Today’s is a tale of two numbers.
The first number is $915 billion. That’s the American credit card debt. It’s just below the $1 trillion in sub-prime mortgage debt.
The second number is 31. That’s the percentage of total US corporate earnings that come from financial sector profits. By the way, that percentage was 20% in 1990 and just 8% in 1950. According to Paul Kasriel, director of economic research at Northern Trust and Gretchen Morgenson of the New York Times, financial engineers now generate more profit than mechanical engineers.
In economic speak, debt and financial profits are huge levers. If default rates on nearly $2 trillion in credit card and sub-prime mortgage debt increase, financial profits will decrease, severely hurting the economy.
Want to reverse the levers? Just follow Thomas Jefferson’s advice: "I place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt."
What party is President Bush in again?