As deflation continues to romp its way into our economic lives we are seeing an unprecedented flow of news all pointing to further economic strain. What's important to keep in mind as the deflationary spiral sinks in deeper and deeper is that this is just the beginning. Take a look at the third quarter bankruptcy filings, which are the highest since 2005:

Bankruptcy Filings Up 20 Percent in June

"Bankruptcy filings rose 20 percent in the 12-month period ending June 30, 2010, according to statistics released today by the Administrative Office of the U.S. Courts.


"Third quarter filings, the 3-month period ended June 30, 2010, totaled 422,061. Filings for the June quarter are the highest of any quarter in fiscal year 2010 (October 1, 2009 –  September 30, 2010) and the highest for any April-June quarter since the 2005 third quarter filings. For fiscal year 2010, filings for the first quarter (October 1, 2009 –  December 31, 2009) totaled 372,203 and second quarter filings (January 1, 2010 – March 31, 2010) totaled 388,148."

By the time we've hit bottom, the over 422,000 third-quarter-2010-bankruptcy filings will be a very small number. The credit contraction will continue and more people and businesses will find it extremely difficult to locate sources of additional credit to pay off debt, which in turn will lead to more bankruptcies.