Over the last four years the US has seen the worst recession since the Great Depression of 1929. Immediately following the burst of the real estate bubble, the financial markets almost imploded and a large number of Americans lost their jobs. This snowball quickly started rolling down the hill taking everything in sight. Back in 2005, Congress amended the bankruptcy code because they felt that too many Americans were abusing the system. With the new BAPCPA of 2005 came the addition of the means test to qualify people filing Chapter 7 bankruptcy. This qualification was added because Congress believed that many people filing Chapter 7 were capable of paying back at least a portion of their debt. They thought the ones that made too much money should file Chapter 13 bankruptcy instead. Initially, prior to the law going into effect rose significantly to over 550,000 Chapter 7's and sharply declined in 2006. Congress patted themselves on the back and said problems solved. At least they thought it was.
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In 2008, the number of Americans filing for bankruptcy quickly passed all records to over 1 million. This number continued to rise through the end of 2010 to 1.6 million. We saw a slight decline in 2011 down to what it is currently for 2012 which is close to 1.3 million bankruptcy filings. Government agencies are once again patting themselves on the back thinking the economy is on its way back around. When looking at all the numbers nationwide we are seeing the worst economy we have seen in over a year. And that's not saying much if anyone's been following the economy since 2007.
While there aren't as many people filing for bankruptcy, the number of Americans living in poverty and the number of Americans receiving food stamps are both at record highs. The new numbers released by the U.S. Census Bureau show that the number of Americans living in poverty hit an all-time high record of 49.7 million and those accepting food stamps has reached an all-time high of 47.1 million Americans. Every day many Americans are leaving the middle class and dropping into poverty. As the media keeps telling us that things are getting better unemployment claims rose to 439,000 for the week ending November 10, 2012. This is the highest number we have seen since April 2011. On top of all of this great news, the Dow and S&P 500 have both dropped more than 5% since the election and the government is roaring towards the fiscal cliff while spending at a deficit of $120 billion a month. As the finger-pointing continues, so does the spending. It doesn't take a rocket scientist to figure out where the country is headed spending money at this alarming rate.
Most Americans are burying their head in the sand and spending themselves into oblivion also. The credit card debt of the average individual is now over $16,000. The average income over the last four years has declined from $42,000 a year to around $36,000 year. People are spending more and making less. At a time that they should be calling a bankruptcy attorney and filing for bankruptcy, they instead are calling their creditors to have their limits raised. When you really think about it, it's just craziness. It's time that Americans suck it up and take the pain to get things back on track. If it means losing entitlements, then so be it. The country can't continue at the rate it is going. At some point in time the economy will completely implode. Printing and spending money didn't work for the Weimar Republic and it won't work for the United States either.
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