Tuesday, February 15, 2011

Bankruptcies Per Capita

Felix Salmon: Bankruptcy charts of the day

What’s more, in both of my charts it’s clear that the number of filings is more or less “back to normal” after the artificial interruption of BAPCPA.

I wish I could see his charts. They aren't posted.

Here's my version. Some of these increases in bankruptcy filings might simply be due to population growth. Let's try to factor that in.

Click to enlarge.

Felix Salmon claims bankruptcies are more or less "back to normal". The red trend line is flat. He sees a reason to cheer long-term.

I'm looking at the blue and the purple trend lines. They both slope up. I see a reason to despair long-term. Some of the steepness of the purple trend line was due to filers trying to get in before the
Act. Some of it was due to our weakened economy.

The act was meant to decrease the rate of filings; it doesn’t seem to have worked very well in that regard, although admittedly we’re still painfully emerging from a particularly nasty recession.

In my opinion, it did work. I strongly suspect that the red trend line wouldn't be nearly so flat if not for the Act. If I am right, then bankruptcy is still a long-term growth industry in America.

I should point out that I am a crisis blogging doomsayer though. Felix Salmon pointed that out shortly after I started this blog.

November 21, 2007
Crisis Blogging: Beware of the Doomsayers

A system-wide financial crisis isn't impossible, of course: almost nothing is impossible. Almost any financial downturn, taken to its logical conclusion, can become a crisis. But in practice, in the developed world, that doesn't seem to happen.

Score one for system-wide financial crisis doomsayers.

Source Data:
Growth in Bankruptcy Filings Slows In Calendar Year 2010
St. Louis Fed: Popluation


Anonymous said...


Well, he's baaaack and the sky is the limit right now according to JC above. This is a nice bookend to the 2000 piece you have highlighted here--just pointing it out. If Jon Stewart can't make people see the hypocrisy, maybe this finally will, and possibly in the aftermath of the next crisis CNBC will be replace by Soupy Sales reruns. Actually Soupy was much more direct in his money pitches--remember when he asked the kids to get the little green pieces of paper from daddy's wallet and mail them in?

nanute said...

Rates may or may not be back to "normal." I think the more important question is what has (have?) been the unintended consequences of the new bankruptcy law? Making it more difficult to liquidate liabilities,and start fresh, the way corporations can, would seem to be an overall drag on the consumer driven economy. It's purely speculative on my part. Don't know how you could measure it. I'm not a lawyer, but I've argued that I think the new bankruptcy law has constitutional issues in the sense that it treats real live, breathing citizens differently than corporate citizens. (It's the pesky equal protection thingy.)

Stagflationary Mark said...


From your link:

"Instead, Cramer said investors need to understand that in the religion that is the stock market, growth stocks are idols that get worshipped by new money."

Good frickin' grief.

Stagflationary Mark said...


"Making it more difficult to liquidate liabilities,and start fresh, the way corporations can, would seem to be an overall drag on the consumer driven economy."

I think you make an excellent point.

Zombie businesses?

Stagflationary Mark said...

Zombie small businesses?

nanute said...

I think in this case, one size fits all. Take your pick.