Catastrophe Averted, Bankrupticies Soar

Brian Hicks

Updated August 10, 2009



wonder woman


Seizing upon some rather dubious unemployment figures, the Obama administration now claims to have saved the U.S. economy from “catastrophe”—-like some sort of economic super hero.

Unfortunately, though these claims are about as real as Wonder Woman’s invisible airplane.

You see, in the real world you can’t actually lower the unemployment rate without putting people to work. And where the rubber meets the road, 247,000 American lost their jobs last week.

And deciding not to count people so down in the dumps they have stopped looking for a job doesn’t wash with reality.

Meanwhile, even the President himself admits the unemployment rate is headed towards double digits.  But why ruin a good headline with something as pesky as reality?

As for headlines, here’s a catastrophe worthy of a superhero….Too bad they aren’t for real.

From Bloomberg by Linda Sandler and Andrew M. Harris entitled: Consumer, Celebrity Bankruptcies May Hit 1.4 Million

“Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the American Bankruptcy Institute.

More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.

“Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.

Debt problems don’t stop with sub-prime borrowers. Celebrities who filed for bankruptcy in July included movie actor Stephen Baldwin, who sought protection from creditors after lenders began foreclosure procedures against his home. Lenny Dykstra filed for Chapter 11 bankruptcy in a petition that says the former Major League Baseball All-Star owes between $10 million and $50 million.

Also last month, con man lawyer Marc Dreier’s luxury Manhattan condominium sold for $8.2 million, 21 percent less than what he paid two years ago, in an auction at U.S. Bankruptcy Court in Manhattan. Proceeds will be used to pay creditors in Dreier’s bankruptcy case and victims of Dreier’s fraud, said Salvatore LaMonica, trustee in the Chapter 7 bankruptcy case.

Steeply rising filings by consumers are hurting commercial banks. JPMorgan Chase & Co., the second-largest U.S. bank, predicted more losses on consumer loans last month even as it announced a rise in second-quarter profit on record investment banking fees. Chief Executive Officer Jamie Dimon said he doesn’t expect the credit card business to make a profit this year or in 2010, and the company increased its loss projections for prime and subprime mortgages.”


All I can say about that is Gadzooks…. must be another green shoot.


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