Monday, August 24, 2020

Has America Peaked?: 2020 Will Have A Record Number Of Large Corporate Bankruptcies

(Via The Financial Times)

The consequences, of the madness of locking down large sectors of the economy for a virus that has minimal severe health consequences for the very young and most of those of working age, continue to multiply.

According to FT, as of August 17, a record 45 companies each with more than $1 billion in assets has filed for Chapter 11 this year; this compares with 38 for the same period of 2009 during the depths of the financial crisis and is more than double last year’s figure of 18 over the comparable period.

"We are in the first innings of this bankruptcy cycle. It will spread far across industries as we get deeper into the crisis. It’s going to be a bumpy ride," said Ben Schlafman, chief operating officer at New Generation Research.

Some of the most iconic names that have filed this year include Neiman Marcus, which struggled for years with a heavy debt burden from its 2005 leveraged buyout by TPG and Warburg Pincus, and which finally filed for bankruptcy in May with liabilities of $6.7bn. JCPenney, also saddled with billions in debt, filed for Chapter 11 bankruptcy in May. Brooks Brothers, the venerable suit retailer that once counted Abraham Lincoln and John F Kennedy among its clients, did the same in July, notes Zero Hedge.

"It pains me to say this, but bankruptcy is a growth industry in America," New Generation’s Schlafman concluded.

Of course, some of the bankruptcies will simply result in the restructuring of debt and lease agreements, and corporate survival will occur. For others, it will be total liquidation.

And this says nothing about the greater damage done to mom and pop businesses across the land/

This can all be laid at the initial mishandling of the COVID-19 panic by President Trump and the Democratic opposition power freaks who saw an opportunity to damage Trump by destroying the economy.

The future problem is that there is no indication that there is anyone close to power that knows how to put the economy on sound footing by letting laissez-faire policy breath.

Regardless if Trump gets reelected or Biden slides in, interventionist madness in one form or another is likely to continue--especially with the irresponsible money printing by the Federal Reserve.

America may have peaked or at least entered an extended dark period.

Some of us will still be able to eke out a good life but it will likely be very far from all.



  1. My bigger concern is "regime uncertainty." If there is now an expectation that politicians will shut down everything on whims, as just happened, then how could entrepreneurs plan and invest in long-term projects? So while there will be short-term carnage, between regime uncertainty and MMT, how can there be sustainable, long-term growth? It seems like this is going to be an environment that really rewards those who can get in an out quickly, arbitraging fleeting opportunities, as well as upping the premium on having political connections. Great for speculators and large crony capitalists, but tough for the plodding entrepreneur (as if his life was easy before).

  2. The 'vid thing is almost too easy for the globalists...
    -They want corporations married w/ government ruling over us with almost total control
    -Their fiat system is bankrupted and the only way to keep it going to put their corporate system while gather up all the assets is to flood money in at never before seen amounts
    -How can you do this without causing another weimer....kill velocity by literally stopping almost all business but the big corporations.

    So the deep state globalists get their insurrection, their huge wealth transfer, more control, bankrupt all the small business, etc. It's almost too perfect.