Bankruptcies of Large U.S. Corporations Soar 35 comments
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In yet another sign that the U.S. economy is still plummeting downward, bankruptcies of large, U.S. corporations increased by 60% from the previous four-week period, according to a Reuters article, which obtained the numbers from BankruptcyData.com.
Led by long-term care operator Extended Stay Inc, and theme-park operator Six Flags (SIX), there were eight corporate bankruptcies in the last four weeks of corporations with more than $1 billion in assets, compared with five in the four weeks before that.
With U.S. consumers having no savings, no credit, and declining wages, there is no possibility of the retail sector strengthening in the U.S. Indeed, with the U.S. economy still losing roughly two million jobs per month (see “U.S. economy to lose 20 MILLION jobs this year”), the retail sector is certain to lead the U.S. economy in bankruptcies, going forward indefinitely.
Meanwhile, in the U.S. housing market, foreclosures remain near record-highs, delinquencies continue to break new records every month, and home-prices continue to fall more than three times as fast as during the worst of the Great Depression. This means that Americans are still losing trillions of dollars per year in “paper wealth”.
With debt-levels also at all-time record highs, individual bankruptcies are soaring, as well. In the twelve-month period ending March 31, there were 1.2 million bankruptcies in the U.S., more than doubling the level of bankruptcies from three years ago.
This soaring bankruptcy rate comes despite changes in bankruptcy laws which makes it much harder for individuals to be allowed to declare bankruptcy. Barbara Lynn, who heads the Judicial Conference of the United States is recommending that the U.S. government increase the number of bankruptcy judges by 13, while making 22 “temporary judgeships” permanent.
Is adding large numbers of bankruptcy judges now consistent with an economy which has “bottomed”?
In the meantime, the Obama regime, Wall Street, and clueless, media-parrots continue their inane chatter that the U.S. economy is starting a “recovery”, or to be more precise a “jobless recovery” - where there will few discernible signs of economic improvement.
For Americans who continue to lose their jobs, lose their homes, and lose their businesses, it is only a matter of time before they cease listening to Ben “I-cannot-tell-a-truth” Bernanke – when his 5th prediction of an “economic recovery” turns out to just as baseless as his first, four predictions.
Based on the previous pattern, Bernanke will be forced to abandon his prediction of “an economic recovery in the second half of 2009” in the next few days - since the 2nd half of 2009 starts in less than two weeks. After that, Bernanke will lie low for a month to six weeks, then emerge from hiding and announce his 6th prediction of an “economic recovery” - with the new start date for that “recovery” being the first half of 2010.
Maintaining the pattern, Bernanke will suffer complete “amnesia” and not remember his “prediction” that the recovery was supposed to be starting now (nor any of the other “predictions” before that).
Meanwhile, the entire U.S. media will suffer an identical bout of “amnesia” - and also forget about all of Bernanke's previous “predictions” as they pump his next “prediction”.
...and the bankruptcies of large U.S. corporations in the next four weeks will likely exceed the number of bankruptcies in the last four weeks. Welcome to the world of U.S. “economic recoveries”!
Disclosure: I hold no position in Extended Stay Inc. or Six Flags.
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This article has 35 comments:
In no time, we'll all be working sweet government jobs with the best health care in the world.
Nothing but gumdrops and lollipops.
I appreciate and thank the author's details but let's not forget the people that will be out of work and hence add to the downward pressure on the economy.
Six Flags CEO was on CNBC the other day to explain their Bankruptcy filing.
What an arrogant, insensitive person.
He said "our debt load was to high so we have to shed it".
Hey Mr CEO, you should never borrowed it in the first place.
It has become too easy now for companies to file and have the bondholders take massive losses and witness and experience the pain.
But guess what, we the people indirectly are the bondholders in one form or another through 401K or pension funds and we will witness more pain coming with these filings.
It is a vicious circle and i hope none of us are missing after this storm!!
Johnathan Vrozos JV
johnathanvrozos.com
johnathanvrozos.ca
we just have to figure out which bankruptcies will recive the largesse of political favor and make the trades for the quick gains to invest in gold, silver or junior miners. the pundits are useful to sift through the propagenda as long as you don't expect any news or journalistic integrity. this round may be harder to decipher than the bank and gm trades.
thank you u.s govt.
> jack
On Jun 21 10:49 AM cecil91 wrote:
> <snip>
> breadwinners struggle to feed and house their families. Increasing
><snip>
Uh ... under the socialst agenda they may think they are struggling to feed their families, but actualy, via confiscatory taxation throught the income range, they are struggling to feed the families of others. And unfortunately, this did not start with BHO - it's been gravitating in this direction for ages.
Someone smarter than I pointed out that everything can easily be stolen from us a tiny bit at a time whereas trying to take it all in one bite when cause mass revolt.
That is how we got to where we are now, a slice here, a nibble there, ...
What's stolen? The constitution, our property (emminent domain), the gains of our efforts (direct federal income tax, FICA, SS, ...).
There is no true freedom without economic freedom (property rights).
HardToLove
"home-prices continue to fall more than three times as fast as during the worst of the Great Depression"
If there was no housing bubble during the period preceding the great depression, and I can't recall ever reading that there was, this factoid is just a distraction. This observed effect is probably a result of the leverage, which is much higher than what existed in that prior period.
Regardless, keep posting the great articles. Much of what you touch upon is not generally recognized.
Thank you,
HardToLove.
Legislators need to examine the corporate culture that assumed too much debt in the first place and find ways not to let it happen again.
Johnathan V, if I seem "heart-less" in my bleak forecasts for the U.S. economy, think about how much MORE heart-less all the liars are - who are duping Americans into false-hope at a time they should be totally focused on simple survival!
Cecil91, I totally agree with your even bleaker views. The U.S. economy is crashing far worse than any other industrialized country, while it has the LEAST supportive social, "safety-net". I too see a complete break-down of U.S. society lying ahead.
H.T. Love, there was a "bubble" for ALL asset-classes in the U.S. before the Great Depression (much like today). Meanwhile media-liars continue to pretend this current catastrophe is LESS severe, when it is obviously much WORSE.
Lastly, to all those who continue to attach the LUDICROUS label of "socialism" to the current betrayal by the U.S. government, I would point out that more than 90% of all "stimulus dollars" are going straight into the pockets of filthy-rich fat-cats. This is the POLAR OPPOSITE of "socialism". Time to take your blinders off!
"conservative" administrations over the last 30 years! And Obama will be forced to spend $2.5 to 3.0 trillion more to cleanup the mess
left by 43.
On Jun 21 01:30 PM Jeff Nielson wrote:
> Thanks for the comments, let me try to address a few of them.
>
> Johnathan V, if I seem "heart-less" in my bleak forecasts for the
> U.S. economy, think about how much MORE heart-less all the liars
> are - who are duping Americans into false-hope at a time they should
> be totally focused on simple survival!
>
> Cecil91, I totally agree with your even bleaker views. The U.S. economy
> is crashing far worse than any other industrialized country, while
> it has the LEAST supportive social, "safety-net". I too see a complete
> break-down of U.S. society lying ahead.
>
> H.T. Love, there was a "bubble" for ALL asset-classes in the U.S.
> before the Great Depression (much like today). Meanwhile media-liars
> continue to pretend this current catastrophe is LESS severe, when
> it is obviously much WORSE.
>
> Lastly, to all those who continue to attach the LUDICROUS label of
> "socialism" to the current betrayal by the U.S. government, I would
> point out that more than 90% of all "stimulus dollars" are going
> straight into the pockets of filthy-rich fat-cats. This is the POLAR
> OPPOSITE of "socialism". Time to take your blinders off!
Meanwhile, the collapse of banking induced inflation now has the forces of raw unbridled capitalism trying to reorganize too big to manage corporations down to more manageable, human scale entities. But the government and megalomaniac Fed Reserve are trying to bring back the ebbing tide with huge buckets that have holes in them.
My out of work daughter, who is back in college, just landed a part time job with a stand alone retail store. Where jobs are created. Earlier, she had been let go earlier from a full time job after the Whole Foods - Wild Oats megalomania merger started to play out. Now Whole Foods even admits it was a bad idea, but the Wild Oats upper management, in place only a few months, made some fast money. Of course, then jobs have to be cut so that wages can be diverted just to pay bank interest.
Rep. Bachman has an interesting observation...
www.youtube. com/watch? v=dPP6kkRb2WQ
You been drinking the coolaid?
Debt left by 42?........, and 41, 40, 39, 38, 37, 36, 35, 34, 33, and oh ya, the grand daddy of our current problems #32.
This must be the most negative site on the internet. If I was a bunker, guns or caned food salesman, I could definitely make a fortune advertising here.
If you're looking for "negativity" check out the comment section of Calculated Risk. By comparison, this here is a veritable jungle of "green shoots", populated by Kool-Aide swillin' bulls, LOL.
On Jun 21 06:55 PM Jeff wrote:
> Hey PokeyClips,
>
> You been drinking the coolaid?
>
> Debt left by 42?........, and 41, 40, 39, 38, 37, 36, 35, 34, 33,
> and oh ya, the grand daddy of our current problems #32.
>
> This must be the most negative site on the internet. If I was a bunker,
> guns or caned food salesman, I could definitely make a fortune advertising
> here.
I can no longer buy junk bonds at 18% or corp bonds at 8%, or buy Cheesecake factory for $4.78, now at $17.60. I was buying condo's in Vegas for $40,000, now if I can find anything at all it's $60,000 plus.
Oh ya, I just got an interest only loan for 4,78%, last year this time, 8% to 12% IF you could find one.
I am not the Swillin Bull you spoke of, but I am a realist, and things are changing. We can't live in 2007 forever.
You must be the wiener who always complains when the next guy takes the risk and rakes in all of the money. Better get some balls.
I worked through the 1980 recession, the WORST since the Great Depression, and never knew it was taking place.
I started my own business in 1989, OH BAD TIMING, since the 1990 recession was dead ahead. My business did $20 million in sales in 1990, oh go figure, another recession missed.
You should read Think and Grow Rich, and recession's will stop happening to you.
On Jun 21 12:40 PM Gregman2 wrote:
> Great article. Thanks Jeff. Unfortunately, even though it points
> to serious structural problems, it's actually a good thing, albeit
> painful.
> Legislators need to examine the corporate culture that assumed too
> much debt in the first place and find ways not to let it happen again.
The entire government is corrupt, not just the federal reserve. All governments eventually turn corrupt when the people develop apathy toward the running of them and are content to allow "someone else" full governmental control of their lives.
We ain't seen bad yet but its coming.
We've been living in a capitalistic bubble since 1983, which is another world for a partnership between government and business to destroy and enslave the working class in America by sending high-paying jobs overseas and by providing easy enslavement to debt through the banks.
Is it better for the government to assist only the rich in America (the banking and business class) or the middle and working-poor class also? We've had socialism for the rich since Reagan; now we have socialism for the non-rich, since the rich destroyed our economy.
If we insist on 'dog-eat-dog' forever, our cities will be burning again. That's not such a good idea, in my estimation.
The 'rugged individuals' torpedoed the ship of state -- now they are whining when a new regime tries to pick up the pieces. 'Socialism'? We do not need to support a system that supports the greediest and the most criminal.
I don't know or care what's really in them, so long as they make you believe that about "working sweet government jobs with the best health care in the world".
On Jun 21 08:49 AM yellowhoard wrote:
> It's OK Jeff.
>
> In no time, we'll all be working sweet government jobs with the best
> health care in the world.
>
> Nothing but gumdrops and lollipops.
there are better ways to solve our economic hardship than through central planning. the big problem is that we think of our 50 year old disneyland economy as normal and real and we therefore have unsustainable expectations.
Your doom and gloom take is correct. In the long run, it makes little difference if the burning sack of s**t left on the taxpayers front porch is in a red or blue bag.
On Jun 21 06:55 PM Jeff wrote:
> Hey PokeyClips,
>
> You been drinking the coolaid?
>
> Debt left by 42?........, and 41, 40, 39, 38, 37, 36, 35, 34, 33,
> and oh ya, the grand daddy of our current problems #32.
>
> This must be the most negative site on the internet. If I was a bunker,
> guns or caned food salesman, I could definitely make a fortune advertising
> here.
It is their suppliers, vendors and customers I continue to worry about.
Right now, even though I sell NOTHING on credit to the Big 3, my receivables are out of control.
My customers supplied the Big 3 and they aren't getting paid.
AND the government is deciding WHOM Chrysler & GM "save" in their supplier line.
Let me give you a hint as to where your tax dollars are going:
China, Mexico and South America.
The government is running small business out of business and then they go on tv and talk of "green shoots."
The increase in large corporate filing will be quickly followed by the small company filing. With no press release AND the loss of lifetime of hard work & savings.
Things are so much worse than most know. And yes, I too truly feel that the upcoming horror of our society will be much worse than anyone can imagine.
Such data is a sign that what needs to be done is being done. The economy must deleverage before it can once again grow in a sustainable manner and because of the FACT that we leveraged-up for several decades it is not reasonable to believe that everything will be hunky-dorry so soon.
Businesses are still loaded with debt, and the financial sector continues to sit with TRILLIONS in (leveraged) near-worthless "assets".
Meanwhile, U.S. households are being DISCOURAGED from de-leveraging by continually being promised "recoveries" - and in trying to con them into taking on MORE debt by buying over-priced U.S. homes.
This is why there is no "light at the end of the tunnel." NOTHING is being fixed right now.
On Jun 22 12:47 PM Fred Voetsch wrote:
> Good data, thanks, and I largely agree with the tone of the article.
>
>
> Such data is a sign that what needs to be done is being done. The
> economy must deleverage before it can once again grow in a sustainable
> manner and because of the FACT that we leveraged-up for several decades
> it is not reasonable to believe that everything will be hunky-dorry
> so soon.
What do you think is happening? We just handed close to 13 TRILLION to the "Greediest and Most Criminal". Lots of Taxpayer money flying around with no "Transparency OR Accountability" to show for it. "Representatives" voting for bills they have not read - The President Signing Bills He Has Not Read.
Things Are Not Well.
If you rely on others for your safety and well being you will always be a possible victim. To Assume Benevolence Is Foolish.
The Maw Of Government Continues To Tighten.
On Jun 22 03:26 AM Michael Clark wrote:
> In America, all one needs to do is utter the dread word 'Socialism'
> and people begin to scatter as if bubonic plague had just been introduced
> into the conversation.
>
> We've been living in a capitalistic bubble since 1983, which is another
> world for a partnership between government and business to destroy
> and enslave the working class in America by sending high-paying jobs
> overseas and by providing easy enslavement to debt through the banks.
>
>
> Is it better for the government to assist only the rich in America
> (the banking and business class) or the middle and working-poor class
> also? We've had socialism for the rich since Reagan; now we have
> socialism for the non-rich, since the rich destroyed our economy.
>
>
> If we insist on 'dog-eat-dog' forever, our cities will be burning
> again. That's not such a good idea, in my estimation.
>
> The 'rugged individuals' torpedoed the ship of state -- now they
> are whining when a new regime tries to pick up the pieces. 'Socialism'?
> We do not need to support a system that supports the greediest and
> the most criminal.
Ouch, your to clever for me.
> Lastly, to all those who continue to attach the LUDICROUS label of "socialism" to the current betrayal by the U.S. government, I would point out that more than 90% of all "stimulus dollars" are going straight into the pockets of filthy-rich fat-cats. This is the POLAR OPPOSITE of "socialism". <
NO IT'S NOT! Socialism has its elite just like capitalism, only worse. Do you think everyone in socialist countries lives at the same standard? Of course not. Here's how it REALLY works: some sovnabitch says "it should work like XYZ and it will be really great". Then he proceeds to game the XYZ system using his intimate knowledge and built in back doors for him and his pals.
By the way, the actual correct title for what Obama is doing is known as Fascism.
Obama is doing what FDR did. FDR is his model. And those who argue that Hitler is his model are just melodramatic hysterics who are not seeing reality clearly.
On Jun 28 07:06 AM Did U Think The Ponzi Scheme Would Last? wrote:
> On Jun 21 01:30 PM Jeff Nielson wrote: