Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Eniola Odetunde/Axios

Companies around the world are increasingly at risk of failure, and the size of the problem is growing.

Driving the news: That's the message being delivered by two of the world's most respected monetary authorities — former European Central Bank president Mario Draghi and former Reserve Bank of India governor Raghuram Rajan — and a flurry of other top economists.

What's happening: "There is a growing corporate solvency crisis in most of the world, as balance sheets are hit hard by losses and the resulting need to pile up debt," co-chairs Draghi and Rajan, along with a group of economists, academics and central bankers that includes former chair of the Council of Economic Advisers Jason Furman and People's Bank of China governor Yi Gang, wrote in a report for the Group of 30 (G30).

  • "In addition, many companies entered the coronavirus recession with unusually high levels of leverage."

Between the lines: Further, the actions taken by central banks and governments in response to the coronavirus pandemic are masking the true state of the economy — a disguise that cannot last forever.

What we're hearing: While central banks could continue to pump money through the financial system for a long time, businesses can't survive on liquidity alone, Draghi told Axios during a meeting with reporters Friday.

  • "You can do a certain amount of what’s called evergreening but after a while the corporation will remain unviable no matter how big is the liquidity support."
  • "At this point in time the next issue we’ve got to be worried about is a surge in nonperforming loans all over the banking system in most parts of the world."

One level deeper: Unlike central bank support, which will be in place for quite some time, the massive fiscal support packages from governments will have to come to an end, Rajan told Axios during the meeting.

  • At that point, businesses will start failing and questions will need to be answered about not just the firms that go under, but about the firms that are connected to them, as well as banks and individuals.

The bottom line: "We’re not yet out of the pandemic but we should start preparing for what comes next," Rajan said.

  • "And what comes next are the consequences of the tremendous amount of support that we have in place."
A crisis with no end in sight

Draghi, who famously said the ECB would do "whatever it takes" to support the eurozone economy back in 2012, believes central banks have no alternative but to continue to keep rates low and keep printing incredible amounts of money.

  • "Support, in my view, will continue for quite a long time," he told Axios during the Friday meeting.

The big picture: "Originally, some people said this is going to be a V-shaped recession. This is not a V-shaped recession, this is a long recession."

The big question: "For fiscal authorities almost everywhere ... we are in a period of time where new [spending] programs succeed old programs without any break, and bigger and bigger numbers come every day."

  • "The main issue is how do you design these programs, how well do you spend this money because ultimately growth will depend on that. In many countries, only on that."

Editor's note: This story has been edited to state that Raghuram Rajan was the governor of the Reserve Bank of India, not the Bank of India.

Go deeper

Dan Primack, author of Pro Rata
Jan 15, 2021 - Economy & Business

Trump blocks banks from limiting loans to gun and oil companies

Illustration: Sarah Grillo/Axios

Big banks are no longer allowed to reject business loan applicants because of the industry in which they operate, according to a new rule finalized on Thursday by the Trump administration.

Why it matters: Wall Street has curtailed its exposure to industries like guns, oil and private prisons, driven by both public and shareholder pressures. This new rule could reverse that trend.

U.S. ambassador to Russia will return home briefly: State Department

John Sullivan, U.S. Ambassador to Russia, during a briefing in Moscow in 2015. Photo: Anton Novoderezhkin/TASS via Getty Images

The State Department said Monday that the U.S. ambassador to Russia, John Sullivan, will now be returning to the United States this week before returning to Moscow "in the coming weeks."

Why this matters: The statement, from a State Department spokesperson, comes just hours after Axios reported that Sullivan had indicated he intended to stand his ground and stay in Russia after the Kremlin “advised” him to return home to talk with his team.

Scoop: Leaked Ukraine memo reveals scope of Russia's aggression

Russian President Vladimir Putin visits a military exposition in Sevastopol, Crimea, in Jan. 2020. Photo: Mikhail Svetlov/Getty Images

Russia has been holding last-minute military exercises near commercial shipping lanes in the Black Sea that threaten to strangle Ukraine's economy, according to an internal document from Ukraine's ministry of defense reviewed by Axios.

Why it matters: With the eyes of the world on the massive buildup of troops in eastern Ukraine, the leaked memo shows Russian forces escalating their presence on all sides of the Ukrainian border.