Josh Sigurdson talks with author and economic analyst John Sneisen about the soaring bankruptcies in Vancouver which are up 17.94% since last year.
According to Business Insider,
“The OSB received 184 bankruptcy filings in June 2017, a 17.94% increase from the same month last last year. Total assets in these filings add up to $5.09 million, vs $17.32 million in outstanding liabilities.”
Total insolvencies are up 2.43% as well.
As John notes,
“People are indebted. People went on a debt binge when the Bank of Canada was lowering interest rates. When everyone’s borrowing money in different businesses, what happens is over time when you over extend and there are several competitors in one business and everyone is borrowing, there will be a problem where some of them will go bankrupt because they’re all fighting over the same dollars, the same principle to pay off the interest that doesn’t actually exist in the first place. So they have to go out and try to find venues to find this new currency but the problem is they are all fighting in the same circle, and then suddenly there’s not enough of that money anymore to feed one or two of the competitors in that market and then of course they lose.”
We will see more and more of this popping up where people are scrambling to pay off their massive amounts of debt that they’ve accumulated because of the cheap currency created at the Bank of Canada. Then there’s also policies in place that push businesses to start something they probably shouldn’t have started because they got government grants.
It’s normal to see bankruptcies in Canada because most businesses don’t make it through their first couple years. The regulatory and tax burden is alarmingly extensive, and it constantly grows.
This debt will continue to increase as interest rates go up and currency is created out of thin air. People with variable mortgages or loans, their debt is going to become more and more costly to service. This will build up slowly and then eventually we will see a massive crash.
As the debt collapses within real estate and other markets, it trickles everywhere into the economy and people had value that they don’t have anymore that they used for collateral on certain things.
“People go to declare bankruptcy and they have collateral and their house is suddenly worth about 50% of what it used to be.
This is a deflationary pressure on the economy. The Canadian government desperately needs inflation to pay off its debt so this may be a pressure that will lead into much more currency printing and quantitative easing in the future. ”
This is all the more reason to be financially responsible and self sufficient!
Stay tuned for more from WAM!
Video edited by Josh Sigurdson
John Thore Stub Sneisen
Graphics by Bryan Foerster and Josh Sigurdson
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