Commercial bankruptcies surged in August, up 29% from a year ago to 3,199, the 10th month in a row of year-over-year increases, as per the American Bankruptcy Institute. While a little off their recent highs the dramatic increase began late last year should not be ignored. As commercial credit is 30% higher today at 2.06 trillion outstanding than the 1.59 trillion seen in 2008. This time around it won’t be one primary trigger like sub-prime was in 2007, but many, commercial, student and auto to name a few.
Despite endless mainstream media happy talk about how great the economy is the data just doesn’t back the narrative. It does however continue to show that the world struggles to this day with a gargantuan credit bust. The latest example being an annualized 10% decline in German imports and 6.5% decline in exports for the worlds #4 economy. A disappointing trend began around the beginning of the year and becoming all too commonplace.
Goldman Sachs recently released a paper putting Chinese debt growth at 40% of GDP or Gross Domestic Product annually since the 2008-2009 financial crisis. A truly eye opening figure but one I don’t doubt given other Chinese debt metrics as their credit bubble made us and the Europeans look like amateurs in comparison. Let’s hope they don’t have an equally gargantuan credit bust, the avoidance of which will redefine the concept of “it’s different this time” if history is any guide.