If bankruptcy is any kind indicator of how an economy is basically doing, those in the country of England need to be aware of the latest bankruptcy statistics. After a series of quarterly improvements, England has reported a 5.5 percent increase in bankruptcies filed for the first quarter of 2012.
The Consumer Credit Counseling Service (CCCS) in England reported “it expects personal insolvencies to rise over the next year due to factors including high inflation, redundancy and welfare benefit changes, and warned that six million households are living on the edge.”
With similar reports coming out of places, like Germany, Spain, and Greece, the United States economy might be beginning a recovery, but a lot the rest of the world is still in the Great Recession, also known as the Global Financial crisis.
Although the worldwide financial scene looks gloomy, many prognosticators are predicting the worldwide recession may very well end within two years.
So, what does all of this have to do with those of us who live in the United States?
President Obama’s administration officially announced the recession ended for the United States in 2009, but unfortunately, we are no longer a self dependent nation. We are tied into the world economy just like a lot of other countries, and what happens around the world can still have an economic impact on our nation as a whole.
Bankruptcy figures are a tell-tale sign of how an economy is doing. In the United States, there has been a consistent drop in the number of bankruptcy filings for the past fourteen months. The economy, although somewhat stagnant and not having significantly lowered the unemployment rate, has plodded along showing a very slight growth.
The rest of the economic world cannot say the same, especially in Europe’s Greece. There, confidence between Greece’s citizens and their politicians have eroded resulting in a recently elected new mixed parliament that will not come to a coalition in agreeing on the latest bail out from the European Union and its banks. Greece is basically bankrupt as a nation and the European Union countries are quick to voice that Greece can have its freedom if they do not stand behind the latest agreement.
If Greece economically defaults, other European countries can follow. This places the European Union in more financial straights which could postpone any quick recovery of their economy from the recession.
If these events occur, the United States will be dragged down with the countries directly proportionately with the economic ties we have with them. Already in debt beyond our resources, the blow of a melt down could hurt. Some feel the economic health of Europe is vital to United States prosperity.
Others believe the International Monetary Fund’s (IMF) strength to lend a substantial amount to the European problem can help overcome the potential melt down. Thriving and developing nations like China contribute to the support of the IMF.
Whichever way the economic world situation plays out, the problems will most likely come to a head before the United States elections occur this year.
Keep an eye on bankruptcies numbers because they can indicate which way the economic wind is blowing.
- Good News and Bad News on the Bankruptcy Front (betterbankruptcy.com)
- EU predicts 0.3 pct eurozone contraction in 2012 (news.yahoo.com)
- Greek fears grow beneath looming shadow of bankruptcy (guardian.co.uk)
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