Stephen Roach, the chief economist at investment banking giant Morgan Stanley spoke privately about how daunting a task it will be to pull us out of this economic slump. For those of you in debt, this is not a good scenario. Because of the record trade defecit the dollar is expected to continue to fall opines Roach. This will force Greenspan to raise interest rates so that we can hold inflation at bay. This creates problems for many Americans who are in hock up to their eye balls. Those interst payments are going to be killers. The facts speak for themselves. Says Roach "Twenty years ago the total debt of U.S. households was equal to half the size of the economy. Today the figure is 85 percent." Are you getting the picture?
On a similar note, PBS's Frontline ran a program called The Secret History of the Credit Card (available on line for viewing). This is yet another example of the unraveling of our governments responsibility at protecting its citizens from unscrupulous businesses and how embolden corporate America is now becoming. One of the most striking questions asked on this program is " Did you know that if you miss one payment for any bill that comes to your household, your Visa company can double your interest rate with only a 2 week notice?" This apparantly is true for many credit card companies. It's time for Americans to re-examine their relationship to debt and look at the cost of our credit cards. There's sharks in the water and they are hungry!