Business Bankruptcies Up 7% in October
Tags: Financial Crisis, Obama Depression.
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And with CIT out, this just might be the harbinger of worse to come:
Business bankruptcy filings jumped in October, reversing two consecutive months of declining commercial filings and indicating that bankruptcies could continue to rise as the economy struggles to stabilize.
Last month, 7,771 businesses filed for bankruptcy protection, compared to 7,271 that sought shelter from creditors in September, according to data from Automated Access to Court Electronic Records, a private firm that tracks bankruptcy filings.
After two months of decline, the 7% rise in commercial filings shows that businesses are still struggling to access financing and are facing weak demand for their products.
With CIT’s bankruptcy, businesses will find it even harder to obtain financing and that will start a cruel cycle.
There would have been a role for government here if Obama hadn’t already shot his bolt with TARP and the Spendulus boondoggles. You see, the government can, at times (and only for short times) provide some much needed liquidity to small and medium sized business who have solid products, but are having trouble staying afloat or getting launched in an economic downturn. The key here is to understand that if someone isn’t making, mining or growing something, then there’s no point getting involved, at all, in such times. Obama shoveled all the money at entities which just shovel money around…it made their books look good for a quarter, but it didn’t produce any wealth. And as the money was borrowed against the future, Obama’s programs actually made us worse off.
But for those companies that do something useful (grow food, make tools, mine for copper, etc, etc, etc) then its in our best interest to help out as much as we can. This is because wealth isn’t money – money is just a convenience…easier to carry around a $20 to buy your lunch than provide your skills or goods at the local fast food joint, you see? Money can come in handy, but only if its to be used to allow people to exercise their skills to create wealth. Don’t bail out a bank (which only got in to trouble because the people running it got greedy and stupid), but you can send a few bucks to the landscaper who needs to purchase a new truck but can’t get financing in a tight market.
Even so, of course, such interventions are not ideal – and should be given sparingly and terminated as swiftly as possible – but they can play a role in economic stablization and as they result in things being made, mined or grown, we actually have more wealth…wealth which can, of course, be used to pay back the money provided to get things rolling. Right now, the economic wizards are stirring a pot of toxic assets and hoping that recovery emerges from the stew. Ain’t gonna happen. In fact, with all of Obama’s borrowing, we’re just being buried deeper…and more firms won’t get financing (because Obama borrowed it all, you see?) and thus will go under or not get started and this will, in turn, cause more firms to lose financing, etc.
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9 Responses to “Business Bankruptcies Up 7% in October”
Caucus of Corruption
With CIT’s bankruptcy, businesses will find it even harder to obtain financing and that will start a cruel cycle.
Which is especially strange since financial institutions are sitting on a ton of free/cheap money that they’re afraid to loan, knowing that, if they start loaning it out it’s going trigger an inflationary cycle, which, in turn, is going to drive up interest rates. And the last thing the Fed and the Treasury department want right now is higher short-term interest rates. We may actually be in a sort of economic limbo for a while, but sooner or later something has to give. I’m still thinking a government driven deflationary spiral into a deep depression is a more likely scenario than hyper-inflation, but a lot depends on 2 variables: what happens to the 120% increase in the money supply from last fall until last spring, and the washing out of the system of toxic mortgage-based derivatives, which reportedly amount in the trillions.
Beware of the new antiseptic…
Hydrogen Barackside, it’s deadly! Kills capitalism on contact!
Liberalism is a mental disorder and it’s driving us into the poorhouse.
Hey libbies, more bailouts? How ’bout another cash for clunkers program to create a false uptick in auto sales?
Spook
Bingo, have recently encountered that my self…disgusting.
big business pulled in thier cash when they saw that the One had captured the DNC nomination in 08…now they pull it in even harder…and push up thier prices…because of what the One keeps doing…
when government owns everything…can the world see us in any different light than we saw the ussr…
Productivity at 6-year high, jobless claims fall
Thu Nov 5, 2009 9:07am EST
New jobless claims fall to nine-month low
WASHINGTON (Reuters) – U.S. business productivity in the third quarter grew at the fastest pace in six years and new claims for jobless aid fell to a 10-month low last week, indicating the decline in labor market may be hitting bottom.
http://www.reuters.com/article/newsOne/idUSN0243717320091105
That has what to do with this, Ohio?
that productivity growth is a leading indicator while biz bankrupticies are a lagging indicator.
leading indicators show an improving economy ahead which the investment community clearly recognised resulting in an equity rally…another leading indicator.
Ohio,
All just smoke and mirrors – the productivity gains are the result of doing more with less…I don’t know about you, but my employer is expecting far more from me each day than formerly. I’m more “productive”, but I’m actually producing less than I used to…because there’s just less happening.