Thursday, December 06, 2007

Guido Fawkes: Bankrupt Bloggery and Glib Fibs

Old Mr GuF came on this morning moaning at being featured with some questions against his dubious Deutsche Bank story. It is yet to be run by any responsible media outlet. Exclusive because it is tosh.

Now he makes a complete monkeys of himself and of his gullible readers with some ridiculous propaganda built round this graph:

The law has changed you numpty Guido! The 2002 Act reduces penalties in the event of no blame/low blame bankruptcy cases, makes it less onerous, makes it less of a stigma. And IVAs have also been made more serviceable.

On the other hand reckless bankruptcies face stiffer penalties.

The changes in the law - coinciding with the break in the curves - were as requested by professionals and theorists alike. Assisting the economy and giving a leg up to entrepreneurs. They were likely to lead to the pattern observed.

Although he got kicked out of college without ever passing an exam I don't think GuF is completely stupid. I think he knows that his own theory for everything - blame Brown - is complete and utter nonsense.

And to think I thought he was coming back to form.


Anonymous said...

The effect of bankruptcy remains the same, the period of bankruptcy is reduced from 3 yrs to 6 months, but the 86 Act remains the basis of Bankruptcy Law as amended by the 2002 Act. The effect for the period of bankruptcy remains substantially the same. The professionals are finding it easier to suspend the automatic discharge - and in my experience more of these orders are being sought and obtained by trustees that instruct me and against bankrupts that I represent.

The fact remains that there has been a startlingly large increase in the number of bankruptcies ... and many professionals working the area are concerned about this increase ... even the most pessimistic predictions did not anticipate that the number would increase to the extent that it has.

Chris Paul said...

But you do agree that the change coincides with the change in the law, yes?

And also that banks and customers being soft/brave one way or another is the key to the numbers?

If you think the banks being fairly soft with credit is a good thing - because it helps the stronger ideas and entrepreneurs with inferior covenants as well as some failers - and if you think old school bankruptcy arrangements were too harsh - then you might well support the changes.

The direction of the change in the numbers was fully expected. Very hard to predict how exactly the numbers would behave as these decisions are pretty complex I'd imagine.

It is hard to understand why Guido would want the state to intervene too much in the bargain between banks and businesses/entrepreneurs.

He is just fitting the facts to his obsession and being hugely dishonest by not acknowledging the changing environment.

I also notice a dip at the end of the IVA line ... I think the other line may do a similar thing when the 2007 figures are added in.

Almost like people saved up their insolvencies a little for the new law.

Anonymous said...

The consequences of bankruptcy remain the same even after the changes made in the 2002 Act. The only significant change was that the period before the bankrupt would become automatically discharged was reduced from 3 years to 6 months.

There may be an element of people who were waiting or who became aware of bankruptcy as a possible way out of debt ... but that would not be a reason for a nearly threefold increase in the number of people being made bankrupt.

Bankruptcy and IVA are no easy way out ... metaphorically you are tipped upside down, your pockets emptied, your ability to be a director of a company and to borrown money are barred or severely curtailed. Everything you own, including your interest in a home belongs to your trustee in bankruptcy - although as a result of a later change, the home will revert back to you if the trustee doesn't take it within 3 years of the Bankruptcy Order.

Even this last change has had unintended consequences, with a massive increase in the number of possession applications being made by trustees.

If my sources are correct there has been a small reduction in the last quarter, but expectations are that in the first quarter of 2008, professionals are expecting another upturn.

Economically, soft credit against the bubble of house prices is not a good thing ... most people have assumed that their home is an asset rather than a cost. This has led them to believe that they are richer than they are and that they can spend more than they can afford. The Government has made a number of errors - the first was to agree to change to measure of inflation to remove housing costs (our economy is sufficiently different as a result of the proportionate over participation of our people in ownership of homes and the proportionate under participations of our people in renting) - the second was to assume that borrowing was going to continue to be cheap for the foreseeable future (and it has already risen - and the recent reduction in interest rates may help in the shortterm but may also exacerbate the house price bubble and increase the risk of inflation). Combine that with a massive increase in Government borrowing over the last few years and the massive provision of guarantees to the PFI (effectively, off-balance sheet financing) and you end up in a particularly difficult position for the Government if things do turn down. Now I hope that they don't ... but methinks that 'the end of boom and bust' was optimistic at best; hubris.

Anonymous said...

All very interesting given recent relevations about Guido's bankruptcy in 2003 per Bloggerheads and the London Gazette. What's more Guido applied for the bankruptcy on a debtors petition.