Back in 2008 just about the whole world was aware of the dire financial situation the global economy was in. The Federal Reserve ran to Congress and asked to fire up the printing presses to avert a financial crisis that would make the Great Depression of 1929 seem like the good old days. And like everyone also knows, Congress agreed to it with a stimulus bill close to $1 trillion. The only problem is, none of it really reached the economy. All this money did was bail out the bad financial dealings of the Federal Reserve member banks. If it only let those banks fail, the US probably would have already recovered and been able to stay as the number one global economy. It seems that now that is changing as China is taking a run at the number one spot. The only thing the US is now exporting is debt. That is selling U.S. Treasury’s to be able to keep the sinking ship afloat.
A few years ago large numbers of people were racing to the bankruptcy courts to file for bankruptcy. That was then and this is now. Since the printing presses were fired up over the last five years with QE1, QE2, QE3, QE4 and now talking about QE5, the banks have been pushing credit out to the consumers through low interest auto loans and large balance credit cards and the number of those filing bankruptcy declined. These were the things that they said they would never let happen again if they got bailed out. With this newfound wealth, many are able to continue kicking the can down the road as they go further into debt. I don’t know what they’re thinking, but maybe they’re hoping to win the lottery or something. As this debt compounds, credit sources will begin to dry up and these individuals will find themselves running from their creditors. The only downside to this is, many of them have waited too long to use the power of a bankruptcy filing to extinguish their financial fire. Recently, a bankruptcy attorney told me there is a new group of people in the US that had become too broke to file for bankruptcy. This sounds crazy until you understand why this is becoming such a problem.
Back in the day, everyone knows what happened to the banks and the real estate markets. According to the media a disaster was averted. What no one talks about is 40 months of over 8% unemployment rates and a continuous drag on the economy. Currently, they are reporting an unemployment rate of 6.7% which is impossible to believe when you see all the numbers. The employment to population ratio continues to decline in the number of those signing up for food stamps continues to increase. Let’s face it, there is no recovery, this is the new normal. As Americans we have always been optimistic and rightfully so, economic trends go up and down and things always get better. This time that hasn’t happened and many people have waited for their career to return only to find out their job got moved overseas. Consequently, they have continued using credit cards to keep the house going and when those got tapped out, they went after the savings account and the retirement account so they would be able to continue paying their bills. Instead of thinking of a bankruptcy filing, they decided to push on optimistically knowing that right around the corner was a new job and everything would be back to normal. These people did not know that filing bankruptcy would protect all those assets they burned through and now that everything is gone and all they have is debt, they really have nothing to lose and join the category of too broke to file for bankruptcy.