If you’re considering filing for bankruptcy protection, you’re not alone.  Large numbers of your fellow citizens are thinking the same thoughts.  And large numbers have already filed for bankruptcy protection this year – I’ll give you the exact number later in this post.  But what about the nation as a whole?  How is it doing?

I.          National Bankruptcy?

In the November 17, 2011 Los Angeles Times Michael A. Memoli reported:

The Treasury Department confirmed this week that the national debt has surpassed $15 trillion – that’s 15, followed by 12 zeros . . .

A little more than a week earlier, in the November 7, 2011 Los Angeles Times, Mr. Memoli reported:

The federal government recorded a $1.3-trillion budget deficit in the 2011 fiscal year, roughly even with the previous year’s shortfall.

What does this mean? It helps to know the difference between the national debt and the budget deficit.  The budget deficit for a single year is the shortfall between the revenues the federal government took in and the amount it spent for that year.  The national debt is the grand total of accumulated federal debt the nation has racked up since its inception.  Thus, the $1.3 trillion budget deficit for this year (it’s actually larger – get the exact value by looking at the U.S. National Debt Clock is part of the $15 trillion total national debt.

How big a part?  Well, if you divide 1.3 trillion by 15 trillion and multiply by 100 to get the answer as a percentage you get 8.7%.  In other words, 8.7 % of the entire debt that the nation has accumulated since the Revolutionary War was accumulated this year!

Notice that Mr. Memoli’s November 7 statement says that this year’s deficit is roughly equal to last year’s deficit.  Therefore, the deficit for the last two years is $2.6 trillion.  Doing the same calculation as before, but with 2.6 trillion instead of 1.3 trillion, we find that about 17.3% of the entire debt that the nation has accumulated since the Revolutionary War was accumulated during 2010 and 2011!

If you’ve looked at the U.S. National Debt Clock you know that the debt and the deficit are growing rapidly by the second.  The U.S. National Debt Clock gets all of its figures directly from the relevant government agencies – e.g., the U.S. Treasury, the Federal Reserve, the Congressional Budget Office.  You can see which agency provided which figure by holding your cursor over the number and looking at the box at the top of the screen.  Check it out.

Another thing you’ll see at the U.S. National Debt Clock is the total U.S. Unfunded Liabilities (Source:  the Federal Reserve), which include Social Security and Medicare.  That number is $116.5 trillion as of November 21, 2011 at 5:31 p.m.  Why is that important?  That number represents the amount the federal government must payout, but has no money to do so.  This means that as these obligations come due, the deficit and debt figures are going to mushroom.

A while ago I posted “The Next Great Depression And Bankruptcy” in which I reported that some very significant authorities were predicting a next Great Depression around the corner.  In light of the above-stated facts – note that they are not opinions, but facts – I think it is very likely that things are going to come crashing down hard in the near future.

When?  That’s something only God can answer.  But the numbers do not bode well for the economic future of the country.  Unless there is a huge change in the financial policies of the nation, we’re headed for a Greek or Italian-like financial catastrophe.  And who will bail us out?  The EU?  Not likely.  They’re struggling to resolve the Greek, Italian, Spanish, Portuguese, and Irish financial meltdowns.  The Chinese?  Another unlikely scenario given their recent financial difficulties.

The Constitution doesn’t have a provision for either the federal government, or the states, to file for bankruptcy protection, as I discussed in a previous post.  Apparently, the framers of the Constitution didn’t envision a government that would be as fiscally reckless as the current one is, so they made no provision for national insolvency.

That raises the interesting question:  Is the U.S. insolvent?  To answer this question we need the definition of insolvency.  The dictionary definition and the generally accepted definition among insolvency professionals for insolvency is the condition where the value of the total liabilities exceeds the value of the total assets.

Going back to the U.S. National Debt Clock reveals that the total value of the national assets for the entire nation is about $78.3 trillion.  Interestingly, that number is shrinking – look closely at the Debt Clock and you’ll see that unlike the debt numbers, which are growing, the asset numbers are shrinking.  In fact, the only asset-type number that is growing is the currency number – meaning that the government is blasting out currency at an amazing rate.  The currency number is $617.5 trillion.  Were it not for the currency number, the nation would, on paper, be insolvent.

But does it really make sense to say that the nation is solvent because it has an ocean of green pieces of paper?  I suppose that if everyone believes the pieces of green paper are inherently valuable, then the answer is yes.  But the recent surging of gold prices suggests that folks are starting to conclude that the green pieces of paper are rapidly becoming less valuable.  And after all, with a stagnant economy an increase in the supply of those green pieces of paper means that the buying power of each of those pieces of green paper shrinks.

II.        Personal Bankruptcy

The U.S. National Debt Clock also shows the number of bankruptcy filings in the U.S. thus far in 2011.  That number is 1,596,433.  So if you’re ready to seek bankruptcy protection you’re not alone.  Over one and a half million of your fellow Americans have already taken the plunge this year.

Unlike the irresponsible politicians who are destroying the nation’s economy with no intention of giving the country a fresh financial start – even if they wanted to do something, they lack the political will to do it – you have the power to start fresh.  It’s worth investigating the benefits of bankruptcy’s fresh start.  Contact a good lawyer and explore your options.  But stick with a board-certified specialist rather than a bargain basement hack.