Economy: Bankruptcy





In the US Congress a vehement debate is going on concerning the bankruptcy law.  It is a complicated and serious matter. In the US there are over a million bankruptcies each year, and even in the prosperous Bay Area there are thousands. When I was young in Europe, filing for bankruptcy was considered a disgrace, whether it be in French terms faillite (honest) or banqueroute (dishonest). We were uneasy about the American way of life in which bankruptcy was considered a normal thing.  Then came the Great Depression, which was attributed to the excessive use of credit in the US. The question is: Does the US face a similar situation now?  Americans generally are in debt, and credit cards are being issued in large numbers without the necessary safeguards. Every day on TV there are advertisements telling people how easy it is to reduce their debt. This really means helping people to declare themselves bankrupt. The dangers inherent in this situation explain the vehemence of the congressional debate.  How it will end we do not know. Bankruptcy laws around the world are a WAISworthy subject.  In Russia, was the Yukos bankruptcy fraudulent?

I wrote: In the US Congress a vehement debate is going on concerning the bankruptcy law.  It is a complicated and serious matter. In the US there are over a million bankruptcies each year, and even in the prosperous Bay Area there are thousands.  Gene Franklin comments: This is indeed an important and controversial topic. I would hope that the solution is found that will punish those who go bankrupt because of scandalous spendthrift ways and protect those who go bankrupt because of catastrophic health problems or natural disasters. Based on the law of unintended consequences, I fear that in aiming for the former the law will crush the latter.

I said:  Bankruptcy laws around the world are a WAISworthy subject.  In Russia, was the Yukos bankruptcy fraudulent? George Sassoon replies: According to the British press, the Yukos bankruptcy was due to the
company not paying enough tax (which nobody does) or insufficient bribes to the wrong officials.  Here in Britain, it is so easy that people are using bankruptcy as a way of getting out of credit card debts, having spent the money on holidays and other non-recoverable expenditure.

RH: The UK has certainly changed since my youth there,  Then bankruptcy was considered a disgrace which people would avoid at all cost.


Ronald Hilton 2005

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last updated: April 13, 2005