No comfort from the banks

At the end of last week we had official figures showing the consequences of the worst economic downturn in over 30 years with a record number of nearly 20,000 people having to be made bankrupt. In addition a further 10,000 people were forced to take out individual voluntary arrangements where they must agree set repayments each month in return for having their interest frozen. The news is if anything even worse for companies. The latest insolvency data for the construction industry show the impact of the credit crunch. The total of all such construction companies falling into receivership, administration or company voluntary arrangements in England and Wales in the final quarter of last year was over 220. This compares with under 100 for the same period last year. The problems are by no means just in the building sector. If you talk to people who run almost any kind of business they will tell you the same story. The funding available from the banking sector has virtually disappeared. Even financially robust companies cannot get any form of short-term finance. As a result we are going to see the loss of thousands of companies in the rest of 2009. You should expect to see unemployment hit 3million plus by this time next year. Sorry to sound so gloomy but that is how it is at the moment. No wonder there is such anger towards the banks and their culture of big bonuses. The "apologies" this week from the likes of RBS and HBOS have done little to calm the anger of people. They blame the banks for the current crisis and they want to see them suffer as well.