rainydaynews

I heard a lot this weekend about the massive debt swap on Friday and the cost involved. Essentially about $400 billion in bad loans were insured against loss and when it came time to pay the piper, the loans were worth about 8.5 cents on the dollar. That meant the insurance companies who wrote insurance policies for the banks saying that if the loan was bad the insurance would pay off paid out about $365 billion on Friday.

Guess what segment of the American economy is in trouble next?

Yup, insurance companies. By the end of the week last week, insurance stocks were trading significantly lower because of the huge payouts that are coming. Reagan’s trickle down economics are coming in a tidal wave against the American people, but the sad truth is that neither the presidential candidates nor the American people seem to understand basic economics.

Just the other day, I was talking to a friend about the coming election and she asked why journalists couldn’t write comprehensively about the economy and explain what is happening and why. She was shocked when I told her most journalists don’t get business classes or study economics. We are too busy teaching them about the history of their profession to teacch them what they need to know about the things they will be covering.

Sadly, the problem extends beyond journalists. Most Americans who are not accountants could not read a profit and loss statement or understand double entry accounting. That means they often can’t read the handwriting on the economic wall. Even fewer understand business practices and business ethics.

So, instead, we elect politicians who sound good, but who might have no understanding of the real world we live in. As a result, what impacts one section of the economy soon impacts another and most of us are left with absolutely no understanding about why.

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