The malaise that turned Yellow into a zombie trucking company is sweeping the nation but is even worse in China.

Aug 07, 2023

Trucking company, Yellow, has caught a fever and gone terminal. It’s going to leave tax-payers holding the barf bag on what they still own of the $700-million Trump-era loan that bailed Yellow and Trump Corp., and many others like Yellow, out during those Covid lockdowns that Trump presided over, at least, initially when he did nearly everything Dr. Grouchy told him to do. Trump yielded the bully pulpit to the evil doctor on a daily basis for almost a year, locked down the national economy upon his urging, then created more big-business bailouts at the cost of greater deficits than any president in history prior to him BY FAR. Then he pushed for, funded at the cost of hundreds of billions, and rushed past testing … a vaccine for the world in order to save us from another fever, some called the Kung Flu, all while legally shielding the companies who buried evidence of its harm from liability forever. Now we come to a prime example of what all those trillions of bailout dollars made necessary by forced government closures buy you.

All of that created deep new damage throughout the economy, untold damage to the health of the labor force and all while protecting some businesses that were already damaged by their own rapacious greed long before the pandemic happened. Yellow, as a sample case, never got better, in spite of the bailouts, and the zombie company now lies dying with a union boot on its throat. “Default, Dear Brutus, lies solely within ourselves.” Yellow might have once strode the narrow world like a colossus in the trucking business, but it is now shutting down after a century of such great strides, and Yellow’s fever will to some extent infect us all:

The downfall of the 99-year-old company will lead to the loss of 30,000 jobs and could have ripple effects across the nation’s supply chains. It also underscores the risks associated with government bailouts that are awarded during moments of economic panic….
The bankruptcy could create temporary disruptions for companies that relied on Yellow and might prompt more consolidation in the industry. It could also lead to temporarily higher prices as businesses find new carriers for their freight.
“Those inflationary prices will certainly hurt the shippers and hurt the consumer to a certain extent,” said Tom Nightingale, chief executive of AFS Logistics, who suggested that prices would likely normalize within a few months.
Jack Atkins, a transportation analyst at the financial services firm Stephens, said that Yellow’s troubles had been mounting for years.
In the wake of the financial crisis, Yellow engaged in a spree of acquisitions that it failed to successfully integrate, Mr. Atkins said. The demands of repaying that debt made it difficult for Yellow to reinvest in the company, allowing rivals to become more profitable.

Yeah, that last bit is pretty much how we define a zombie corporation, making Yellow one of the many to join the zombie apocalypse I said was coming with this round of Fed tightening. That will happen due to the damage higher interest will inflict on numerous companies that could barely stay alive on the cheaper interest upon which they had become dependent. They became dependent when the Fed was zombie baiting by enticing businesses to use more debt by offering almost-zero-interest loans for years on end, breeding a weak horde of businesses throughout the economy.

The Fed and feds kept MANY zombies alive throughout the years since the 2008 crash via bailouts and low interest. These have become a heap of quivering, undead corpses that cannot survive any longer without being over-Fed continually on low-interest loans because they are too unprofitable to service the debts they have taken on. Yellow did exactly that.

Yellow was bailed out by the Trump admin on the claimed basis that it was critical to national security because it shipped supplies to military bases. That just pushed the problems ahead so we’ll have more supply shortages for everyone now, including the military! (If the argument for its necessity was true.) If Yellow was so essential that tax-payers needed to be put on the hook to bail it out, I guess it was too big to fail, as it would have (and should have) if left to wallow in its own corporate-conglomeration greed. We’ve been following the plan of saving businesses that should die their natural deaths due to their own greed since the Great Recession.

Because Yellow was already looking green in the face before the pandemic, the government should have expected this failure. It is what happens whenever you bailout zombies. But, hey, at least, the government was smart enough to get a 30% equity stake in the rolling dead before it went down the road. Government logic says 30% of nothing is better than nothing!

Yellow fever is a contagion that is spreading like a flooding river through China, too. The yuan, you see, is drowning in its own self-created deluge of troubles to such extent that investors are now fleeing China like bats from a Wuhan lab. One headline today even notes that the quaint notion that China was going to overtake the US economically or financially has now become the “hoot of the day.”

So much for the feared dragon as it chokes on its own smoke. This is what central planning gets you. The communist government creates money by showering a municipality in low-interest loans and presses that government to create large-scale civic projects. Then it gets the harebrained idea of locking down its vast economy because it can over a virus it created. It literally screws people into their buildings and creates such brain-dead economic carnage across the land that tax revenues plummet and cities and towns and rural regions cannot repay their debts. It’s what socialist government in the US gets you, too. We’ve seen that ever since the days when Bush and then Obama socialized the costs or risks of dying banks to save the capitalists pigs (for truly those particular ones were pigs) who crashed their banks by feeding their greed.

Now, just like Yellow, local Chinese governments are sinking in their own junk financing — even faster than their junk loans were going down last time I reported on this about a month ago. One more reason, no doubt that investors are fleeing China like rats off a sinking junk.

Got gold?

Finally, if you’re one of those bitten by the gold bug who caught a little gold fever, don’t worry about the recent slide in gold. Another kind of yellow fever is helping you out — also from China: The People’s Bank of China is still glomming onto that yellow stuff. That’s probably because they’re going to need real money as the yuan-continues its long slide, but it helps you avoid the slide.

GoldSeek Radio Nugget - David Haggith: Gold and Silver a Protection Against CBDC

(Headlines backing up today’s editorial appear in boldface type below:)