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.
Lisa Hamler-Fugit, Executive Director of Ohio Assoc. of Second Harvest Foodbanks:
We've have see poverty continue to increase in this state as the economy has continued to decline. This didn't just happen overnight. It certainly didn't just happen as a result of the Great Recession. It has been happening for quite some time as our high wage manufacturing based economy has just eroded away. In fact, the food bank that serves this part of the state now feeds 44 percent of the residents of the 10 counties that make up the Appalachian region. 44 percent.
Apparently what's happening in Ohio is also occurring in other parts of the country:
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But there is hope:
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A look at the graphic above, from The Rouge Treasury, tells all: the bailout has not accomplished anything.
Is it to early to tell? Only time will tell but given the prognosis for continued economic deterioration, as the deflationary spiral digs deeper and deeper, the odds are not good that the last bailout worked and that future bailouts will work.
Another example of deflation taking its toll on the economy as reflected by what Mayor Booker said during an emergency press conference Wednesday:
Every single contract that does not go to the core function of our city in providing safe streets, providing fire protection, or other things to keep our city afloat will now be cut.
Watch the press conference:
On the other side of the table, Newark Councilwoman-at-large Mildred Crump said during a press conference:
It appears the mayor is a Pontius Pilate. In other words, his hands are clean. The blood of the residents of Newark will be on our heads.
So what happens when city or state governments shut down? Will there be more finger pointing and bickering or will there be cooperation?
See for yourself:
October 19, 2007:
November 27, 2007
February 27, 2008
March 19, 2008
May 7, 2008
June 25, 2008
August 20, 2008
October 28, 2008
February 25, 2009
March 2, 2009
May 29, 2009
June 19, 2009
Looks like Robert Prechter was right on the money. Get tomorrow's news today with a risk-free subscription to his forecast service.
