Sunday, December 3, 2023

The disturbing graph of the US economy that has gone viral

The US economy appears to be holding up well. rate increase of the Federal Reserve. almost to full-time job and with the leading signs showing some strength.

However, they also appeared data that invites caution. One of them went viral last week and showed an increase in requests for the suspension of payments, which is reflected in a 4-week moving average.

As you can see, the number has risen to levels not seen since 2 significant recent crises: the great financial crisis of 2008 and the pandemic. But there is an important difference. Now there is no plan to start lowering rates, to reactivate growth and lower financing costs, but the opposite: the Fed suggests that it may increase rates further and that, at least small, leave it at this level. for a good time.

Although these payment suspension proceedings are called in English Bankruptcy It should be taken into account that this term does not in all cases have the same meaning as the word bankruptcy in Spanish, which means the definitive bankruptcy of the company. In the US, liquidation is an option, but not the only one.

When we talk about bankruptcy in the financial media, it is usually referred to as more than just the term suspension of payment, which is a legal process that allows individuals or companies that cannot pay their debts to seek financial assistance. This process is designed to allow an opportunity to continue the activity if through asset liquidation to pay debts or by making a debt reorganization plan.

In the US there are several types of suspension of payments:

– Personal

Chapter 7: This is a liquidation process where the debtor’s unpaid assets are sold to pay creditors.

Chapter 13: Allows borrowers to keep their assets and reorganize their debts, paying them off over 3 to 5 years.

– Business:

Chapter 11: This is for companies and allows the reorganization of debts and the continuation of business operations.

Chapter 7: Companies can also choose to liquidate under Chapter 7.

Often, when the financial press refers to this data, they do so for Chapter 11.

World Nation News Desk
World Nation News Desk
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