Another Shock To The Financial System: SFCG Files For Bankruptcy

As the futures market is gleefully unaware of just how horrible everything really is, Japanese small business lender SFCG filed for bankruptcy today. This represents the largest Japanese bankruptcy by a public company in almost 7 years. The company listed $3.6 billion in liabilities at filing, and among its creditors is none other than the latest addition to the portfolio of Taxpayer Capital LLC, Citigroup itself, which was owed 71 billion Yen.

“Up until now, bankruptcies were concentrated in the real estate and construction sectors, but the trend has widened to collapses across a broad range of industries,” said Nobuo Tomoda, an analyst at credit and bankruptcy research firm Tokyo Shoko Research Ltd. “It’s getting harder to obtain funds.”

Shinsei Bank, which is owed 54 billion Yen by SFCG, has already seen its shares hammered in early Japanese trading, down 7% as of last. As the Japanese government is not an endlessly money printing piggy bank unlike its US equivalent, SFCG Chairman was heard saying:

“We can’t get funding from almost any financial firm. Ever since the bankruptcy of Urban last August, procuring funds has become almost impossible.”

The bottom line is that the global economy is getting exponentially worse, and the only way to even be on the right way out of the current debacle is to take all the necessary massive losses as soon as possible, wipe out numerous classes of existing investors and start afresh.