We left the Phat Lady of the Turnaround headed back to her dressing room, not yet ready to sing the praises of the end of the Recession and the start of a shiny future.

In fact, foreign observers may have a better feel for the plight of the U.S. consumer than do many domestic pundits and measures that just don’t seem to get it.

For example, an Oct. 26 report from MarketWatch tells us, “A broad gauge of U.S. economic activity rose above the level that typifies recessions, the Federal Reserve Bank of Chicago reported Monday.”

But here’s an account from Oct. 28…from Ireland, mind you, showing a better grasp of the situation:

“The US recession is expected to be declared over tomorrow but economists insist that it is still too early to start celebrating.

“When gross domestic product (GDP) estimates for the third quarter are released at 8.30am local time (12.30 Irish time), they are likely to report that the economy is growing again, ending one of the deepest slumps since the Great Depression.”

Of course, that report did not materialize, but even if it had,  imagine the bitter taste and hollow comfort “to the millions of people left unemployed or who have lost their homes as a result of prolonged economic downturn–especially as economists suggest that more jobs and houses are to go before real improvement is realised.”

And here’s this…from The Globe and Mail, in Canada: “Fresh figures due out Thursday are widely expected to show that the U.S. economy grew in the third quarter for the first time in more than a year – long-awaited confirmation that the recession is over and recovery has begun.”

But a few grafs down, here’s the kicker: “But temper the enthusiasm: The main driver of the economy – U.S. consumers – are still in a deep funk, relying heavily on temporary government incentives to get them to spend.”

At least the president seems to have a grasp.

As we know, the recession’s end was not announced Thursday, but still the AP reported, “Helped in large part by federal support for spending on cars and homes, the economy grew at an annual rate of 3.5 percent from July through September, the government said Thursday.”

Although Obama called the numbers “welcome news,” he also said, ” ‘The benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well.’ “

So, maybe the numbers are simply saying that the recession is over for the Big-Shoe Boys on Wall Street, where business continues as per usual?

Remember the teeth-grinding despair in certain circles when the gummint “turned its back” on Lehman Brothers while bailing out everybody else? Well, have a look at Kevin White, one of Lehman’s “architects” of the so-called “securitized” debt that helped create the Recession. In a Fortune report via CNNMoney.com, we learn that White was “head of the global structured finance syndicate at Lehman Brothers ([before being]  . . . promoted to a different job in 2006), [when he] created the kind of collateralized debt securities that fueled the financial bubble–and still bedevil many bank balance sheets.

“Now White runs a firm that’s doing a nice business in cleaning up the mess: Spring Hill Capital Partners specializes in buying, selling, deconstructing, and investing in structured finance products.”

And get this–he sounds proud of it: ” ‘The securitization process locked a lot of assets into mortgage-backed securities or CDOs,’ says White. ‘As the underlying collateral ran into trouble, the complexity of securitizations has paralyzed investors, lenders, and borrowers.

But we made a lot of these products, and we’re skilled at taking them apart, valuing them, and in some cases restructuring them.’ “

Kinda sounds like Stanford Kurland, who spent nearly 30 years at Countrywide before leaving in 2006, then subsequently starting PennyMac (along with a cadre of other Countrywide alumnae)–and to do what? Why, to specialize in distressed properties…

As might be expected Kurland puts distance between his role at Countrywide and its riskier business practices, as shown in this March 2008 account at MSNBC.com: “Kurland, who left Countrywide in late 2006, said he wasn’t to blame for problems faced by the company as a result of subprime loans made to people with shaky credit histories.

“ ‘My leaving Countrywide has a lot to do with having a different strategic view,’ Kurland said. ‘I have a reputation in the market that, unfortunately, is tainted by things that transpired after I was gone.’ ”

Not everybody bought into that, according to MSNBC:

“The irony was not lost on analysts.

“ ‘He won’t be the first or the last person trying to make money on both sides of a trade,’ said Frederick Cannon, an analyst at Keefe, Bruyette & Woods Inc. who covers Countrywide [since absorbed by Bank of America].

“ ‘On the one hand you could make the case that he was (with) the company that made all these loans. On the other hand, what we need right now is to find some buyers for these assets,’ Cannon said. ‘Is it fair? Hard to say.’ ”

(CNBC has an interesting slide show here, a “where-are-they-are-now?” update on (in)famous figures from the financial crisis, including Countrywide founder Angelo Mozilo, who is fighting the SEC in a civil suit alleging fraud and “misleading investors.”)

By the way, it’s these guys who will “officially announce” the end of the recession; as you can see as of 10-30-09 (on the right-hand side of the page), the current recession has no end date, but merely a question mark. Meanwhile, as end-of-Recession talk buzzes, unemployment, foreclosures and filings for bankruptcy protection continue unabated.

This, from Oct. 28 The New York Times, “Unemployment is Higher Almost Everywhere”:

“Unemployment rates were higher in September than a year earlier in 371 of the 372 United States metropolitan areas, according to the Bureau of Labor Statistics.”

Not too long ago, the concern was that unemployment might blow past 10 per cent. In some areas, the new concern is it may breeze on 20 per cent. “The greatest increase in unemployment over the last year was in  Detroit-Warren-Livonia, Mich., where joblessness grew 8.4 percentage points to a total rate of 17.3 percent in September 2009. The second-greatest year-over-year increase was in  Muskegon-Norton Shores, Mich., where the rate rose 6.8 percentage points to 16 percent.”

And it gets worse: in a couple of areas, 20 per cent is in the rear-view mirror: “In September 2009, the overall highest metropolitan rates of unemployment (again, not seasonally adjusted) were in  El Centro, Calif., and  Yuma, Ariz., where rates touched 30.1 and 24.2 percent, respectively. These two areas, which both border Mexico, are highly agricultural.”

On the foreclosure front, perhaps the worst hardest-hit areas have bottomed out, but the damage seems to be spreading according to RealtyTrac data reported by American Banking News.” ‘Rising unemployment and a new variety of mortgage resets continue to gradually shift the nation’s foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,’ said James J. Saccacio, RealtyTrac’s CEO in the Metropolitan Foreclosure Market Report. “Per the report, filings for foreclosures rose five percent in the third quarter, and 23 percent over last year. This includes auctions, bank repossessions and defaults. Taking into account the unreported abandonment by homeowners of their houses by banks so they don’t have to include it as an accounting event, and the numbers are even more staggering, to say the least.”

Consumers seeking relief via bankruptcy petitions are filing in waves, unmatched since the rush to beat the “reform” deadline in 2005.

Google “personal bankruptcy news” and the results read like a fill-in-the-blank: numbers rising in _____________  (Massachussetts, Connecticut,  Georgia).

An Oct. 2 Wall Street Journal post sums it up simply as “Personal Bankruptcy Filings Soar”: “Consumer bankruptcies topped one million for the first nine months of this year, the highest point since the system was overhauled in 2005.

“The number of personal bankruptcy filings for the nine months rose to 1,046,449 as of Sept. 30, the American Bankruptcy Institute, an organization made up of attorneys, accountants and other bankruptcy professionals, said Friday, using data from the National Bankruptcy Research Center. There were 773,810 personal bankruptcy filings for the same time period in 2008.

“September’s filings reached 124,790, 41% higher than the same month last year.”

Looks like the Phat Lady of the Turnaround has even left the dressing room and headed home–if she still has one.

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Bankruptcy protection offers a chance for a new start, as well as methods for protecting certain assets–and even improving one’s credit score over time. To asses the value of bankruptcy for your individual situation, you should seek counsel from a trained, experienced bankruptcy attorney.

Here’s some online resources:

U.S. bankruptcy court

Federal Trade Commission, consumer credit

Bankruptcy Corner, overview portal

Bankruptcy Corner, principles of bankruptcy

A blogger at iStockAnalyst posted  on August 12 a pretty thorough roundup showing that the tsunami of consumer bankruptcies is not limited to the “ugly Americans” of the USA but is indeed a global phenomenon. His main point is that the binge of the “credit party” is over, and as far it is goes, the post is a quick, representative look at nations and economies as seemingly diverse as Holland, Scotland, the U.K., and Canada–and it offers plenty of links to pertinent, recent headlines.

Nevertheless, these are all statistics, alarming, yes–but still a rather chilly dataset that do not uncork the hot odor of failure. For regardless of perceptions in the other beleaguered countries, in the bootstrap-yourself, Root Hog, or Die! psyche of most U.S. workers, the simple truth is that bankruptcy stinks. True, you can find many accounts across the Web saying something to the effect that there’s so many personal bankruptcy filings now that the mere fact of having a bankruptcy on your credit report does not carry the stigma that it once did. For instance, at this in-depth post from July 19 (”The Human Side of Bankruptcy: Financial Disruption is Personal for the Millions Who File for It”), consider this passage:

“Brian Hemphill is a lawyer in Bend who did not work for the Gulicks but who specializes in bankruptcy cases. He keeps a box of tissues on his desk because clients are often in tears. Many clients, he said, feel overwhelmed and ashamed.

“I tell them, it’s not a magic wand and it can’t cure everything,” he said. “It does have a lot of negatives to it, and people have to decide, do the positives of bankruptcy outweigh the negatives? But fundamentally, bankruptcy is there to help.”

Hemphill said the social stigma attached to bankruptcy has faded in recent years as it has become more common.

Donald Trump told the New York Daily News in 2004 — during his casino company’s second voyage through bankruptcy — that there’s no shame in it.”

And it’s also true that recent unemployment figures hint that overall job loss in the U.S. may be turning around. Neverthless, a very cruel trend is emerging that spells double trouble for job seekers: the increased use of background credit checks among prospective employers is headlined “Another Hurdle for the Jobless . . .” in this August 7 report from The New York Times.

Here’s the lead: “Digging out of debt keeps getting harder for the unemployed as more companies use detailed credit checks to screen job prospects.”

And here’s the meat and potatoes: “Once reserved for government jobs or payroll positions that could involve significant sums of money, credit checks are now fast, cheap and used for all manner of work. Employers, often winnowing a big pool of job applicants in days of nearly 10 percent unemployment, view the credit check as a valuable tool for assessing someone’s judgment.

“But job counselors worry that the practice of shunning those with poor credit may be unfair and trap the unemployed — who may be battling foreclosure, living off credit cards and confronting personal bankruptcy — in a financial death spiral: the worse their debts, the harder it is to get a job to pay them off.”

The article also cites a survey by the Society for Human Resource Management in reporting that “[m]ore than 40 percent of employers use credit checks at least sometimes. . . up from 25 percent in 1998,” adding that  career counselors contend that figure “has almost certainly risen today.”

Of course, anyone who’s ever run a business can sympathize with the effort to find the best employee: “Business executives say that they have an obligation to be diligent and to protect themselves from employees who may be unreliable, unwise or too susceptible to temptation to steal, and that credit checks are a help.”

But, see, right there? “unreliable,” “unwise” or propensity for theft–what has that got to do with a business decision to file bankruptcy? Where’s the two-way street? By that measure, who can do business with any of the bailout companies or the scores of businesses that have filed for bankruptcy protection?

As the article continues, “Credit counselors, worker advocates and the unemployed contend that a credit check is not always relevant to hiring decisions.

“ ‘There’s no relationship between being a personal trainer making $12 an hour’ and having a good credit history, said Janet L. Newcomb, a career counselor in Huntington Beach, Calif. ‘People are being turned down for jobs on the basis of things that really have nothing to do with qualifications.’ ”

Here’s an example: Say you’re an employer with a choice between:

1. a recent graduate, with no roots, who bounces from apartment to apartment, never cleaning up behind and simply walking away from the deposit, and
2. a 30s or 40s employee, with spouse and children, who’s fighting to save their home and therefore were forced to seek bankruptcy protection.

Ask yourself one simple question: Who will be more highly motivated?

The problem is the reliance on the FICO score, in which bankruptcy is a big, long-lasting hit. As summarized in the following, while national leaders are looking at major reform, perhaps this whole credit score industry deserves a long-overdue examination: “Employers say it’s a good way of picking out possible red flags in an otherwise promising-looking employee. But this continued belief in the existing credit-check infrastructure seems stupidly pro-cyclical. In the boomtimes, everyone looked like a great credit risk. Now at this point, everyone looks suspect. Maybe it’s time to put some more though thought into how we measure an individual’s creditworthiness.”

Now, here’s another double-whammy, from the health-care arena. It’s the practice of rescision, in which insurance companies can drop policy holders in the hot grease of costly medical bills and simply deny to pay all claims. Merriam Webster online defines rescinding as:

1. “to take away: remove
2. “take back, cancel”

Here’s how a June 17 LA Times article describes the insurance company practice: “The committee investigation uncovered several rescission practices that one lawmaker called egregious, including targeting every policyholder diagnosed with leukemia, breast cancer and 1,400 other serious illnesses. Such investigations involve scouring the policyholder’s original application and years’ worth of medical and pharmacy records in search of any discrepancies.

” ‘These practices reveal that when an insurance company receives a claim for an expensive, life-saving treatment, some of them will look for a way — any way — to avoid having to pay for it,’ said [Rep. Bart Stupak (D-Mich.)] Stupak, chairman of the commerce committee’s Subcommittee on Oversight and Investigations.”

Here’s how it works. Insurance company contracts have anti-fraud provisions, such that applicants are not supposed to lie about known life-threatening conditions, for example, AIDS or cancer. If you lie, if you try to commit insurance fraud, you should be caught–and punished, for that matter.

But what unscrupulous companies do is use those provisions as loopholes, cutting people off who forget to list innocent items on the apps–or even for not listing conditions hidden in their medical records, unknown to them. Here’s some example from a repost of another LA Times article: “A Texas nurse said she lost her coverage, after she was diagnosed with aggressive breast cancer, for failing to disclose a visit to a dermatologist for acne.

The sister of an Illinois man who died of lymphoma said his policy was rescinded for the failure to report a possible aneurysm and gallstones that his physician noted in his chart but did not discuss with him.”

The practice of rescission “was largely hidden until three years ago, when The Times launched a series of stories disclosing that insurers routinely canceled the medical coverage of individual policyholders who required expensive medical care.”

Apparently, once the practice came to light, Congress got interested and held a hearing in June. From The Times’ coverage and the hearing testimony, a particularly nasty item came to light. Despite insurance execs’ denials of bonuses for employees who rescind thousands of policies, “[o]ne employee, for instance, received a perfect 5 for ‘exceptional performance’ on an evaluation that noted the employee’s role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.”

The jaw-dropper in all this is the response of three insurance execs who testified at the hearing.

“Late in the hearing,  Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show ‘intentional fraud.’

“The answer from all three executives:

” ‘No.’ “

Then Rep. John Dingell (D-Mich.) tied the discussion to the need for health-care reform. He “said that a public insurance plan should be a part of any overhaul because it would force private companies to treat consumers fairly or risk losing them.

” ‘This is precisely why we need a public option,’ Dingell said.”

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Many of us can not wait for our leaders to fix the foreclosure/credit card/health system fiasco. Experts agree that if personal bankruptcy is your best option, the sooner you get counsel from a qualified attorney, the better. Here’s some online resources:

An overview from The New York Times.

An introduction to Chapter 7.

An introduction to Chapter 13.