Economic outlook points to another wave of bankruptcies

Pete Stolcers isn’t a bankruptcy attorney, or any sort of lawyer for that matter; he is a speculator who trades options on the New York and Chicago exchanges. As such, he keeps a keen eye out for any subtle hints on future economic trends. Here is a snippet from his latest newsletter:

“Foreclosure rates in the United States continue to rise. People are spending money on discretionary items and they are not paying their mortgages. Credit card companies have these records and they confirm that this money is being spent. Homeowners are under water and the do not fear being kicked out of their homes. People are living rent free and that has artificially elevated retail sales.

Taxes on a federal, state and local level will increase. While the government can continue to print money, state and local governments cannot. They are quickly cutting expenses and laying-off workers.”

Stolcers foresees a “stumble” on the way to full economic recovery, probably by this summer. Obviously, people cannot continue to live rent-free while buying consumer goods on a long term basis; when either of these conditions end, a wave of bankruptcies as well as a shudder in the financial markets will be the most likely scenario.

 

By Doug Beaton

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