Unemployment, Foreclosure, Bankruptcy and Now QE4?

What in the world is going on? I thought the Fed told us that everything was getting better and we were on the road to recovery. Last week, the government released the unemployment numbers showing a decline to 7.7% from 7.9%. This sounds like great news, but are these the actual numbers or are they just the stated numbers? Many statisticians have a different opinion and believe the government is cooking the books to show what they want the American people to believe. Recently, the bankruptcy filing numbers for 2012 ending in September were released showing once again a decline from 1.5 million in 2011 to close to 1.3 million for 2012. Once again, this all sounds like things are really turning around. Looking at the foreclosure numbers for 2012 we can see over 1.5 million homes in foreclosure nationwide. In November 2012, one in every 728 homes received a foreclosure notice nationwide. While the actual foreclosure filing rate slightly declined the bank repossessions increased for the first time since October 2010. Experts are now saying that this is more evidence that shows the US is past the worst part of the foreclosure problem that started six years ago.

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All of this news seems too good to be true. My grandfather used to tell me, "When someone tells you something that sounds too good to be true, it probably is too good to be true." I started doing some digging of my own to see why the bankruptcy filing and foreclosure numbers continued to decline alongside of the phony unemployment numbers. What I came up with was frightening. Back in September 2012, the Fed announced QE3 where they would be pushing out $40 billion a month to member banks to buy back mortgage guaranteed securities. This bothers me because the Fed is doing nothing more than printing $40 billion a month out of thin air and buying back Americans home loans. What's interesting is how this is the fourth quantitative easing package since the financial meltdown back in 2007 with no relief to Main St., America. The only people making out like bandits are all the big Federal Reserve member banks. Yesterday, another bombshell dropped when Mr. Bernanke announced QE 4 to increase the buyback of mortgage securities to the tune of an additional $45 million month. That is $85 billion month being printed out of thin air to buyback home loans of good hard working Americans. They say this will continue until the unemployment rate reaches 6.5%. In reality, if you change the numbers around that could come next week or in 10 years.

Back to the number of Americans filing bankruptcy and the lower foreclosure rates, while I was wondering why these numbers were declining in this terrible economy, all I had to do is take a look at the consumer debt of the US. What I found out is why I believe the bankruptcy filing and foreclosure rate has dropped. Back when the financial market almost collapsed in 2007, banks scrambled quickly to close credit lines and lower available balances on credit cards to limit their liability. With many people's credit lines cut off they had no other choice but to file bankruptcy to wipe out the debt they could no longer afford to pay. At that time, most people were living by robbing Peter to pay Paul. They borrow from one to pay the other and when that dried up, give it credit limit increase or get a new line of credit. That's when the light came on and I realized the mess that almost took the banks down in 2007 was happening again. Creditors are once again free to loan to just about anyone outside of mortgages. The mortgage industry has now tightened their underwriting making it next to impossible to get a home loan. Any ways, looking at the numbers for total consumer debt rose to a record $2.75 trillion at the end of October. This makes it very apparent that most Americans are once again kicking the can down the road, while waiting for the real estate and job market to return. From the way it looks, if I were them I wouldn't hold my breath.

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