Business Bankruptcies to Spike in 2008

[Purveyor]

SAN FRANCISCO (Dow Jones) - Market analysts warn that more U.S. businesses are likely to hang "going bankrupt" signs on their doors next year as the twinned blows of slower economic growth and pricey commodities force the weakest companies to seek refuge from creditors.

In a twist from this year's trends, the pain is likely to spread from mortgage lenders, homebuilders and consumer-oriented firms - all areas that contributed to a 40% jump in bankruptcy filings in 2007 and are expected to play a role in 2008's misery.

Next year, industries at risk for the biggest increases in Chapter 11 filings include electronics makers, energy miners like coal companies and agriculture firms, according to Global Insight.

Makers of durable goods like machinery are also more at risk and will likely contribute to a 13% rise in bankruptcies in 2008, says the private research firm, which bases its estimates on issuers' credit quality and operating conditions.

Some of the reasons? "Slowing growth, particularly in the United States, increasing supply pressures, increasing production in China," lists Global Insight managing director Mark Killion.

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http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20071228-000369-0540

[napi21]

1. Look for more restaurants to go bellyup too!

With the cost of everyday necessities all rising, the first thing to suffer is "eating out". I think that's not only regular restaurants, but fast food too. It's always more expensive to eat out, and when you have to buy gas for your car to get to work, increases in your health care premiums and co-pays, utility bills, and food, the average person has no other option but to cut out the unnecessary stuff. Eating out, movies, shopping as a passtime, etc. will all suffer!

[JFN1]

2. Makes one wonder

If this was Bush's plan all along, since he dramatically changed the bankruptcy laws...