25 MASSIVE Corporate BANKRUPTCIES Primed to DECIMATE the US Economy!

This month, I think there have been nine so far large bankruptcies.

That would be bankruptcies for companies with 50 million or more in liabilities.

So that is tracking at the fastest pace since the pandemic first hit.

And that we look like it looks like we're going to see 25 large bankruptcies in June, and that would be larger than the peak after the pandemic hit of 23.

So when you have these large bankruptcies, liquidations, what have you, you do have a loss of income.

In the shadowy depths of America's economic landscape, a storm is brewing that threatens to unleash a tidal wave of corporate bankruptcies, potentially plunging the nation into an unprecedented crisis.

As Danielle DiMartino Booth, a respected financial analyst and former Federal Reserve insider, warns in her chilling Complete Loss of Paycheck interview, the United States is teetering on the brink of a bankruptcy cycle that could dwarf anything seen in recent history.

This is not a distant threat or a hypothetical scenario, but a clear and present danger that could reshape the economic landscape for future generations.

The numbers paint a stark and sobering picture of the looming crisis.

According to S&P Global, April marked the highest number of bankruptcies in a year with 66 filings.

That's an 88% increase from January's 35 filings.

This surge in corporate failures represents the highest level of bankruptcies since the 2008 financial crisis, and experts fear it may be just the tip of the iceberg.

Even more alarming is the scale and rate of these bankruptcies.

According to statistics released by the Administrative Office of the U.S. courts, annual bankruptcy filings totaled 452,990 in the year ending December 2023, compared with 387,721 cases in the previous year.

Business filings rose 40.4% from 13,481 to 18,926 in the year ending December 31, 2023.

Non-business bankruptcy filings rose 16% to 434,064, compared with 374,240 in December of 2022.

Perhaps most concerning of all is the concentration of bankruptcies in key sectors of the economy.

The retail industry, already reeling from the shift to e-commerce and the impact of the COVID-19 pandemic, is still seeing major bankruptcies in 2024.

Retail bankruptcies picked up in 2023 with 10 new filings in the second half, plus the filing of an assignment for the benefit of creditors, or ABC, by the online apparel retailer Zulily, resulting in a total of 24 filings, including the ABC for the year.

year.

This is a marked increase from the past two years and more in line with the annual filings seen before the pandemic.

In this video, we will explore the underlying causes of this impending disaster, the industry's most at risk, and the potential ripple effects on everyday Americans.

In the United States, bankruptcy is largely governed by federal law, commonly referred to as the Bankruptcy Code.

The United States Constitution authorizes Congress to enact uniform laws on the subject of bankruptcies throughout the United States.

This new wave of bankruptcy in the US business sector is destined for nothing short of turmoil for businesses

and their various sectors.

To understand the gravity of this situation, it's essential to look at the historical context of corporate bankruptcies in the United States.

The roots of the current crisis can be traced back to the aftermath of the 2008 financial crisis when the Federal Reserve embarked on an unprecedented program of monetary stimulus.

By slashing interest rates to near zero levels and pumping trillions of dollars into the economy through quantitative easing, the Fed created an environment of easy money that encouraged companies to take on ever-increasing

levels of debt.

For over a decade, this flood of cheap credit allowed many companies to stay afloat, even if their underlying business models were unsustainable.

Zombie companies, firms that earn just enough money to continue operating and service their debt but are unable to pay off their debt, proliferated in this environment.

According to a 2020 study by Deutsche Bank, up to 25% of U.S. companies could be classified as zombies, a dramatic increase from just 2% in the 1980s.

However, as DiMartino Booth explains in her interview, this era of easy money is coming to an abrupt end.

The Federal Reserve's aggressive interest rate hikes in response to surging inflation have dramatically increased borrowing costs for companies, exposing the fragility of many corporate balance sheets.

As the tide of cheap credit recedes, it's becoming clear which companies have been swimming naked, to borrow Warren Buffett's famous phrase.

Corporate bankruptcy, in essence, is a legal process that allows a company that is unable to pay its debt to seek protection from its creditors while it restructures its operations or liquidates its assets.

In the United States, corporate bankruptcies typically fall under Chapter 11 of the Bankruptcy Code, which provides for reorganization or Chapter 7, which involves liquidation.

Under Chapter 11, a company is given time to restructure its debts and operations while continuing to function, with the goal of emerging as a viable business.

This process can involve negotiating with creditors, will involve liquidating all assets to repay creditors, closing unprofitable divisions, and renegotiating labor contracts.

Chapter 7, on the other hand, involves the complete cessation of operations and the liquidation of all assets to pay off creditors.

DiMartino Booth's warning of 25 large bankruptcies looming on the horizon is particularly alarming given the size and significance of the companies likely to be involved.

While she doesn't name specific firms in the interview, her analysis suggests that these are major corporations with substantial impacts on the broader economy.

For many corporations burdened by high rates, that has meant throwing in the towel, S&P

After all, hawkish policy has been the central headwind for eroding balance sheets last year and businesses have hinged their survival on lower borrowing costs.

By one measure, rising costs did slow when a rate cut looked likely in early 2024.

Effective yields on junk-related corporate debt hit as low as 7.40% in March, according to the ICE B of A U.S. High Yield Index.

But last month's stubborn inflation and slowing GDP made a Fed cut look unlikely and yields shot up to 8.11%.

The three sectors leading in bankruptcies that month were consumer, discretionary, healthcare, and industrials, S&P Global said.

While April's stagflation scare has subsided following a weaker-than-expected jobs report, Fed officials continue to signal that lower inflation prints are still necessary before an interest rate cut can occur.

The reasons behind this potential wave of large-scale bankruptcies are multifaceted and interconnected.

Years of low interest rates have encouraged companies to take on massive amounts of debt.

According to the Federal Reserve,

non-financial corporate debt reached a record $11.2 trillion in the third quarter of 2022.

As interest rates rise, servicing this debt becomes increasingly difficult, particularly for companies with weak cash flows or declining revenues.

The COVID-19 pandemic has also played a significant role, accelerating shifts in consumer behavior and disrupting global supply chains.

Companies that were slow to adapt to the surge in e-commerce and digital services have seen their revenues plummet.

According to the US Census Bureau, e-commerce sales as a percentage of total retail sales jumped from 11.4% in the fourth quarter of 2019 to 16.1% in the second quarter of 2020 and have remained elevated ever since.

This rapid shift has left many traditional retailers struggling to survive.

Ongoing global supply chain issues have increased costs and disrupted operations for many companies, squeezing profit margins and straining cash flows.

The Institute for Supply Management's Manufacturing PMI, a key indicator of supply chain health, fell to 46.3% in March 2023, indicating contraction in the manufacturing sector and ongoing supply chain challenges.

Rising labor costs have also put pressure on many companies, with inflation driving up wages and a

tight labor market making it difficult to find workers, many businesses are facing significantly higher operating costs.

According to the Bureau of Labor Statistics, in May, average hourly earnings for all employees on private non-farm payrolls increased by 14 cents, or 0.4%, to $34.91.

Over the past 12 months, average hourly earnings have increased by 4.1%.

In May, average hourly earnings of private sector production and non-supervisory employees increased by 14 cents or 0.5% to $29.99.

Certain sectors are facing particularly acute challenges.

The traditional retail industry, for example, has been decimated by the shift to e-commerce, with over 12,000 store closures announced in 2020 alone, according to data from CoStar Group.

The energy sector has been roiled by volatility in oil prices and the transition to renewable energy, with 107 oil and gas companies filing for bankruptcy in 2020, according to Haynes & Boone LLP.

The commercial real estate market is grappling with the fallout from remote work trends, with office vacancy rates in major cities reaching record highs.

The potential consequences of this looming bankruptcy cycle for the average American are far-reaching and potentially devastating.

Job losses are perhaps the most immediate and visible impact.

During the 2008 financial crisis, the US economy lost 8.7 million jobs, pushing the unemployment rate to a peak of 10% in October 2009.

A similar wave of corporate bankruptcies could lead to widespread layoffs across multiple sectors, potentially pushing unemployment well above the 3.7% level

recorded in May of 2023.

The ripple effects of these job losses could be severe.

As unemployment rises and people become more uncertain about their financial futures, consumer spending, which accounts for about 70% of US GDP, is likely to decline.

This could create a negative feedback loop, further weakening the economy and potentially triggering more bankruptcies.

During the Great Recession, personal consumption expenditures fell by 3.4% in 2009 to the largest single-year decline since 1938.

The impact on retirement savings and pensions could be equally devastating.

Many Americans have their retirement savings invested in mutual funds or 401 plans that hold corporate bonds.

A wave of bankruptcies could lead to significant losses in these investments, potentially delaying retirement for millions of workers.

During the 2008 financial crisis, Americans lost about $2.4 trillion in retirement savings, according to the Urban Institute.

Credit markets could also freeze up as lenders become more cautious in the face of rising defaults.

This could make it harder and more expensive for both businesses and consumers to access credit.

During the 2008 crisis, the TED spread, a key indicator of credit market stress, spiked to over 450 basis points compared to a normal range of 10 to 50 basis points.

The potential for disruption in the supply of goods and services is another major concern.

If major companies and key industries go bankrupt, it could lead to shortages and price spikes in essential products and services.

This could range from retail store closures to interruptions in utilities or transportation services.

Local communities could be particularly hard hit by large corporate bankruptcies, especially if the company is a major employer in the area.

This can lead to a ripple effect of business closures, declining property values, and reduced tax revenues for local governments.

For example, when General Motors filed for bankruptcy in 2009, it devastated many communities in the Midwest that were heavily dependent on the auto industry.

The stock market would likely see significant volatility and potential declines in the face of a wave of major bankruptcies.

This would affect not just direct investors but also pension funds and other institutional investors that many Americans rely on for their financial security.

During the 2008 financial crisis, the S&P 500 index fell by more than 50% from its peak.

The banking sector could face significant stress if companies default on their loans en masse.

In a worst-case scenario, this could lead to bank failures and a broader financial crisis, similar to what occurred in 2008.

During that crisis, 465 banks failed between 2008 and 2012, according to the Federal Deposit Insurance Corporation.

Given the interconnected nature of the global economy, a wave of bankruptcies in the US would likely have international repercussions.

This could lead to a global economic slowdown, affecting trade, foreign investment, and potentially triggering currency fluctuations.

The International Monetary Fund estimates that the 2008 global financial crisis

resulted in cumulative output losses of about 25% of global GDP.

The potential bankruptcy cycle that DiMartino Booth warns about is not just a problem for Wall Street or corporate boardrooms.

Its effects would be felt across the entire economy, potentially touching every aspect of Americans' financial lives.

From job security and retirement savings to the prices of everyday goods and the stability of local communities, the ramifications of widespread corporate failures would be profound and long-lasting.

As the shadow of impending corporate bankruptcies looms ever larger, America stands on the precipice of an economic abyss, where the collapse of industry giants threatens to trigger a catastrophic domino effect that could shatter the financial security of millions.

The specter of widespread job losses, decimated retirement savings, and communities laid waste by economic upheaval paints a chilling

picture of a future where the very fabric of American prosperity may unravel, leaving countless citizens to grapple with the harsh realities of a nation in economic freefall.

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