. October 18, 2005 SouthAmerica: Regarding the new bankruptcy law that were effective as of October 17, 2005 in the United States. The changes in the bankruptcy law were made to protect the US financial institutions as much as possible from the coming collapse in the price of real estate, stock market decline, and the massive credit card debt default from millions of credit card holders. Millions of Americans will be in trouble financially, and they will not be able to have a fresh start as in the past. The changes in the minimum payment that people have to make every month on their credit cards - which will become effective as of January 2006 - also will compound the financial problems to most Americans. Never mind that they are being squeezed by the high cost of gasoline and will have a shock when they receive their heating bills for the coming winter. On top of that the monthly mortgage payment of many people will increase because of the increase in interest rates. It will not be a pretty sight for most Americans what is in store for them in the near future related to price increases and declining value for their properties and stock holdings. Other sectors of the population will receive drastic cuts on their health benefits, and on their pensions. And they will have to spend more of their resources related to health care. Americans will be hit from every side with higher costs, and declining wages and benefits. ******** February 2005 I posted the following in the "PBS" message board on February 2005: Here is why it is a Bush administrationâs top priority, to change the bankruptcy laws in the US. Here I am quoting from parts of various articles that I wrote over the years. Keep in mind when prices decline in the economy, the liabilities doesn't go away - You still have to pay your mortgage to your bank, even as the price of the property is declining If you lose your job, and is able to get another job earning 30 to 40 percent less, you still have to pay your old liabilities, your creditors don't give you a reduction on your outstanding debt because you are making less money to pay your bills. âSeems to me that the financial markets of the world lost any common sense, and they are driven only by hype and nothing else. In the new deflationary environment that we will be living in the future, God knows for how long, the US economy is in a position for a repeat performance of the great depression of the 1930's. It is like a recipe for big trouble to be in debt during deflationary times. The housing bubble is ready to be burst, just like the stock market bubble. From that point on, consumer confidence and everything else will go down hill. Companies lay off people, there is less buying power, they lay off even more people, we have a deflationary spiral and so on. People with no jobs can't pay the bills including credit cards and mortgages. People have to sell their houses, and the flood of new houses on the market depresses even further the market price for houses. After a while, if you have some money, you can buy what used to be a $100,000 house for about $ 15,000. The last time we had deflation on this large scale in the US was in the 1930's and very few adults remember those days. Recent experience in Japan and here in the US showed us how quickly asset values (in equities or real estate) can melt away. Remember, asset values decline very fast but the liabilities don't go away. If you just bought a house for $400,000 and have a mortgage for that amount, when housing values decline in the near future and that house is worth only $200,000 or less, you still owe the bank the $400,000. Your debt doesn't go away, as asset value is declining. I am not surprised that they are trying very hard in Washington to change the bankruptcy laws. The creditors know that massive losses are on the horizon related to the deflationary wave that will affect the US economy.â âThe Coming Economic Depression We are in the beginning of a deflationary cycle; that means that prices will decline. The economies of Japan and Germany are already suffering because of this deflationary spiral. Few years ago many economists claimed that they had tamed the economic cycle, and that deep recession and depressions were things of the past. When I read articles about that, I thought they were completely wrong. The truth is the world is overdue for a new economic depression. Historically we had a depression in the world once every 55 to 60 years. The last world depression was over 60 years ago. A Russian economist, Nikolai Kondratieff, published a study in 1926 showing that a very long-term economic cycle existed. His major premise was that capitalist economies had a pattern of long wave cycles of boom and bust. The bust cycle repeated itself approximately every 60 years. If you had read Kondratieff's paper in 1926, you would have known that an economic depression was around the corner. Kondratieff identified four distinct phases the economy goes through during each cycle: 1) Inflationary growth, 2) Stagflation, 3) Deflationary growth, and finally 4) Depressionâfalling prices, falling stock prices, falling profits, debt collapse. As the stock market is collapsing, a number of corporate scandals emerge such as Enron, WorldCom, Global Crossing, Adelphia Communications, Arthur Anderson and many others. As the debt load reaches new highs in the economy, the result is a record-breaking number of personal and corporate bankruptcies, as is the case in the US today. There are many countries around the world whose economies are in a state of deep economic depression such as Argentina, Bolivia, Colombia, Paraguay, Venezuela, Uruguay, and also most African countries. This is just a small list of countries in deep economic distress. We can add to this list of economies in distress, not only the US economy with its $8 trillion dollars of cumulative government debt (and continuing to grow), but also the local economies of most states in the United States. The most important states in the US economy are California and New York, and their economies are in shambles. If California were an independent country, its economy would be collapsing today in the same manner as the Argentinean economy.â .