Wednesday, November 5, 2008

Bankrupt: Coming Soon to Someone You Know

As if October didn't have a lot of terrible data for 'economy is fine' enthusiasts, here is one more. Bankruptcies by consumers passed clear through 100,000. One one hand this resets the debt of the clownsumer, so might enable them to be a bit more free for spending. On the other, it means that they likely maxed themselves out for the final splurge before committing bankruptcy and will not have credit available to them for the foreseeable future.

Add to that, the debt they incurred will now need to be written down by actual people and companies. This is credit destruction in the finest form. Money gone to money heaven. This points to deflationary pressures. Not much good the printing press will do when the banks that lost in this practice need to fill that 'asset' hole.

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