When Congress radically changed the bankruptcy code in 2005, the number of bankruptcies skyrocketed as fear among the public grew that there would be no more bankruptcy. Then, three years later, the bottom fell out of the economy when Wall Street helped create a real estate speculation boom and ultimately, a bust. Now, America faces what may well be the largest financial crisis since the Great Depression.
For a moment, assume some best-case scenarios: that thousands of small businesses figure out a way to stay afloat, after having been forced to close their doors for weeks or months. Assume landlords and lenders decide to forbear from coming down on their tenants and borrowers. Assume that our current administration makes good on their plans to infuse billions of dollars into the economy.
Then shake yourself back to reality. Visualize the global impact this is having on world economies and that will come to roost on our shore. Imagine how our burgeoning deficit will basically leave America insolvent.
According to some sources, the disaster is already upon us. “I wouldn’t be one bit surprised if when we look back at the data, it is decided … that the recession started in March,” Alan Blinder, a former Federal Reserve vice chairman and now a professor at Princeton, told CNBC’s “Squawk Alley.”
The signs of the impending crumble are already upon us. Small-business owners are experiencing supply chain problems and lost sales. The travel industry has been gutted. The energy industry stocks are crashing as the big oil slashes dividends and the Saudi’s, our pseudo friends, flood the market with cheap oil. Last week the Federal Reserve reduced interest rates to zero— a measure not taken since the 2008 financial crisis. As we speak, Americans are tightening their belts as they see the writing on the wall. The White House is going to send us a check, but we won’t be able to go out to eat or find toilet paper to buy.
We in Florida are a cautionary bunch. Hurricanes and housing crashes have scarred us; we know about hoarding and hunkering down. But the scope of this may beyond the pale. It is anticipated that even if this results in only a low-grade recession, we are looking at a 5-6% unemployment rate and the loss of over 3 million jobs. First to go in any recession is the housing industry, and guess what is the second biggest component to Florida’s economy after tourism. Yep, you guessed it. Housing. And what do people stop spending on when money is tight? Recreation. Spelled “tourism”. So long Florida economy….again.
And once again, as in 2008, every out of work, cash flow-strapped attorney will jump on the bankruptcy bandwagon. The bloody massacre that they left behind in 2008 will return like a zombie apocalypse. The Bankruptcy Butchers will once again be at our door. What do they look like? Go to “Why Didn’t my Lawyer Tell Me?”: How Not to Swim in the Bankruptcy Alligator Pond."
The wise among us will not wait. They will assume the worst in our financial universe, they will talk to an expert in asset preservation and financial distress management. They will seek a lawyer who is not newly minted but who has been in the trenches through the worst of times.