Americans have long been criticized for living beyond our means. Savings? Not when I have another credit card or home loan! The joy of living on credit unfortunately ended with the atomic bomb blast known as the bursting of the real estate bubble. Once that happened, credit became rare and the debt we all face became nasty as the bill finally came due.
According to economists, the worst of the pain is now over as we head into the middle of 2010. The economy is starting to recovery and credit is starting to get straightened out. Oh, really? The truth is things are still looking very murky. Real estate is headed for a double dip and job growth is next to non-existent.
The news out of the bankruptcy courts is particularly troubling. The American Bankruptcy Institute announced that the personal bankruptcy filing rate over the first half of 2010 is the highest it has been since 2005 when a change in the law led to millions of people rushing to file. Instead of reflecting an improving economy, the numbers show bankruptcy filings are up 14 percent compared to the first six months in 2009. This would seem to suggest that the "recovery" we are supposedly going through is anything but.
What does this mean in the long run? Nobody is particularly sure. The bleak economic numbers we are seeing now could just reflect a slow down in the technical recovery or they could be a sign of a dreaded double dip. Nearly everyone is praying it is just a temporary slow down. Why? Well, the government and Federal Reserve Bank really don't have any other tricks to throw at a double dip recession. That is a pretty scary thought.