---
title: Excess capacity creates bankruptcy creates restructuring creates excess capacity
date: "2002-09-17T12:00:00Z"
categories:
  - links
wp_id: 1155
description: I discuss a thought-piece from The Economist arguing that US bankruptcy laws perpetuate excess capacity. By helping companies shed debt and stay in business instead of exiting, these laws create a cycle of repeated financial failure.
keywords: [bankruptcy, excess capacity, restructuring, economics, debt, business cycles]
---

[![Excess capacity, bankruptcy, restructuring, excess capacity](/blog/assets/flickr-excess-capacity-bankruptcy-restructuring-excess-capacity_24685601_o-gif.webp)](/blog/assets/flickr-excess-capacity-bankruptcy-restructuring-excess-capacity_24685601_o-gif.webp)

Interesting thought-piece by The Economist on how [bankruptcy laws may be hurting America](http://www.economist.com/business/displayStory.cfm?story_id=1317912). The logic is, industries with excess capacity have bankruptcies. The bankruptcy restores a balance. If courts help bankrupt companies shed debt and re-enter business, excess capacity again results. Leading to bankruptcies again.