The Big Picture

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• How Has the Bankruptcy Act Affected Bankruptcy Filings?
• Forest Man
• Back to Basics
• 10 Sunday Reads

How Has the Bankruptcy Act Affected Bankruptcy Filings? Posted: 22 Dec 2014 02:00 AM PST How Has the Bankruptcy Act Affected Bankruptcy Filings? By Juan M. Sánchez, Senior Economist     ©Thinkstock/bobbushphoto   It is well known that the number of non-business bankruptcy filings increased dramatically during the '80s and '90s. This period has been referred to as the "revolution in consumer credit and consumer bankruptcy,"1 as the number of Chapter 7 bankruptcy filings increased more than fivefold from 1983 to 2004. This process, which is associated with the decline in the cost of information,2 ended with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. In short, BAPCPA made bankruptcy filings more costly and more limited to low-income households. We focused on the evolution of the number of bankruptcy filings after the BAPCPA. The figure below presents data on Chapter 7 and Chapter 13 bankruptcy filings for debt associated (predominantly) with non-business activity. Since the most recent information available is for the third quarter of 2014, the chart includes data for the third quarter of every year since 2001. The figure shows two interesting patterns: Chapter 7 filings increased dramatically in anticipation of BAPCPA. Chapter 7 filings, and to some extent Chapter 13 filings, increased during the recession and have now been declining for four consecutive years. The fact that bankruptcy filings have been declining while employment has been increasing should not be a surprise, since research has shown that bankruptcy filings follow fluctuations in the labor market quite closely.3 BAPCPA clearly had an impact on the number of bankruptcies being filed. However, the exact impact may not be known for some time, since the recession hit right after the BAPCPA was implemented. Notes and References 1 Moss, David; and Johnson, Gibbs. "The Rise of Consumer Bankruptcy: Evolution, Revolution, or Both?," American Bankruptcy Law Journal, Spring 1999, Vol. 73, Issue 2, pp. 311–351. 2 Sánchez, Juan M. "The IT Revolution and the Unsecured Credit Market," Federal Reserve Bank of St. Louis Working Paper 2010-022B. 3 Athreya, Kartik; Sánchez, Juan M.; Tam, Xuan S.; and Young, Eric R. "Labor Market Upheaval, Default Regulations, and Consumer Debt," Federal Reserve Bank of St. Louis Working Paper 2014-002C. Additional Resources Working Paper: Labor Market Upheaval, Default Regulations, and Consumer Debt On the Economy: Why Don't Gas Prices Always Move in Sync with Oil Prices? On the Economy: Are Wages and the Unemployment Rate Correlated?

Forest Man Posted: 21 Dec 2014 03:00 PM PST Since 1979, Jadav Payeng has been planting hundreds of trees on an Indian island threatened by erosion. In this film, photographer Jitu Kalita traverses Payeng's home—the largest river island in the world—and reveals the touching story of how this modern-day Johnny Appleseed turned an eroding desert into a wondrous oasis. Funded in part by Kickstarter, “Forest Man” was directed by William Douglas McMaster and won Best Documentary for the American Pavilion Emerging Filmmaker Showcase at the Cannes Film Festival in 2014. India Man Plants Forest Bigger Than Central Park to Save His Island See more from the filmmaker. http://polygonwindowproductions.com/ See more photos of the world’s largest river island. http://yourshot.nationalgeographic.com/tags/majuli/

Back to Basics Posted: 21 Dec 2014 06:00 AM PST >   My Sunday Washington Post Business Section column is out. This morning, we look at a few basics of investing that many investors get wrong. Here’s an excerpt from the column: “Today, I am going to suggest you take a different route: Focus on 10 basic, simple truths that many investors seemingly ignore. Some of you are unaware of these realities; others understand them intellectually but cannot act on your knowledge. These are the simple things that amateurs and pros alike get wrong. There are no guarantees on Wall Street. But if you take the following admonitions to heart — and act on them — I will extend you this money-back guarantee: You will become a much better investor.” Back to basics . . .     Source: For investors, it's a perfect time to go back to the basics Barry Ritholtz Washington Post, December 21 2014  http://wapo.st/1AOlWPa

10 Sunday Reads Posted: 21 Dec 2014 03:00 AM PST My pre-flight Jet Blue reads: • Strategies Can Beat The Market, You Can't (Irrelevant Investor) • Wall Street Firms Endure Lost Decade After Goldman Peak in 2007 (Bloomberg) • Swedroe: Hedge Funds Rip Off Investors (ETF.com) see also Year of man v machine for hedge funds (FT) • The Promise of Smart Beta (Research Affiliates) • The Lessons of Oil (Oaktree Capital) • Maybe There’s No Such Thing as a Business Cycle (Bloomberg View) • Cheaper Oil, Fatter Wallets and a National Opportunity (NYT) • Half of Dr. Oz's medical advice is baseless or wrong, study says (Washington Post) • Wars' Cost to U.S. Since the Sept. 11 Attacks: $1.6 Trillion (Bloomberg) see also  Fact-checkers tear apart Dick Cheney's pro-torture interviews (Raw Story) • Winners of the 2014 National Geographic Photo Contest (The Atlantic) Have a happy holidays!     Bitcoin’s Collapse Is Worse Than the Ruble’s Source: Quartz

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