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Business bankruptcies 20 year low; What about consumers?

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Business bankruptcies in Canada fell in August to their lowest level since January 1987, while personal bankruptcies soared during the same period, according to the Office of the Superintendent of Bankruptcy.

August saw just 466 businesses across Canada file for bankruptcy or go through credit rearrangement, a decline of 18.8 per cent and the lowest number since January 1987.

While oil and gas has taken a hit over the past year, this past August, there was a 60 per cent decline in the number of businesses that declared bankruptcy compared to August 2008.

However, it was not the same story with consumers.

Nationally, consumer bankruptcies rose by 36.9 per cent from a year ago, with Ontario, Alberta and British Columbia the worst-hit provinces.

This is written optimistically, but its a disturbing statistic because the businesses need the consumers in order not to declare bankruptcy next year. If the consumers (i.e. personal bankruptcy) can’t sustain the level of spending big business needs, it stands to reason that businesses failing in a bigger way is not far behind. All this stimulus spending is artificially propping the money stats up. If consumers are already in trouble in the year before we have to start paying back these big deficits. PM Harper will just do another about-face and throw a tax hike in; if we know anything about this guy by now, its that he has no compunctions about lying to voters.

Way back when, in the days before the “capitalism” concept grew 10 ugly new heads, business was there to serve society. Today, society is there to serve business. Its not sustainable that way around for very long – we’ve been at it a couple of decades this way now, I’d say we will barely get through another one before the “inverted” system of business just collapses.

This is most likely a depressing statistic because 2/3 of new businesses fail in the first 5 years it probably just means that the rate of new business formation has fallen. Which is a bad thing for the economy.

A high business bankruptcy rate could actually be a good thing. A sign of optimism – new businesses being formed and most of them failing.

At any rate, you also need to know how many new businesses are being created before making a determination as to the significance of this statistic.

The three have suffered the worst of the economic downturn.

Alberta saw a 74.6 per cent increase in the number of consumers declaring insolvency in August 2008 compared to August 2009, with B.C. seeing a 44.7 per cent increase and Ontario a 41.3 per cent increase.

Original story found at CBC Online

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