Recovery? What Recovery? Sbarro and Quiznos Latest to Fall

[The following post is by TDV editor-in-chief, Jeff Berwick.]

It has now been five years since the financial collapse of 2008 and 2009. Since then, we’ve heard it all from the mainstream media.  They said it was a “goldilocks recovery”… which is apt since it was a total fairy tale.  Then Ben Bernanke said he was seeing “green shoots”… which would be great if he was a gardener rather than pulling the levers printing greenbacks.

But most statistics show quite the opposite.  The labor force participation rate, a much better tool for getting a clear picture of the employment market, has been heading down since 2001, 13 years ago.  And it hasn’t been this low since 1978.

One million fewer Americans are working today than when Barack O’Bomber took his place behind the teleprompters of the world’s largest organized crime ring, the US government.

And, 2.5 million jobs are expected to be lost to ObomberCare.

BANKRUPTCIES ABOUND

In the last week Sbarro and Quiznos declared bankruptcy.

Sbarro pizza restaurant filed for bankruptcy court protection Monday, three weeks after it was forced to close more than 40% of its US locations. The chain is planning to restructure. Quiznos filed for bankruptcy protection five days later, on Friday. It will undergo a restructuring which will see reduced food costs and a foray into lending.

Not the first US companies to go bankrupt since the onset of the financial crisis, Quiznos and Sbarro join a long list of American companies which have gone bankrupt since 2008. 

There was Lehman Brothers, which filed for Chapter 11 bankruptcy in September 2008. It’s value at the time of bankruptcy was $691 billion. The government chose not to bail out the investment bank, before the bank was eventually liquidated.

Washington Mutual also filed bankruptcy in September 2008. The bank’s value at the time of bankruptcy was $327.9 billion. Customers withdrew $16.7 billion over 10 days before the bank was purchased by JP Morgan.

Chrysler, which filed for bankruptcy in April, 2009, had a value at the time of bankruptcy of $39.3 billion. General Motors went bankrupt in June 2009. Both were bailed out by the government.

Around the same time, General Growth Properties Inc., purveyor of shopping malls in suburbs across the US, filed for bankruptcy protection with $30 billion in assets at the time.

Then, a little known, but massive company, Thornburg Mortgage, filed for Chapter 11 in May 2009, in what amounted to one of the largest bankruptcies in US history: $36.5 billion. They were a victim of the housing crash and credit crunch.

CIT Group filed for bankruptcy in November 2009, as the commercial lender had been caught in the credit crunch after an poorly planned expansion. They were bailed out by TARP 38 days after filing.

In 2011, MF Global filed for Chapter 11 on Halloween in 2011. The value of that bankruptcy was $41 billion.

In early 2012, Eastman Kodak, the 131-year-old photography giant, failed as it could not catch onto a new world of digital photography.

In October 2012, Solyndra LLC, the failed solar-panel maker that received a $535 million U.S. Energy Department loan guarantee before going bankrupt, won approval to go bankrupt.

Then there was Hostess, who filed for bankruptcy at the end of 2012.

Which companies are next? There is a long list of companies who could go bankrupt, with varying odds. Will it be Venoco? Or Barnes & Noble? Standard Pacific or Dynegy?

Frankly, it could be any company. Except for bargain outlets. With consumer spending having fallen off a cliff over the past five years, it is no surprise that bargain outlets are what are keeping US shopping malls from having record high vacancies.

Now, in true capitalism (which doesn’t exist anywhere on Earth except for in “black” markets – a.k.a. free markets) it is normal for companies to go under.  Trends change… Tastes change.  And if you have eaten at Sbarro you can probably understand why it did not do well.

But the question also needs to be asked if this is also a symptom of further economic deterioration in the US.

Mall vacancies are up dramatically since 2008 and investment in malls has cratered to its lowest levels in over 30 years. What recovery mall vacancies has made, as noted above, are due to bargain outlets as consumers have less and less to spend.

According to bankrate.com, 76% of Americans are currently living “paycheck-to-paycheck”.  In other words, if they were to lose their job today it would be a matter of days or weeks before they were destitute. As we’ve noted, death is the new retirement. 

And, don’t even mention the fact that 1 in 6 Americans need assistance to even be able to afford to eat… 1 in 4 children.  The US is beginning to look like the early days of Mao’s communist China… and not surprisingly since many of the activities of the US government have been similar in nature.

The amount of people who need assistance to eat in the US has more than doubled since 2008.

RECOVERY?  WHAT RECOVERY?

Anyone who is paying attention knows there is no recovery in the US.  And, there will be no recovery.

And, as things get worse the US government will continue to to take more and more of the remaining assets of their citizens to stay afloat.  Subscribe to The Dollar Vigilante newsletter to get the best news, analysis and actionable info on how to protect yourself from what’s coming… The End Of The Monetary System As We Know It (TEOTMSAWKI).