In defence of lawyers- maybe they should not go to the bottom of the ocean just yet.

LawyerI am getting regular comments on my blogs attacking me and attacking lawyers in general so I thought I would write a blog that defends lawyers.  I have been a lawyer for over 12 years now.  I Lincoln-lawyershave done many things before the law so it is not the only profession I know.  I am now doing bankruptcy law but I have practiced in the areas of Immigration and Landlord/Tenant also.

It is well-known that many people do not like lawyers.  They are considered dishonest, greedy, self-serving “blood suckers” by many.  In fact one of my kids favorite movies is Jurassic Park where the lawyer is openly called a “blood sucker” to his face and he is the first to be eaten by the T-Rex as he hides on the toilet.

Shakespeare has a line in a play about them all being killed and lawyers are the butt of many jokes like one that puts them at the bottom of the ocean (like drowned rats) as a good start.  On talk radio they are skewered often and many talk show hosts seem to consider them the root of all evil.  They seem to be blamed for many evils in society.

For those of you that have been around long enough it reminds me of what police were thought of in the 1960s.  Many hippies and radicals wrongly thought of the police as the cause of all ills in society at that time.  The implication then was that if we just got rid of them then society and everyone would be better off.

But I remember what I read in a “Mad” magazine once when I was a youngster in the 1960s.  A hippy was protesting the cops and holding up signs calling them “pigs” in full view of the police officers.  Then a mugger came along and robbed the hippy of his wallet.  He immediately called out “help, help police” and the cops did not help him and responded with “no one here but us pigs”.

And the same is true of lawyers.  The same people who say they hate lawyers will call one very quickly if they are sued, or served a divorce, set upon by the IRS, or especially if they are arrested.  The lawyers will dutifully come to their aid and help them.  What if they didn’t?

And you may say” but lawyers are paid so well for their work”.  Not always.  Many in private practice are losing money because running a law office is expensive and clients are hard to come by and they often don’t pay their lawyers.  You would be surprised at how often and how much lawyers talk among themselves about their struggles in getting paid by clients and their resulting financial difficulties.

Also it is true as you may have suspected that there are too many lawyers out there for the available clients.   And remember that things are far worse and lawyers are getting even fewer clients now with the recession.

Lawyers are well aware of their reputation.  I work in a building with a hundred lawyers and we talk about this stuff.  We know we are hated and under-appreciated.  I once got a quote from a lawyer that was very interesting:  “Your lawyer in practice spends a considerable part of his life in doing distasteful things for disagreeable people who must be satisfied against an impossible time limit in which are hourly interruptions from other disagreeable people who want to derail the train; and for his blood, sweat, and tears, he receives in the end a few unkind words to the effect that it might have been done better, and a protest at the size of the fee.”

This partially reflects the lawyers perspective.  He or she is doing these difficult tasks for difficult people under pressure and they are rarely happy with it.  And this is he can even get a client in this recessionary environment.  It is no wonder that lawyers suffer from problems with drugs, alcohol, depression, and suicide.   Very often lawyers become disillusioned with law and leave it altogether because doing it everyday is not what you might think.

Most lawyers I know now in private practice are certainly hurting now.  Business is down, clients are scarce and money is tight.  Clients just don’t have money to spend.  These lawyers are not getting rich or blood sucking but just trying to survive like everyone else.  They have kids in school and house bills to pay too.

And remember that many are providing a valuable service.  They provide this service to many people and get very little in return.  They are often doing things like helping people in very bad marriages break up peacefully, or getting people out of deep debt, or keeping people out of jail, or fighting off a lawsuit that could potentially ruin them.  In addition they are defending those against the government which has unlimited resources to come after anyone of us.  And who is going to defend you when that happens?  Only a lawyer can.

So don’t put lawyers at the bottom of the ocean yet.  In Shakespeare’s Henry VI play the character who says “kill all the lawyers” is trying to stage a revolution, take over the country, and establish himself as king.  He knows who will stop him.  Those that know the law, the Constitution, and how to get things done in court and throughout the legal system.  The lawyers would stop him from taking over so character asking to kill the lawyers is the villain in the story and the lawyers are the heroes.  This quote is usually used in the opposite way in which Shakespeare intended it.

So the next time you are being “mugged” (i.e. sued) in court by a private party or by the government remember who is going to help you.  The lawyers and only the lawyers will and only the lawyers can.  They are the heroes of our story here.  When you call out for a lawyer to defend you be nice to them.  You don’t want the lawyers to respond with “nobody here but us drowned rats”.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Lawyer clipart courtesy of OCAL.  Lincoln quote courtesy of mrsdkrebs.

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Is there currently a mancession? How about a shecovery? How can this be a good thing?

workmen 2There has been a lot of talk since the recession started as to whether the economic downturn has hit men harder than women thus creating womana “mancession”.  Even Wikipedia states that unemployment for men has been 10% while unemployment for women was only 8%.  There are even articles about a “shecovery” which occurs when areas of the economy that are dominated by women recover and male dominated areas don’t.

The recession hit areas harder that employed men in greater numbers than women.  Construction and manufacturing were all hurt badly in the recession and more men than women were employed in these areas.  Men were therefore impacted more greatly in the economic downturn.

As one online article in Nation magazine points out women make up already half of the workforce in America today which is up from 30% in the 1940s.  Women also have more jobs than men in areas like retail sales and healthcare and they have half of the middle management jobs according to the article.  I would also add to this list areas like education and the media where women outnumber men.  And these areas tend to either be growing or not shrinking as fast as male dominated areas of the economy.

We already know that women outnumber men in colleges these days by almost 60% to 40%.  They have also caught up in graduate schools as now women are graduating in numbers for the most part equal to men in medical and law schools.  These schools are pushing these grads out into the job market every year.  So women are also getting the degrees which will help them land the good paying jobs in the future.

Many of these articles are written by women and they describe this situation as women “winning” some kind of job struggle.  Some even say that women are just more suited to the modern economy.  A new book is even entitled “The end of Men”.  Does anyone see a problem with this besides me?  Men being cast off as outmoded, outdated, no longer useful to society.  Is anyone concerned with where they will go and what they will do?  It is indeed disturbing.

We have always been concerned in the past about some group that is disadvantaged, falling, behind, or left out.  We have always seen the danger and unfairness in this and we have always in the past made some attempt to address it for the good of everyone.  Now with half of society being looked upon as at least falling behind (and at worst defunct) we do nothing.

Do we believe that men somehow deserve a mancession?  Is is payback for some past crimes?  I say what about the future?  There is a whole new generation of men that must find their way.  I have seen the men in my office that have lost their jobs years ago and still can’t find something even close to what they used to do if they can find something at all.  They then must face foreclosure, eviction and all the serious financial problems of having little or no income.

As a bankruptcy attorney I want to say to the men that if they are still unemployed or underemployed and they have debts they cannot pay then they should look at bankruptcy as an option to get out of the debt.  They can then begin to rebuild their lives with out the debt burden often incurred prior to this recession when things were better.

But we are all in this thing together and if men are falling behind and if their is indeed less and less need for them in the future it is a problem for everyone.  The Nation article asks if women are “really victors” in the new economy.   I am reminded here of a line from the movie “The War of the Roses” where Danny DeVito’s character tells Michael Douglas’ character that “there is no winning only degrees of losing”.  We are all in the same boat in society and when men lose we all lose.

I am a San Diego bankruptcy attorney.  For further questions please visit my website at www.farquharlaw.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Men photo courtesy of Roger Blackwell.  “I won” photo courtesy of Search Engine People Blog.

Shiller says housing prices won’t rebound for a generation. Are we headed for a society of permanent tenancy?

In an interview with Reuters Yale economics professor Robert Shiller (creator of the Case/Schiller housing index) has expressed his concern that housing prices may not rebound for a generation.  He says that the combination of high gas prices, a weak labor market, and a general sense of unease among consumers have all combined to keep housing prices low for the foreseeable future.  He apparently added in the interview that he was worried that we would not see a housing rebound in our lifetimes.

If this is true could it mean that our generation is doomed to low housing prices?  Will we really not see increases for the foreseeable future?  What effect will that have on future home sales?  Don’t people buy homes because they are a good investment and because they will increase in price in the future?  Will they now stop?  Won’t this radically affect our whole economy and what about all of the people who work in the real estate industry?

These are just a few of the questions I had when I read this.  I hope this economist is wrong but if he is right then we could see a whole different society in the future.  It could be one where people won’t invest in real estate anymore.  People could merely rent their home or apartment and not buy because they have little hope of getting any appreciation or equity out of their investment.  This could mean the end of the American dream of home ownership.

It is well-known that there are kids who are staying longer and longer at home.  Much longer than they did in previous generations.  These are the “failure to launch kids”.  According to CBS fully 70% of children under 30 still live with their parents. These people will probably not buy homes until much later if at all unlike previous generations when people usually left home at 18 years old.

This factor combined with the recession, the foreclosure crisis, and the failure of housing appreciation is creating a different kind of nation.  One where real estate is not purchased nearly as often.  I believe that there could be a future for America where people don’t invest in real estate.  One where they rent and don’t own ever. One where they are tenants for life.  This will be a different society than the one we know now.  Some realtors I know claim that the whole economy is so dependant on real estate that it cannot climb out of this recession until real estate does.  (See here for my blog on how foreclosures are predicted to increase in the near future).

I hope the realtors are wrong and I hope Schiller is wrong.  I personally don’t want to see our country abandon the American dream of homeownership and trade it or a society of permanent, lifetime tenants.  It sounds too much like medieval Europe to me.  I don’t foresee good coming out of us becoming tenant/peasants who have not hope of owning homes.  I believe housing prices must rise again in the not too distant future if we are to avoid an unraveling of society and a return to a more slavish tenant existence.  This would not be good for anyone and a departure from everything were moving towards up until this point in our history.

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.   Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

A new wave of foreclosures is expected while housing prices decline for 6th staight month. What does it mean?

According to an article in Smart Money last month foreclosure sales are still flooding the real estate market in America.  35% of all home sales in January were foreclosed homes or for short sales.  This amounts to 91,100 properties in January and this number was up 29% from the month before.

The head of a real estate research firm predicted that this will cause a decrease in prices for homes in the next year.  Statistics have indeed showed that the median home price has declined 8.5% since June of 2011.  This same analyst predicted in the article that home prices are going to go down for a long time to come.

In the city of  Las Vegas foreclosures accounted for 59% of all sales and in Sacramento 50% according analysis done by RealtyTrac.  Other cities have similar statistics.  There is a huge number of foreclosures coming back to the banks currently and these foreclosures are then going back on the market for sale.  This flood of foreclosures will continue to press home prices lower in the future according to analysts.

This is exactly what an article in Yahoo Finance stated yesterday.  According to that article home prices dropped for the 6th straight month in a row.  The Case-Shiller housing price index reports that housing prices dropped in February in 16 out of the 20 cities tracked.  Atlanta, Chicago and Cleveland saw the worst declines while San Diego and Phoenix saw price increases.  This represents a 35% decline in home prices since the recession hit and home prices are now at 2002 levels.

Another article came out in Reuters that a new wave of foreclosures is expected.  In that article they predict that 2012 will be a bigger year for foreclosures than 2011.  Just when you thought it was over.  But it is not over.  Many in the article predict a growing number of foreclosures ahead.  They point to the statistics that show that many major banks and many major cities are showing a rise in foreclosures.

The Reuters article points out that the toxic mortgages are now gone.  Sub-prime, and balloon payments, and negative amortization mortgages have been foreclosed on or short sold and are no longer in effect.  Now we have regular mortgages that are being foreclosed on.  Mortgages with normal interest rates and fixed rates for 30 years.  Mortgages that are owned by regular working families.  Families who are extremely responsible but still can’t afford the mortgage.

These people are being stressed now.  They cannot afford the mortgages I argue because the price of everything is going up especially food and energy which are not counted in government inflation statistics.  That is what I argue in this blog http://bit.ly/HUNMNJ .

But it is clear that the housing/foreclosure is not ending but may get worse and be with us for some time.  I believe that we underestimated the depth of the crisis from the beginning.  I had realtor tell me years ago that this was serious.  At a realtors convention he was told to expect 10 years of depressed prices in real estate.

The amount of foreclosures is astounding and these all have to be put on the market at some time and they will depress it.  Indeed there appears to be a shadow market of these homes that the banks are holding off the market as I argue here  http://bit.ly/IUF0k0.  When these homes are put on the market instead of being kept off, prices could decline further.

So with home prices declining, foreclosures increasing, and prices of living increasing we have a perfectly bad storm it appears.  The government printing of money and the resulting devaluation of currency is increasing prices of food and energy so that people can’t afford their homes.  This stresses their finances so they cannot afford their homes which leads to more foreclosures and more homes on the market.  We seem to be in a downward spiral economically.  Don’t expect housing prices to go up anytime soon.  It is also a good time to take care of unneeded unsecured debt do you can afford to pay for your home.

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com for more info. about any of these topics.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Update on home squatters. They have turned into a full fledged political movement!

The squatter phenomenon that began with current recession and is reminiscent of the great depression is still going strong according to an article in “In These Times”.  Squatters are people who move into vacant homes and refuse to get out until someone evicts them or pays them.  There are plenty of these homes to choose from now in California and many other states due to the ongoing foreclosure crisis.  These squatters are often violent, angry, and sometimes hardened criminals.

In an article about a case right here in San Diego a squatter moved into a foreclosed home and refused to get out until he was paid $25,000 for “cash for keys”.  Banks rarely pay former homeowners more than $5000 for this.  This squatter was arrested fortunately but many others are not.  Another article in FOX 5 News told of a Broker that has been attacked by violent squatters when he was checking on a vacant home for a client.

I wrote in a previous blog ( http://bit.ly/JdF7ea ) what a big headache it is for a homeowner when a squatter moves in and takes over the property.  In the end you may have to pay for an eviction the because the cops don’t want to get involved in a legal dispute between you and the squatter.  This is especially true when the squatters create phony rental agreements to say that they have a legal right to occupy your property.  During the eviction process the homeowner has to support the squatters by paying the bills for the home until the eviction is over and the sheriff comes to throw them out.

These realities are the same for a bank which takes over a foreclosed home that a squatter moves into. And worse it can happen to an investor who buys a foreclosed home at a foreclosure sale.  They may try to move in but find that someone has beaten them to it and that someone may have one of these phony rental agreements.  Then a legal eviction would be required to remove the squatters.  Of course once the eviction is finalized the homeowners will find a completely ruined, trashed, and vandalized homes.  Indeed some of these homes are gutted by the squatters.

Technically these people are trespassers but it is difficult to prove that when they have the lies and phony rental agreements.  Cops won’t remove them in these circumstances and owners have to go through the legal process of eviction.  I used to do evictions in San Diego and I know what a mess they can be especially if the squatters hire an attorney who can fight and delay the process.

Worse than this though is the phenomenon written about in the “In These Times” article.  This is the political movement that is growing up around these squatters and their takeover of these vacant homes.  In the article they talk about a woman who has occupied a vacant home in Chicago’s south side with the help of a group called “Liberate the south side”.  The article states that this group “targets vacant homes for reoccupation”.  The home apparently had been vacant and the group put money into renovating the home.

The article points out that this is happening across the nation in cities like Chicago, New York, and Minneapolis (and apparently here in San Diego too).  And it is also a global movement.  They talk about highly organized groups with “squatting offices” in Spain where they coordinate squatting for squatters.  Similar movements are happening in Ireland too.

These political movements are much more disconcerting than the individual criminal squatters that occupy and then extort.  Law enforcement can take care of them more easily but large groups of squatters who hold sit-ins, occupy homes in large numbers, and refuse to get out can be much more dangerous.  They hold up signs  and they come up with names like “sovereign women of the republic of california” or “poor people’s economic human rights campaign” .

I wrote about these groups in a previous blog (http://bit.ly/I5nsoT ).  They are now buoyed by the Occupy movement and they are now and were then calling housing a “human right”.  I presume that this means to them that houses should be free or supplied by the government like health care and eventually everything else.  If these people were to get their way and occupy these homes permanently then what about everyone else who is paying rent?  Won’t they want their free housing?

In my previous blog I warned about the reality of  what really happens when houses are occupied by squatters.  First of all utilities are shut off because they are not provided for free so squatters often live in the dark and cold with overflowing toilets and they still refuse to get out.  Some of these could move into your vacant home sometime before you can find a renter so be wary!  If the have a political movement behind them demanding free housing because it is their “human right” them they could be even more difficult to get out of your home.

I recommend anyone with any kind of vacant property check their home regularly to see of this is happening.  If the entire neighborhood is vacant then it is even more dangerous because no neighbors are there to watch. Be on the lookout for squatters!

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

San Diego unemployment rises in March as does American food stamp usage. What does it all mean?

Here in my city of San Diego unemployment has increased in March much to everyone’s surprise. This was detailed in an article in the San Diego Union Tribune.  This fact certainly calls into question whether there is a recovery occurring at all in San Diego.  According to the article San Diego would need to add 20,000 to 25,000 jobs per year but only 6,700 are currently being added.  This is far short of what is needed for a full recovery according to some economists.

This article also explains that California unemployment is on the rise.  California unemployment rose to 11% in March.  18,000 jobs were created in California in March and that may sound like a lot but 2 million people still are unemployed in the state.  They also mention in the article that nationwide there seems to ba a decrease in unemployment.  I would argue thought that this nationwide rise in employment looks good but must be balanced against other factors. (See here for my blog on unemployment is rising when the governement says it is not).

For instance the Wall Street Journal reports that 34 million people are on food stamps currently and that is an all time high.  This represents an increase of 70% since 2007 and 1 person in 7 is now on food stamps.  A 70% increase is significant and calls into question the state of the economy as a whole.  Are these people receiving food stamps unemployed or are they people with jobs? Are the employed (or underemployed) getting on food stamps because they can’t afford to buy food with their salaries?

Another article in Investor’s Business Daily tells of an increase in the number of people on disability.  Are suddenly getting more disabled in this country or is something else happening?

I believe something else is happening.  First of all more people are out of the work force than ever according to recent articles.  As they come back into the work force this could increase unemployment.  But also you have this massive over-spending by government and “quantitative easing” or straight money printing.  As I argued in a blog (http://bit.ly/I9XMnU) about governments like the Weimar Republic who choose to print money,  massive money printing can only lead to massive devaluation of the currency.  This devaluation in turn leads to a huge increase in the prices of foodstuffs.

We are seeing prices go up dramatically in the past two years especially in the area of food and energy.  I also blogged about this phenomenon some time ago  ( http://bit.ly/IahMZf).  These increases in food have even caused farmland to increase in prices.  There was a story today on Fox Business how farmland is currently selling for very high prices when it just recently used to be very cheap.  It only makes sense that this is happening because food is a commodity that is increasing in price so it will become more profitable to produce in the future.  It is also true that food and energy are increasing but government inflation figures do not reflect this because they conveniently exclude food and energy from inflation measures.

So it appears that prices are up and currency values are down and unemployment is sideways.  It is also true that government figures usually don’t reflect real world conditions.  This is why I belive that people are getting on food stamps and disability.  Even if they are employed full-time they cannot afford the ever higher prices for everything today.  Even two income couples are struggling especially if there are kids.

The underemployed and unemployed are even in a worse condition than the employed.  But employed people on food stamps in these large numbers is a new phenomenon in America.  It used to be that you got off food stamps as soon as you got a job.  I suspect that is not the case today.  People are staying on food stamps no matter what because they simply can’t afford the ordinary costs of life.  The food stamp statistics reflect this reality.

My clients who I see in my office every single day also reflect these changes in society.  They come to see the bankruptcy attorney  to get out of their old debt which they certainly can’t afford.  They can barely afford their current expenses as commodity prices increase but their wages do not.  For my clients bankruptcy can eliminate the old debt and make it easier to go forward.

We do not know if there is a recovery but there are other economic factors out there affecting everyday people.  With prices on the rise and the government not admitting it I expect to see many more bankruptcies in the future out of necessity.  It is not a matter anymore that is even subject to debate.  Many of my clients do not anymore debate whether it is worth it to file bankruptcy.  It is literally a case of having enough food on the table.  Food that will undoubtably cost more next month.

I am a San Diego bankruptcy attorney.  Please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Can I file bankruptcy a second time? Yes, and with stubbornly high inflation, unemployment rates, and the housing crisis you might well need to!

economy 2If you want to file for bankruptcy a second time you just have to wait the required eight years since the last time you filed.  Don’t Guess Againworry it goes by quickly!  Many people find that they get into the same situation as they were in before after eight years have gone by.  The country’s unemployment situation does not appear to have improved, the price of everything is going up as inflation worsens, and the nation’s housing crisis continues. (See here for additional reasons for why you should file for bankruptcy).

I read an article yesterday that gas prices have increased by over 80% in the last three years.  Many food prices have increased by 20% in the same period but the government uses an inflation measure that excludes food and energy prices so their statistics do not reflect real inflation.  This seems ridiculous because food and gas are the items that people buy the most.

With our astronomical 15 trillion deficit many of us believe that massive inflation is coming for America which will render our currency increasingly worthless.   I heard a story the other day about inflation in the Wiemar Republic in Germany in the 1920s.  There the cash was so worthless in 1920s Germany that crooks stole only the wheelbarrows that people carried the cash in and dumped the cash in the street.

Unemployment is also staying high and is also under counted by the government. We are told that unemployment is declining but we also find out that increasing numbers of people are leaving the job market altogether and are thus not being counted in government statistics.  We apparently have the lower number of adults working in America that we have ever had before in our history. (See here for my blog on the unemployment is rising because people are leaving the labor force).

As we have known all along many people are giving up on finding a job and are either living off the government or are living on money earned under the table and off the radar.  These people usually are surviving on such little money that they should be counted as at least underemployed if not as unemployed.  This many unemployed people not being counted makes the unemployment situation look far better than it really is.  I hate to say it but it appears that the government has an agenda to advance in these statistics on inflation and unemployment and these government supplied numbers should therefore be questioned or ignored.

The housing crisis also seems to have no bottom.  Houses are still being foreclosed in in great numbers and thus housing prices are not rising in some areas and still falling in others.  Many are facing an iminent foreclosre of their home due to this crisis in real estate and the realtors I talk to say they don’t see any end in sight for this.  With the glut of foreclosed homes on the market the prices of homes will not increase again for some time.  Many who are unemployed cannot afford to pay their mortgages now.

unemployment 4Many people believe that with our massive debt at the federal, state, and local levels we are headed for financial collapse.  I don’t know if a massive collapse is coming but it’s clear that massive inflation and continued high unemployment are a distinct possibility.  Collapse has happened before in history with the Wiemar Republic and with other societies that failed to get their debts in order.  If we are headed for these increasingly difficult economic times then it would certainly be easier to enter them without a tremendous debt load.  Bankruptcy can accomplish that.

If massive inflation comes will help pay down the government’s debt but it will devastate individuals and families financially as it dramatically increases the prices we pay for everything.  If unemployment remains high too then many people will continue to have medical, credit card, auto repossesssion, and other personal debts they  pay.  Many will continue to borrow on their credit cards as they have in the past out of necessity and not irresponsibility.

If any of this sounds familiar then you might want to consider filing bankruptcy.  Don’t be like the government and put you head in the sand.  Deal with your debt in a responsible, legal, and ethical way which is what you get with a bankruptcy discharge.  You can also significantly slow down or stop your home being sold at foreclosure with a bankruptcy.

All of this debt, unemployment, and foreclosure will lead many individuals and couples right back into a situation where they cannot pay their debts.  Once they stop paying these creditors the phone will start ringing again 24 hour a day from collection agents who ceaselessly try to collect these debts.  The result of this will be more people will need second time bankruptcies.  So don’t despair if you have accumulated debt in the last number of years because you can file bankrupty again.

If you filed in 2005 like millions did to avoid the bankruptcy law changes then you will be able to file next year in 2013.  You only have to wait eight years.  If you filed in October of 2005 like many did the you should look to file again around October of 2013.  Remember that millions of individuals are in the same position as you are so don’t despair.  Just call a good bankruptcy lawyer now and he will help you survive financially until the eight years has elapsed.

There are many strategies for managing these debts in the mean time including paying them something to get them off your back.  A good lawyer will help you manage you finances until the date arrives that you can file for bankruptcy again.  For an update on filing bankruptcy a second time see here.

I am a San Diego bankruptcy attorney.  For further information please visit my website at www.freshstartsandiego.com or www.farquharlaw.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for a free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

The economy is so bad photo courtesy of Mark Holloway.  Guess again photo courtesy of Damian Gadal.  Unemployment photo courtesy of Sean MacEntee.

Is hyperinflation coming to America? We have a 14 trillion dollar debt. Remember the Weimar Republic? (It gave the world Hitler).

Notwithstanding President Obama’s pledge to freeze government spending, the Congressional Budget Office is forecasting huge budget deficits in the next five years.  According to the CBO report our deficit will balloon by between 500 billion and 1.5 trillion each year for the next five years leaving us with an extra 4.32 trillion in debt or a total of over 18 trillion in debt by 2015.

Currently the amount of debt we owe as a country is not just still increasing but it is increasing rapidly.  We are not paying any of this debt back nor are we stopping the accumulation of debt.  In fact we are still accumulating additional debt at a dramatic rate.  This is madness in my opinion and sets us on a course headed for complete societal and economic disaster.

Phil Cavuto pointed out on Fox Business that the interest alone on this debt is accumulating at the rate of 4 billion dollars per day.  He went on to say that even if we did nothing and we did not borrow another penny, the debt will continue to increase by 4 billion dollars per day due to this interest.  This amounts to 120 billion per month and almost 1.5 trillion added to our debt each year attributable only to the interest on money that we already owe.  So next year our debt will be 15.5 trillion even if we don’t borrow any more money at all.

Worse still is the CBO prediction that as the debt grows we will have to pay higher and higher interest rates to get people to buy it.  This will cost even more and make the debt really spiral upward.  This is exactly what happened in Greece where borrowing became very expensive for the Greek government which exacerbated their problems tremendously.

We are close to having our debt equal 100% of our gross domestic product which is an extremely dangerous amount.  Greece reached the 110% level which has devastated their economy and led to extreme austerity measures and tax increases.  We will reach this level in 10 years.  Greece, as part of the EEC, was eventually bailed out temporarily by Germany but the Germans were not at all happy about it.  Who will bail us out when we reach 100% debt to GDP?  There is no one who can bail us out.  These debts are too large and no country has the inclination to do it.

But we have added 1 trillion to the debt in just the last seven months and all the politicians can do is argue about raising the debt limit or freezing spending at its current rate.  We should be lowering this debt limit, cutting government massively, and paying off this debt.   A freeze in government spending is not nearly enough and would save us only 30 to 40 billion a year when we need 1.5 trillion for this year.

We in fact need massive cuts (including the military, social security and Medicare), elimination of whole departments in the federal government, a lowering of wages for every federal employee, massive layoffs of federal employees, as well as a sale of government land and property just to begin to save the 1.5 trillion in debt we will amass just this year.  John Stossel recommends closing the Departments of Education, Housing and Urban Development, Commerce, selling Amtrak, ending the drug war, and repealing Obamacare.  I think we need to do all of this and more.  The English are putting Sherwood Forest up for sale and the French and Italians are selling and leasing their historic palaces to balance their budgets.  It’s time we do the same.

For a good start we need my 25/25 solution where 25% of federal employees are laid off and those remaining are given a 25% pay cut.  The CBO recommends a 20% cut in spending.  Once we do the cuts then we can talk about selling some of the lands that the government owns out in the west and we can begin to discuss which federal government departments should be completely eliminated.  After the cuts and layoffs are made and the assets sold then I think the American people will be more open to talking about tax increases if this would help pay this debt back.

It appears though as if we are neither cutting nor selling anything and we seem to be just borrowing more money just to pay the interest on this debt.  Now I don’t know about you but I see a real problem here.  I am beginning to think that Glen Beck is right and that there is a real reckoning coming for America.   How can we ever hope to pay this debt back with these kinds of totally inadequate measures?  It’s unsustainable and it’s quite possibly heading us down the road to catastrophic economic and societal failure.  Historically this is not without precedent.

Remember the Weimar Republic?  After World War I ended in 1919 and the Treaty of Versailles was enacted, Britain, France, and America demanded that Germany pay reparations for all damages caused by the war down to the last barn, cow, and chicken destroyed.  The war was not Germany’s fault alone as it was others who started and waged it before Germany’s participation began.   The Serbians assassinated the Arch Duke of Austria-Hungary, the Austro-Hungarians invaded Serbia in response, the Russians mobilized their military to defend Serbia.  Only then did Germany feel threatened enough to enter the war.

France was allied to Russia and German military doctrine at the time said that Germany needed to defeat France quickly before Russia was able to mobilize and attack Germany. If that happened Germany would then face a two front war she could not win.  So poor France got invaded by Germany.

Once the Germans invaded France and Belgium they occupied their countries and waged war in them for 4 years.  The Germans inflicted very heavy damages and which devastated France and Belgium.  After the war the French and Belgians wanted the Germans to pay for the damages of a war which had ravaged every country in Europe.  The fallout of the war was that not just France and Belgium were destroyed but also the Russians had a revolution and the Austro-Hungarian and Ottoman empires collapsed and were broken up.  20 million people died before it was all over but the Germans were blamed for all of it and they were forced to agree to pay huge reparations.  If the Germans did not agree then the allies threatened to resume the war.   These same reparation demands also created a huge resentment and a deep desire for revenge among the Germans people.

These reparations were in the end beyond Germany’s ability to pay just like our 14 trillion debt is beyond our ability to pay.  In short this caused Germany to try to inflate their way out of debt so they printed money endlessly which led to extreme currency devaluation.  The hyperinflation that resulted was so bad that when workers were paid they were immediately released to go to stores to buy food before their currency was worthless that very same night.  The government had to print million mark notes to keep up with the hyperinflation and prices for a single family’s bread and meat rose into the billions of marks.

The worst of it though is that as Hitler himself stated in his book, Mein Kampf, this hyperinflation in the early 1920s and the troubles it created for the whole of Germany made a Nazi takeover inevitable in Germany.  There was a perception among the German people that democracy had failed to do anything about the hyperinflation crisis in post-war Germany so a call for a strongman went out.   This cry grew louder and louder as riots and political clashes occurred in the streets between communists, fascists and nationalists.  Anarchy reigned in Germany and former soldiers formed armed groups which clashed with other armed groups.

When Hitler appeared on the scene he seemed to be the strong man the country was waiting for to bring peace and stability to the nation and to solve the problems that democracy had failed to solve.  Since the ground was primed people took to Hitler in a big way.  Women would swoon and whole crowds would get in a kind of trance when he spoke.  Women wrote to him to ask him to marry them.  Some saw through him but too many became blind followers or at least acquiesced in what he did and said.  It was the chaos of hyperinflation, default and monetary instability that brought Germany (and the world) Hitler.

Hitler originally came to power by taking over the obscure National Workers Party and renamed it the National Socialist (NAZI) Party.  Hitler’s fiery rhetoric initially attracted many more members to the party causing it to grow dramatically as he ranted about the social and economic chaos of Germany and he blamed the Jewish people for all of it.  After establishing a strong party base the Nazis were  poised to take over all of Germany after Germany’s economic troubles deepened during the worldwide great depression of 1929.  Hitler so wanted revenge for World War One that after he defeated the French he had them sign an armistice in the same railroad car that the Germans had to sign an armistice in is 1919.

The question is whether a situation similar what happened to post-war Germany could happen here if we default on or try to hyper inflate our way out of our $14 trillion debt.  And further could the resulting terrible economic fallout lead to a  call for a strongman like an American Adolf Hitler?  Will hyperinflation occur here which will lead to street riots and clashes and a perceived failure of democracy?   And who will be scapegoated and attacked this time for the failure of America?

The politicians now seem to be doing nothing while we steadily accumulate more debt.  When the house of cards inevitably collapses will our politicians continue to do nothing so that people again look for a strong man to save them from the riots, violence, and massive inflation that will inevitably occur?  Will that strongman scapegoat a group of people who will eventually be slaughtered?

With an unsustainable 14 trillion debt (that we keep increasing by more borrowing)  how long will it be until the government has to “monetize” the debt which means how long until they to print money excessively to try to pay for the debt and its ever-increasing interest?  They now call money printing “quantitative easing” but it is still the same thing.  Money printing and hyperinflation was what happened in Weimar and we in America appear to be on the same course.  If and when this happens hyperinflation will assuredly come to America as the currency becomes worthless and chaos will ensue.

If America tries to default on the debt instead of inflating the currency then how long before our creditors demand that we pay it back?  This is what happened in Weimar Germany as the French and Belgians rode into Germany and occupied the Ruhr valley in 1923 which was the German industrial heartland.  France and Belgium occupied the Ruhr because Germany naturally defaulted on the reparations payments.  To ensure repayment France took over and occupied this industrial area and forcibly extracted the resources necessary to get their money paid back.  This action infuriated the Germans who went on strike and refused to work as slaves for the French but the anger and resentment this occupation caused helped pave the way for a fascist Hitler takeover.

If we now default on our debt payments to (our landlords) the Chinese like the Germans did in the 1920s how would we Americans react to Chinese troops occupying part of our heartland to ensure that they get their money back?  However unlikely and impossible to imagine this has happened before.  Default on the debt that we owe to the Chinese and others could lead to drastic things happening like what happened to post WWI Germany.  The countries that lent us the money will not be any more understanding than England and France were in 1919.

In fact if history repeats itself in any way then these lenders will just ruthlessly demand their money at any cost to America including its destruction.   Indeed the Chinese leaders have their own concerns and they will surely not be concerned with what happens to America.  They don’t want their people to riot and overthrow the Chinese communist leadership if America defaults on what it owes to the Chinese.  The Chinese government will only care about retaining power if it runs short of money sufficient in quantity to keep the Chinese people happy.

The French Premier (Poincaré) in the 1920s argued that the continued forced reparation payments were necessary to keep Germany in “chains” because once those chains were removed Germany would again become powerful and start another world war.  I expect that many anti-Americans in the world today would make the same argument against America when they demand extreme measures be imposed against us to ensure repayment.  America haters will also demand that America be kept down so that America cannot cause any trouble in the world.

Though occupation is unlikely China and other lenders will surely at least stop lending us more money in response to our default on our debts we owe to them.  When that happens will we end up like Greece with riots in the streets as the government shuts down and is unable to operate or disperse payments to its employees or to the recipients of government aid?  How many people are now dependent on the government one way or another?  When the faucet is turned off and government dependents don’t get the money they have come to rely on they will surely riot here as they are doing in Europe.

Many radical groups from diverse ideological backgrounds are now waiting in the wings for this kind of crisis to attempt a seizure of power just like in Weimar Germany.  When they clash with other groups in the streets like in Weimar in the 1902s, how long will it be before people are clamoring for a solution to the chaos.  Will we too be attracted to a “strong man” who promises peace and security?  In the 1930s fascism was widely popular across the world.  Will we too view democracy as a failure and a modern-day Hitler as a great hope?

If we lose democracy we will lose all of our freedoms which we have relied on for 200 years and we will have dictators ruling us.  Democracies almost never go to war against each other but only sometimes go to war against another dictatorship.  Two dictatorships will often war against each other.  So if democracy dies then prepare for more war, no freedoms, rule by a dictator, and a dark ages that could last indefinitely because there is no one in the world to save our freedoms as America has saved other countries from dictatorships in the past.  Who will be there to defend democracy if America fails?  This is what Reagan said in the 1980s.

As a bankruptcy attorney I know that when you have a huge debt you cannot pay back, and you can’t (or won’t) cut spending, and you have to borrow money just to pay the interest on this debt then the financial end is near.  Borrowing money just to make interest payments is a signal that the situation is critical, unsustainable, and near the end.  If no one steps in to pay there is nowhere to go but bankruptcy.

For individuals, businesses, and even for cities bankruptcy is the best alternative when the financial end is at hand for one of these entities.  Bankruptcy gives the entity a fresh start and the debts are wiped away.  The problem with this 14 trillion national debt is that states and nations are sovereign entities and sovereign entities cannot go bankrupt.  They must either pay their debts or default on them.  Both of these options have extremely bad consequences.  America appears headed for a deeper disaster than we can imagine.

(See my update on inflation spending and its consequences: http://bit.ly/HUNMNJ ).  (See here for an update on the actual unemployment rate).

I am a practicing bankruptcy attorney in San Diego.  You can visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Who are the 99ers? Do they signify the start of a depression?

The 99ers are the people who have been on unemployment for 99 weeks or more.  There are  a total of 1.4 million people who have not worked for two years.  The average unemployed worker in this group has been unemployed for about 8 months.  This is unprecedented in American history except for the great depression and we have never had people on unemployment compensation this long ever before.

They held a rally in New York recently to protest and demand another extension of their unemployment benefits.  Their benefits are now exhausted and many 99ers have exhausted their savings and are living on borrowed money.  Some are becoming homeless.  At their rally near the New York Stock Exchange the 99ers are telling stories of the agony of their ordeal and they are demanding more benefits.

They apparently can’t find a job because their no one is hiring.  We have to ask how long can we sustain this and how long should the unemployment compensation system carry them?  Can the country continue to lose jobs, have perennially high unemployment, and have a larger and larger segment of society live on government benefits?

The 99ers have connected through websites and listservs and they have teamed up with the major labor unions who support their cause.  They are now a political force and democratic Senators Debbie Stabenow and Sherrod Brown have responded and co-sponsored a bill to extend unemployment yet again to 119 weeks.  I guess then we have to call them the 119ers.  Are we ready for a permanently unemployed class of people?

I am a bankruptcy lawyer in San Diego.

Please visit my website at www.farquharlaw.com