The Case for Bankruptcy

I promised Someone somewhere in the Ozone that I would explain the advantages of Bankruptcy, a discussion which ruins good felony law (like the poor violated Virgin who is told he was married), and brings fear to the Eye of All but the genuinely Deceitful (Barney Madoff). Bankruptcy basically nullifies all prior commitments made by an individual or Business, substituting a designed repayment system of the Court, almost always much less than promised though almost invariable much more than the Applicant would desire. There is always an inherent evasion of responsibility, using the ‘Big Brother’ attitude of the Court to tell One’s Creditors that you are not going to keep your Word. The only truly innovative element in Bankruptcy lay in the destruction of Business as Usual.

Bankruptcy, though, has some interesting economic aspects. It removes Economic Participants from their previous positions, leaving them at best the Walking Wounded; able to again start borrowing from Anyone willing to risk extension of Credit. This lack of a viable Credit rating generally reduces the Bankrupt from their previous role in the economy. This is the real element which is interesting to the Economist. High Flyers who had previously soared must take flight at lower altitude, leaving Space for other Participants to take the lead in the industry. This Shakeup brings new ideas and business formats to the fore.

This is where the Geithner Plan, and all other such Plans, cause such destruction. Such efforts forestall the basic destructiveness of Bankruptcy, allowing prior failed leadership to continue in their leadership roles with their failed business formats, false projections, and unadjusted Production schedules. Their business policies have already proved deficient, yet they are allowed to maintain their positions; even after extreme losses have already been entailed. Consistency will entice them to reintroduce old failed procedures into any new business format, else this leadership be accused of lack of reliability. The old Problem which destroyed Communism will again raise its head, which was basing Investment schedules on Producers’ desires rather on the interest and Needs of the Consumers. Hyped Advertising takes the place of real Need, and Consumers waste their Resources on insufficient Product which does not fulfil their basic household Needs; disturbing the viability of the households involved. The Economy as a whole finds itself crippled, in supporting business institutions which have outrun their utility to the detriment of Everyone. lgl