# When the Free Money Stops, Reality Hits

Remember when every struggling company could just refinance their debt at rock-bottom rates? Those days are dead.

About 600 large US companies—think American Airlines, Carnival—are now classified as "zombie firms" by economists. Their cash flow can't even cover interest payments. In normal times? No big deal, rates are cheap and you just roll over the debt. But we're not in normal times anymore.

Here's the squeeze:

**The Numbers Are Brutal:**
- ~20% of America's 3,000 largest public companies can't generate enough cash to pay interest (Bloomberg data)
- 620 companies missed interest payments last year alone—way above 2019's pre-pandemic level
- Junk bond issuance collapsed 75% YoY; May saw only $6B in new loans vs. $80B in January

**Why It Matters:**
With the Fed hiking rates and tightening liquidity, these zombie firms face a reckoning. Getting credit is suddenly hard. Rolling over debt isn't automatic anymore. Bankruptcies are coming.

**The Bailout Question:**
Forget expecting a government rescue. "Unless we see another full financial crisis, the Fed's capacity to bail them out isn't that high," says NYU professor Viral Acharya. Plus, the Fed explicitly wants to *reduce* demand—not prop up dying firms.

Bottom line: The lending party's over. Companies that survived on cheap money are about to learn what capitalism actually means.