Bankruptcies Soar And There Will Be More

As a confirmation of the depth of the recession around the world the numbers of filings for bankruptcy seem to be soaring wherever you look.  Here are just some of those headlines.

Canadian bankruptcies soar 47 percent in December

The Office of the Superintendent of Bankruptcy said Monday 8,299 individuals and businesses went bankrupt in December, up from 5,659 for December, 2007, a jump of 46.7 percent.  The latest numbers are a staggering sign of how quickly the Canadian economy has slowed.

Japan company bankruptcies soar

Corporate bankruptcies rose 16 percent to a six-year high for the month of January, and the number of bankruptcies among listed companies is already at a record high for any financial year since World War Two, research firm Tokyo Shoko Research said.

Personal bankruptcies ballooned in Mass. US, last year

“There were 11,638 filings under Chapter 7 of the US bankruptcy code last year, up from 8,245 in 2007 and more than double the number in 2006 when there were 4,698 filings,” the Warren Group, a Boston firm that tracks such data, said in a press release. “Nearly all of the filings, or 98 percent, were by individuals.”

Record numbers are declared bankrupt in the UK as recession bites

The number of people being made bankrupt hit an all-time high during the last three months of 2008, as the country’s worst recession in three decades left thousands of individuals unable to pay their debts.

The increase in the number of people declaring themselves insolvent was particularly high in Scotland and Northern Ireland – jumping 75 and 39 per cent respectively in the final quarter of 2008, compared to the same period a year ago. In England and Wales, there was an 18.5 per cent jump in personal insolvencies. In total, 35,694 people declared themselves insolvent across the UK during the quarter.

Numbers are up for both personal and company filings for bankruptcy.  However given the recent fate of Iceland, questions are even raised about the bankruptcy of countries.  The Huffington Post suggests that the UK Will Be Hardest Hit By Global Recession: IMF.

World economists predicted today that the UK would be hit harder than any other developed nation by the worst recession in more than 60 years.  The International Monetary Fund’s (IMF) grim outlook showed the economy shrinking by 2.8 per cent this year, more than twice as bad as it previously thought and well above the 2 per cent average for advanced countries.

The Institute for Fiscal Studies (IFS) also predicted that swollen levels of public sector debt would not return to pre-crisis levels for more than 20 years.

It may be a overly pessimistic view but Web TV Hub suggests that Britain itself may be on the road to bankruptcy.  You can read the details of its arguments in the following three part series on Bankrupt Britain:

Part 1: Europe Blames America While U.K Warned of Bankruptcy

Part 2: U.K Government Destroying Britain to Help Banks?

Part 3: Is the BBC Hiding Britain’s Bankruptcy?

With this concern for the possibility of the U.K government becoming bankrupt, the series suggests that many U.K news organizations are failing to inform the public of the issues in this argument.

The strength of an economy depends in part on the confidence that the government can generate in the nation.  Clearly in the US, President Obama has been able to create a confidence-building stimulus deal.

Obama’s success at steering a stimulus package from promise to reality is a confidence booster, in and of itself, almost without respect to the actual content of the package. A couple more accomplishments like this, and he might begin to create the illusion that he is an effective leader who can get things done. For a nation shell-shocked after eight years of fiascos, that could be a pretty key step toward facilitating an eventual recovery.

One hopes that other national leaders will be equally effective in building confidence through the economic actions they are taking to counter the recession.

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• Britain’s recession will be deepest IMF warns (telegraph.co.uk)