Posted on 04/24/2008 5:28:34 AM PDT by milwguy
Mounting mortgage misery, accumulated credit debt and higher consumer costs contributed to a 29.5% jump in bankruptcy filings in Wisconsin in the first quarter of this year, and attorneys and debt counselors say the situation is likely to get worse
People who were living on the edge financially with monthly mortgage payments they barely could afford now are tipping into insolvency as fuel and food costs rise, they say.
"I think we're just at the beginning of it," said Claire Ann Resop, a bankruptcy attorney in Madison. "I think it's going to be a couple of years."
There were 4,570 bankruptcy petitions filed in Wisconsin through March, up from 3,530 in the same span a year ago.
The increase in Wisconsin tracks with what's happening nationally. The American Bankruptcy Institute said consumer bankruptcy filings were up about 27% from January through March compared with the same three-month period in 2007. The institute cited mortgage problems and household debt for the rise in bankruptcies and predicted the trend will continue through 2008.
Last year, total bankruptcy filings rose almost 38% nationally. In Wisconsin, they were up 39%.
(Excerpt) Read more at jsonline.com ...
When the commentators called him on the inflation comment, he modified it to say other than food and energy, inflation was not so bad. Tell that to the 1000's of barrista's at Starbucks who will soon be looking for work. He may have to look harder for his latte after they close half their stores.
Let’s see, there are over 5.5 MILLION people in Wisconsin living in over 2 MILLION households (with home ownership rate of nearly 70%) with a poverty rate that is almost 20% LOWER than the national average and you think the sky is falling because there were 1000 more bankrupcy filings in the first quarter of 2008 compared to 2007?
http://quickfacts.census.gov/qfd/states/55000.html
Has it occured to you that perhaps the JP Morgan guy knew what he was talking about and the article you posted was typical election year gloom and doom?
True inflation involves rising prices due to lack of production capacity (i.e., too many dollars chasing not enough products/services). "Currency inflation" is simply the loss of purchasing power of the currency in question (in this case, the U.S. dollar) -- often as the result of deliberate devaluation by the sovereign government that prints the money.
Any way you cut it, the public is getting screwed.
Toss in the high gas prices and significantly rising food prices and those people are in even worse shape.
Don’t fight the Fed. There is no recession. There will be no recession. We’ve never had one with rates this low. And the stock market will be testing new highs by the end of the year. The time to get in was when it bottomed in mid March. Gloom and Doomer FReepers deeply saddened.
I would prefer to be realistic about what is happening. Last year I spent $30 to fill my gas tank, this monring for the first time ever it was $50. That $20 is money which will not be spent on something else. The Fed Reserve action with Bear Stearns was a form of welfare for the rich. Rather than let the market work out the problem, the Fed jumped in. The same thing is happening with Congress and garbage mortgages. They will add debt to save those people who never should have bought more house they they could afford. If you understand basic economics, you will realize you can’t keep expanding credit and lowering interest rates forever. Sooner or later a day of reckoning arrives. I fear that day is approaching.
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
Austrian School Economist Ludwig Von Mises
Read his book “Socialism’
Somehow I don't see the inevitable consequences of Starbucks' overexpansion as a sure-fire indicator of economic weakness.
The earnings this quarter have generally been fairly strong, so the guy may have a point. I don't think a recession this year is inevitable (though it's probably still more likely than not).
“We are in the toughest economy since 2001 and the worst housing crisis since the Depression” Jeff Immelt GE
Durable goods orders down for third straight month, first time since 2001.
The cheap $ has fuled our export biz, mainly coal, grains and other bulk commodities, but the inflation pressures our cheap $ policy has built into the system is going to hurt down the road.
Excellent book - I read it in school and still have it on my shelves.
This kind of currency inflation is the natural consequence of delusional expectations on the part of a nation's population. The notion that we can have massive government entitlement spending and massive military expenditures at the same time is a complete fallacy, and this is why the aftermath of the Iraq war is going to be no different than the aftermath of the Vietnam War.
Baghdad Bob speaks. Very believable. Must have left off sarcasm tag. Or else must be mortgage broker.
Yes, and the reality is that $20 more once or twice a week IS NOT going to put the country into a "depression" no matter how hard the media pushes the idea.
And your notion that the mone "will not be spend on something else" is flawed as well. You have fallen for the media's theory that once money is spent on a gallon of gas that it just vanishes into some "evil oil company's" coffers and is never to be seen again. This money goes to employees and shareholders and gets spent.
Austrian School Economist Ludwig Von Mises
I'm a conservative, I don't subscribe to the flawed theories espoused by the likes of Ron Paul and Lew Rockwell.
If you understand basic economics
not Obama.
you can’t keep expanding credit and lowering interest rates forever. Sooner or later a day of reckoning arrives.
pay the bills or get out.
I’m a conservative as well. I think conservatives around the country would do well to read some of Von Mises’ works. The gov’t we have now is not in any way conservative, it is approaching socialism rapidly. Congress wants to give an un-elected Federal Reserve even more power over the economy. It was Greenspan’s keeping interest rates too low for to long, combined with Congress forcing banks to give mortgages to grossly unqualified home buyer, combined with an insane energy policy mandated by Congress that we use corn to fuel our cars, while leaving vast oil and gas reserves in the ground because of our need to ‘save the planet with biofuels’.
At every turn, our gov’t has been the problem, not the answer to the problem (to paraphrase Reagan). What happens when the Chinese and Arab countries no longer buy our nat’l debt insturments? That is already happening.
The more gov’t is intervening in our economy, the more they are harming it. Massive expansion of entitlements without any paln to pay for them, massive credit expansion without anything other than the ‘full faith and credit of the United States Of America’ to back it.
As for money going to shareholders with my extra $20, SOME of the money will. The vast majority will be sent overseas to purchase that $117 bbl oil.
Ludwig Von Mises is a hugely respected economist, and his works should be required reading for Hellicopter Ben and his buddies at the Fed Reserve.
I do pay my bills, have a 15 year fixed rate mortgage with 7 years left and resent the gov’t jumping in to bail out those who took our ARM’s and now cry because the rate is going up and they could never afford the house in the first place.
BTW New Home Sales Plunge to Lowest Level in 16 1/2 Years- AP
Sales of new homes plunged in March as housing slumped further at the start of the spring sales season. The median price of a new home fell by the largest amount in 38 years.
Just don’t be taken in by the talking heads on tv when they tell you to buy stocks while they are selling. I had my kids 529’s in mostly stocks till last November when I moved 95% into money markets. The ‘rally’ on Wall St has still not gotten back to where I sold, so even though I waited a month or two too long, I think I made the right decision, even though the broker I use told me ‘stocks always go up in an election year, you are making a big mistake’ Did the same with some of my 401k money as well.
A good impact the government could have on foreclosures, the credit stress, and veterans all at once is obvious.
Recreate the VA loan to put veterans in empty houses owned by banks across the country. This could be a win-win-win.
Banks that hold the existing mortgages would get some income from foreclosed properties, and those properties would be maintained. They wouldn’t get the astronomical rates they were hoping for, however.
By getting some income this takes a lot of pressure off the credit crunch. In essence, it trades volatility for time. Such mortgages might be 30-year.
Veterans get housing equity at low interest. They couldn’t sell the property for quite a while, however.
The government wins because the deal can be offered as a reenlistment bonus instead of increasingly greater amounts of cash, and also creates a more stable National Guard, Reserve and IRR. It also stabilizes the credit markets.
30 Year Fixed 5.80% 5.81%
15 Year Fixed 5.40% 5.39%
If the gov’t’s credit policies are working, why are long term mortgage rates rising. 6 weeks ago 15 yr rate was at 5% now 5.4. This even with the huge fall in new and exisitng home sales. The debt market is broken and the gov’t is mostly responsible for that. Ben ain’t going to be able to put Humpty Dumpty back together again so easily this time. The more he continues this way of easy credit expansion, the harder it will be.
There is ALWAYS day to day fluctuation in in interest rates.
You and the other gloom and doomers are going to have a really difficult time convincing people that interest rates that are well below 6% are a sign of a “broken” credit market.
My point is the Fed has been pushing down rate quite rapidly these last months. The mortgage market, and other credit markets are not responding to these cuts as one should expect. The interest rates are still low by historical standards, but that is only 1/2 the story. The lending standards are making it much harder to get loans (which I support), thereby negating what the Fed is trying to do by lowering their rates. A disconnect is happening. Realism is not doom and gloom, it is having your eyes open and analyzing what is going on, rather than believing what is being spoon fed to us by the political elite and their allies in the media.
Next up: credit card debt. As energy and basic foodstuff prices continue to rise, cash strapped households are going to have greater difficulties in keeping up with other payments.
The economy has yet to digest $80/bbl oil, let alone $120/bbl oil.
And can we please quit the bull about a "free market" for oil? When large chunks of the supply are managed through a cartel, there is no free market.
It is past time for our trading exchange regulators to increase margin requirements on traders employing leverage greater than 5-to-1.
Yes there is. It was reported in my local rag that all the delinquent mortgage holders who crashed due to DUI were on their way to their local banks to pay off their mortgages. I kid you not. Well...maybe just a little bit. (smirk)
I have been watching V (visa) since IPO. I think a lot of folks are using CC’s right now for everyday expenses (ie gas and food). The stock of V and MC go up and up, but I think that is a contrarian sign, it shows a weakening economy.
Von Mises is being channeled in this story I found today. He realized that without something tangible, ie gold, paper currency was open to manipulation and the whim of gov’t to print ever more. He was around during the time the Wehrmark was printing trillions of marks before WWII............................................
Since the summer of 2001 when the dollar started to fall, we’ve heard persistent chatter about the strength of foreign currencies relative to the greenback. The strength, however, has been highly illusory in that it’s merely shown that currencies not our own have been stronger than the even weaker U.S. dollar. Measured in gold, it would be hard to find any currency that hasn’t lost value in this decade; hence the worldwide inflationary outbreak that has spread to food prices, and that’s shown up in government measures of inflation that have reached multi-year highs.
So rather than a tragedy of too much growth, too much ethanol production or too little moral fiber, the food “shortage” story is as it’s always been: a dollar story. Going back to 1971 and our mistaken decision to float the dollar, periods of weakness since then have regularly led to commodity shortages of all kinds, including corn.
A simple solution to the present food problem would involve the Bush Treasury making plain that it would not just prefer a stronger dollar, but a stable one defined in terms of something real like gold. Food shortages and the alleged power of OPEC would quickly become historical relics if Treasury made such a move, but in considering our present monetary authorities, it seems that they, much like their predecessors in the Nixon Administration, do not know what they’re doing.
http://www.realclearmarkets.com/articles/2008/04/the_foodshortage_myth.html
John Tamny is editor of RealClearMarkets, and a senior economist with H.C. Wainwright Economics. He can be reached at jtamny@realclearmarkets.com
“Paper money will…ruin commerce, oppress the honest and open the door to every species of fraud and injustice.”
George Washington
According to economist Felix Somary, who experienced firsthand the devastating monetary inflations that destroyed the German mark in the 1920s, it took Rome four centuries to destroy its currency. Germany and Austria reached that point in just nine years, ending in the famous hyperinflations of the 1920s, and before that, Russia managed it in only five years. Everyone’s experience is different, but our collective experiments in paper money have not created a currency that increases in value over time.
The life and value of a monetary unit has less to do with the wealth of a country than with the simple facts of supply and demand. As the great Austrian economist Ludwig von Mises noted, “Even the richest country can have a bad currency and the poorest country a good one.”
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