The Pandemic Bankruptcy Wave Has Been Delayed, Not Avoided

In a short Twitter thread last month, Olivier Blanchard, former chief economist of the IMF and past president of the American Economic Association, reassessed how the economic effects of the pandemic had played out compared with what he had expected, the Financial Times reported. One striking observation was: “I expected a lot of inefficient bankruptcies, due to high debt rather than lack of viability post covid. This . . . does not seem to be the case. The proportion of low productivity firms in bankruptcies appears to be roughly the same as usual.” Blanchard is, of course, right. Despite the deepest economic hit in our lifetimes, the rate of companies going bankrupt is markedly lower than last year and has kept falling since the onset of the first lockdowns. Read more