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U.S. Bankruptcies Spike 35% in One Month

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Bankruptcies are admittedly a “lagging indicator” in any economic down-turn. However, reading a New York Times article which reported that March U.S. personal bankruptcies had increased by 35%, month-over-month, from February; this was clearly a news item which warranted a closer look.


The details are an even clearer warning sign that both the “bottom” in the U.S. housing market, and the “job growth” reported by the Bureau of Labor Propaganda are nothing but the “smoke and mirrors” of private sector shills, and/or government propagandists – dutifully reported by the mainstream media-parrots.


With U.S. bankruptcy laws dramatically tightened in October 2005, U.S. personal bankruptcies have been much lower in this new era of stricter, more punitive provisions. Not so any more. There were 158,000 U.S. bankruptcy filings in March, equal to 6,900 per day.


Even with the restrictive new law, we're back up over where we were before the law changed,” reported Mike Bickford, president of Automated Access to Court Electronic Records (or “Aacer”). The numbers were also 19% higher than March 2009, and broke the previous “record” of October during this U.S. Greater Depression.


People with jobs don't (and likely can't) file for bankruptcy in the U.S. So the”spike” in bankruptcies (which comes directly from court records), and the jobs “estimate” of the Bureau of Labor Propaganda are directly contradictory.


Keep in mind that this is the same bureaucracy which made its preliminary “adjustment” for its infamous birth/death model, in January. This is purely a bookkeeping adjustment, and has no connection to the current, monthly jobs report. The Bureau of Labor Propaganda subtracted over 420,000 “birth/death” jobs from the January report, yet the net job-loss reported for January was just -20,000.


A little simple arithmetic reveals that without the birth/death bookkeeping adjustment that it would have reported a net jobs-gain of over 400,000 jobs. Yet the same media propaganda-machine which never misses a chance to “pump” the U.S. economy (and markets) all chose to ignore this very obvious “good news” - a huge, net monthly gain. Indeed, at exactly that moment, Barack Obama was on national television “apologizing” to the American people for failing to generate any jobs. A politician, as sharp as Obama, who passes up an opportunity to put some (obvious) positive “spin” on the January jobs report?


Perhaps the reason why no one in the U.S. government or media wanted to report this 'wonderful' news in January was because with weekly lay-offs still exceeding 430,000 per week, this is still 30% above the traditional, “break-even point” where U.S. hiring matches the level of lay-offs? Typically, any time U.S. lay-offs rise significantly above 300,000 per week, the U.S. economy has started losing jobs on a net basis.


The U.S. government (and the media propaganda-machine) didn't report the 400,000 “phantom jobs” in January, because it was simply a make-believe number, invented out of 'thin air', to produce a result which fit the “message” that job-growth was nearly here (and was not plausible). The fantasy-gain reported in March is only slightly more plausible than the January number, even with the modest boost to hiring from the U.S. 2010 census.


Soaring bankruptcies say this. So do the continued plunge in tax revenues, for all three governments in the U.S., all across the country, at the fastest rate in history. First we were fed the myth of the “jobless recovery” - an oxymoron for any “consumer economy”, with no savings. Now the we are supposed to believe that there are “jobs” in the U.S. - just no money.


No money to feed government coffers with tax revenues, no money to stay out of a punitive bankruptcy system – and no money to pay mortgages. Even loyal, mainstream mouthpiece, CNBC, today predicted that March U.S. foreclosures would be a “new all-time record”, breaking all the other “all-time records” that have been set since the U.S. housing bubble burst.


CNBC rattled off a long list of factors which would contribute to this “record” - and didn't even mention the 2-year spike in “resets” for the infamous “option-ARM mortgages”, which is also just about to begin.


There was much more bad news for the U.S. housing market in the bankruptcy report. U.S. laws allow two paths to bankruptcy, the cheaper “Chapter 7” filings – which don't allow Americans to keep their homes, and the more expensive “Chapter 13” filings which do. In March, 75% of all bankruptcy filings were “Chapter 7's”, and that ratio has been steadily increasing since 2007, when the ratio was only 62%. This is yet another body-blow to the U.S. housing market not mentioned in the CNBC doom-and-gloom.


We have U.S. bankruptcies setting a record in March, and U.S. foreclosures expected to set a new, all-time record. Both numbers are taken from official, court records – and are incapable of falsification. Against that, we have the extremely improbable jobs “estimate” of a government bureaucracy which has been notorious for issuing reports month after month which are directly contradicted by all sorts of other “hard” numbers – including the weekly lay-offs report. Even the mainstream media and private sector market-pumpers were too embarrassed to report the “good news” in a report only two months earlier.


Americans, and investors in general have a clear choice of two “worlds” to live in. There is the don't-worry-be-happy world of the mainstream media, where U.S. bond markets and U.S. equity markets can exist at valuations which are totally contradictory – thanks to the secretive deeds of the Federal Reserve.


Then there is the much less encouraging world where bank-lending is falling at the fastest rate in history while bank failures increase month-by-month, the housing market is about to suffer a second, worse collapse, bankruptcies soar while government revenues plummet at the fastest rate in history – and job losses still greatly exceed hiring.


The U.S. economic recovery was a myth: nothing but a brief, heavily-contrived lull in a devastating collapse. Now that collapse is once again gaining momentum, and it will take more than reporting a few hundred thousand “phantom jobs” each month to stop this downward spiral.


The precious metals market hints of this, as the price of gold edged higher, directly in the face of the “stronger dollar”. Indeed, as Dan Norcini pointed out, precious metals have traded in a tight-range despite a large drop in the “open interest” of the “commercial” investors: the so-called “smart money”. With “technicals” again turning positive, and more bad news on the way, the likelihood that gold and silver are about to make their next move continues to rise.


Meanwhile, a U.S. dollar ”rally” built atop nothing more than months of around-the-clock Euro-bashing appears to have run its course. The Canadian dollar nudged above “par” again – despite the efforts of Bank of Canada governor Mark Carney to cripple the Loonie. With no strength on the “demand” side, rising gold and oil prices shriek “inflation” - confirmed by the latest readings of Shadowstats.com, which are consistently above 9% for the U.S. economy.


This is not a time for investors to place their faith in U.S. paper. Instead, they should seek protection in the 5,000-year “pedigree” of precious metals, which cannot be conjured out of thin air, nor debauched and diluted by the nefarious deeds of bankers.

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swaps
...
written by swaps, April 07, 2010
Good analysis of complex situation shrouded by smoke and mirrors.
Jeff Nielson
...
written by Jeff Nielson, April 07, 2010
Thanks Breezer!

Yes, also got this one passed along from another member. Way to go guys!
breezer1
...
written by breezer1, April 07, 2010

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