Mind-boggling Personal Bankruptcies In March 2010

The number of personal bankruptcies in March has reached mind-boggling levels. Federal reports indicate 158,000 bankruptcy filings in March. That works out to 6,900 per day and a rise of 35% from February.

The reason for this jump is mainly due to unemployment which rose to nearly 17% for all categories labeled by the U.S. Labor Department.

Katherine M. Porter of the University of Iowa said: "Fewer people are trying to save their homes. ... They realize their payments are not affordable and bankruptcy judges do not have the power to adjust the mortgages to make them more affordable."

The greatest rise in bankruptcy filings are under Chapter 7, which is easier than Chapter 13. With Chapter 13, you need ongoing income and are able to reorganize your debts. Of the 158,141 bankruptcy filings in March, some 75%, or 118,505, were under Chapter 7. Chapter 7 filings have increased about 73% in 2009.

Professor Porter went on to say, "We think that means fewer families think they're really going to save their homes. ... They don't have any equity, so why try to keep up with their home payments? People use their tax refunds to pay their attorney fees."

The personal bankruptcies statistics contrast sharply with the ongoing stock market rally and Wall Street exuberance. This makes me wonder: when will fantasy and reality come together?

Bunning Grills Ben Bernanke To A Crisp

I have a feeling this grilling is only a sideshow. The money printing is going to continue until it cannot, ie. the US dollar becomes worthless.

The US dollar still retains a modicum of dignity because most fiat currencies are on the slide too, but when compared to gold, the US dollar is shedding its value fast.

I believe most Americans realize the country is on a self-defeating and unsustainable path. There will come a time when funny money created by the Federal Reserve no longer boost the economy and creditors start asking for debt repayments.

Fiscal fraud has helped the rich get richer, at the expense of taxpayers. If the Federal Reserve collapses tomorrow, it is going to make Bernard Madoff looks like a choirboy.

Wrong Lesson From Financial Crisis

Benie Madoff's loot is going under the hammer in New York and most of it fails to impress.

Maybe that is why some bankers are upset that they have backed the wrong person.

It is a pity they are counting their losses but I think the wrong lesson has been learned from the financial crisis. Who cares where these despised bankers invest their bonus?

Crux of the matter is whether they deserve to be paid astronomical bonus for taking huge risks...

We Survived Black Monday...

22 years ago, on this day, this was what happened to the stock market... a plunge which rocked the financial world.

We survived the scare for now as the Dow Jones Industrial Average is still above 10,000 and with no sign of slowing down.

But for how long will this bullish momentum stay intact?

Recession Likely To Be Over?

Ben Bernanke said the economy likely is growing now, but he warned that won’t be sufficient to prevent the unemployment rate, now at a 26-year high of 9.7 percent, from rising.

“From a technical perspective, the recession is very likely over at this point,” Bernanke said in responding to questions at the Brookings Institution. “It’s still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was.”

Source: MSNBC

Has Ben Bernanke jumped the gun in declaring the recession is likely over? I think it is callous for Bernanke to make such a statement when 9 million people are still underemployed.

Will the underemployed be able to secure new job soon that will utilize their expensive education and core skill sets? Will the cash registers of retailers start ringing tomorrow now that the outlook is "brighter?"

Don't bet on it...

Twisted Irony of Bailouts

Isn't this sentence interesting? From each according to his ability to each according to his lack thereof.

Frugal and responsible Americans save religiously and could end up $80,000 poorer if all schemes to rescue the financial system are implemented.

Recently, the inspector general for the $700 billion TARP scheme concluded that “the US government’s maximum exposure to financial institutions since 2007 could total nearly $24 trillion, or about $80,000 for every American.”

Tsk, tsk, how many $80,000 are we able to save in a lifetime? And yet, in one fell stroke to save greedy Wall Street who took home fat bonuses in a five year housing orgy, our money is gone.

Henry Paulson Grilled In Congress For BofA Deal

Listen to how Henry Paulson defends his action in getting Bank of America to buy over Merrill Lynch and suffer immense losses in the process.

Of course, there are always taxpayers standing behind all these losses.

Now that big banks like Goldman Sachs and JP Morgan Chase have reported spectacular 2nd quarter profit, they are preparing to ramp up pay packages to top talent.



Good news for the fat cats on Wall Street but how about the ordinary Joes in the street? After extending a lifeline, are they going to share in the spoils?

Bear Taking Center Stage Soon?

Welcome To Fantasy Econoland

If you cannot afford a trip down to Disney Land because of this recession, there is a new attraction in town - Fantasy Econoland. Among the thrilling experiences are:

Currency high-roller: Float like a butterfly with the euro and drop like a stone with the pound!

Chamber of horrors: Tremble at the wailing of distressed debt!

Fiscal fantasyland: Watch the economy shrivel before your very eyes as you
struggle to stop growth falling!

Bankrupt Britain: Pit your wits against the government as you try to sink sterling and bring the country to its knees!

The Severe Contest: Try your strength against a bear market!

How sad that we are experiencing the horrors of this recession, promising to live a frugal and debt-free life, but in another year or so, we may just lose ourselves in Fantasy Econoland again.

By the way, if you need a tour guide, Timothy Geithner and Ben Bernanke will be showing you around the place which is guaranteed to be a memorable experience.

And don't worry about losing money. These guys will bail you out when the fun is over.

How To Prevent Another Bernie Madoff Scam?

What we really want to know is how to beat the next Bernie, the next Stanford, or the next Greenwood and Walsh. Investors won't get their cash back with answers to the past. That money is gone. It's a sunk cost.

I know only one foolproof way to beat fraud: separate money management from reporting. You can hire that lights-out investment manager. But keep all your assets with a custodial bank like State Street or Pershing. They report your account value, not the money manager. It's like separating church and state.

Source: Beating Bernie

Once the financial crisis stabilizes and the economy recovers, everybody starts feeling rich. Appetite for risk increase and the fund managers will be out in force trying to promote their high-yield products. The whole cycle may repeat itself and who knows, this time, the US government may be helpless.

Ben Bernanke and Obama have spoken about regulation to protect financial institutions from themselves. This insightful article provides a new direction for the administration going forward - separate money managers from the reporting function.

This will be the cornerstone to prevent further financial scams. What do you guys think?

Millionaires Who Give Money To Help: A Rare Breed?

Since last year, I have seen so much gluttony on Wall Street (bankers taking astronomical bonuses even as they cry out for taxpayers' money...) that I have almost given up on humanity.

Have our moral standards declined so much that we have no qualms about earning money at others' expenses? To be frank, I will love to see more heartwarming tales of caring and sharing from these rich people.

Actually, there are many millionaires who give money to help people in need, like this modest guy who gave money away to strangers and left little for his family members. At Christmas time, you may find secret Santa Claus lurking around dark corners and handing out $100 bills to strangers.

Such charitable acts deserve accolades but too bad, the media do not give sufficient coverage, either because the millionaires do not wish to seek publicity or because readers are more interested in useless gossip.

In any case, I am worried that in the aftermath of this financial crisis, millionaires who give money to help could become a rare breed, if this Wall Street Journal article: "Help, We’re Running Out of Rich People," is anything to go by.

I know a lot of millionaires have their wealth destroyed as the economic recession borders on the 1920s Great Depression. Even if you have not invested in the stock market or real-estate, hardworking and fiscally responsible folks are still affected as many businesses are struggling to survive the lack of credit and demand.

With shrinking assets, President Obama is set to exacebate the woes of the rich (by his definition, people with joint income exceeding $100,000 are RICH). This group will be taxed heavily (increase to 39.6% from 35%) as Obama seeks to reduce the deficit.

Obama will also raises taxes on the investment gains of private-equity and hedge-fund chiefs and the rate for capital gains and dividends.

I think the number of rich millionaires in America are not declining, what is happening is the significant reduction of taxable income.

However, money given to charity should not be compromised. At times like these, money for the less fortunate becomes even more critical. It is up to the millionaires when and how much to give though.

Are You Stunned By Bloody Job-Loss Monday?

Looking at the news, I am really stunned that over 70000 jobs are lost in a single day... worldwide of course. If this is in America alone, we are really headed for the second Great Depression.


In any case, the numbers are shocking and I am beginning to worry that I could be retrenched too. If that happens, that could spell trouble for our family finances. We do have about 3 months reserve in savings but in this economic climate, jobs are not easy to come by and the disruption to my income could stretch for months.

I am motivated to cut down further on my family budget to accumulate more reserves for rainy days ahead. In fact, it is not only raining cats and dogs, it is a thunderstorm out there. I won't be giving up on my blog monetization but neither am I placing much hope on it. So far, I have earned only pennies. .

Meanwhile, I have been helping my wife to hunt for jobs too. Recently, she found a part-time job giving tuition for juniors. The money is not great, but it helps to tide us over.

How are you guys coping with the economic recession? Any tips to share?

Review of Year 2008

I am saddened by the disastrous financial crisis in 2008 which caused a lot of wealth destruction. It is a wake-up call, not only for Wall Street but also the regulators who have been sleeping on the job.

Nobody seems capable of solving the recession for us. Interest rates have been cut and bailout and loans in billions of dollars have been doled out already. Yet, we are nowhere near the bottom of the market.

In fact, I have enough of the saying: "Things will get worse before it gets better." If politicians and economists earn their stripe and money (and they look recession-proof) by reciting this phrase over and over again, I will consider switching jobs soon.

My wife has been discussing with me whether saving our money has been worth it. The upside of making huge amount of money is limited but we share in the downside when the market collapsed.

Our philosophy has always been prudence with our income and an abhorrence of loans. However, the reckless manner in which the government heaped debts on taxpayers when they bailout financial institutions and propped the housing market is shocking.

The trillions of dollars will come back to haunt us in the form of future taxes. It is ironic that we get creative about pinching our pennies but end up forking huge wads of cash to save those who practice irresponsible lending and borrowing.

By the way, some of our money has been spent on luxurious resorts for AIG executives and huge bonuses for the investment bankers. I don't think it is fair that honest and hardworking people have to be screwed in this manner...

In any case, since we will be having more of the bear market in 2009, let's keep our spirits up by seeking positives from a negative situation. My wife loves the bear poster below and looking at the advantages of being a bear, I can't help but agree. Check it out!

Is Spending Our Way Out of Recession Right?

I saw this article written by jeflin and have been wondering if spending our way out of recession is the right thing to do.

Taking on more debts to put money into the hands of consumers and businesses, in the hope of reviving the economy may be hard to comprehend for some, isn't America in a glory shit hole because of all the debts amassed. What if it cannot service its interest obligations or other countries like China and Japan have had enough and start dumping their Treasury notes?

Granted, debts is what got us into the current mess. Everybody has huge debts from nations, corporations down to the individuals. It is scary that US debts was less than 50 trillion dollars in 2005 and today has ballooned to twice the amount because of all the bailout.

Consumers are also burdened with huge debts in the form of credit cards, auto loans and the ultimate killer, mortgage loans. Coupled with unscrupulous mortgage brokers and investment banks, all these debts are packaged into CDOs and sold to unsuspecting investors.

The housing crisis has caused a lot of houses to be underwater (ie. valuation worth less than the mortgages) and could bring about a wave of foreclosures as owners walk away with little more than a bankruptcy name but leaving banks to abosrb the losses.

But sadly, almost all weapons in the Federal Reserve have been exhausted. It is a path not without danger, to raise more debts in a stimulus package, but the cost of inaction by doing nothing could be far worse. We are a few whiskers away from the Great Depression 2.

The way things have panned out in the stock markets and global economy, the recession is likely to get worse if left unchecked. Already, there are heavy retrenchments going on, Citigroup announced 52000 layoffs, a record number of job loss in recent times. This will shrink Citigroup's work force by 15 percent, and are in addition to 23,000 jobs eliminated between January and September.

I can't blame Citigroup. They hope to slash expenses by as much as 20 percent and having lost $20.3 billion in the past year, it is not expected to return to profitability until 2010. In fact, with Citigroup's stock value plunging, there is a strong possibility of a sale of all or parts of the company.

The situation is likely to get worse before it gets better. I am in support of the stimulus package and spending our way out of recession. Too bad, that we did not accumulate reserves during the fat years and now when we really open up our wallets and spend, we should not shy away and start to hoard money.

Get our finances in order and cut down debts when times are good, not in times of recession.

California Law Offers Repreive On Mortgage Defaults

According to DataQuick, 79,511 homes were lost to foreclosure in California for the three months that ended Sept. 30, a 228% increase over the same period a year earlier and the highest number since the company began tracking foreclosures in 1988.

Fortunately, a new state law appears to be dramatically slowing the foreclosure process -- at least for now. The law effectively blocks lenders from initiating foreclosure proceedings until 30 days after contacting the borrower or making "due diligence" efforts to do so.

However, all is not well. Although there is now a delay in foreclosure actions, it is not expected to prevent widespread mortgage workouts later on.

The first wave of foreclosures, mostly from people who took out adjustable-rate mortgages in 2005 and 2006 that later reset at a higher rate that they could not afford, is probably ending. But with the economy slowing down and expectations of rising unemployment, a new wave of foreclosures could hit early next year.

Read the full article here.

Possible Criminal Charges In Financial Crisis

Investors and taxpayers angry about the government bailout of seemingly mismanaged financial firms can probably count on a wave of criminal indictments in the coming months, say white- collar crime experts.

Prosecutors will comb through email records, looking for inconsistencies between private and public statements, to show that people acted willfully.

The government recently issued subpoenas to a dozen executives at Lehman Brothers, which included CEO Richard Fuld, two CFOS and a COO.

Since September, multiple federal investigations at Lehman and at least 25 other firms are focusing primarily on asset values.

Source: CNBC