Run It Like a Business

What is it we too often hear from candidates and political leaders of BOTH mainstream parties? We need to run government like a business! Yes, if we adopted a business-style model, then the economy would be sitting pink, not dragging its butt through the proverbial muck.

While I don't accept this thesis at all, it is readily apparent that most of the folks who voice this rationale don't either. According to Sally Kohn in an article post at USA Today,

The way politicians from both parties are shouting from the rooftops about the dangers of the federal debt, you'd think such high rates of borrowing are always cause for alarm. But some of our nation's largest and most successful businesses not only run even higher levels of debt — they actually consider carrying significant debt to be good business practice. In fact, the private sector teaches us why increasing government debt right now is a good idea.

The United States generates approximately $14.5 trillion in GDP each year and carries, currently, $14.3 trillion in debt. That represents a debt-to-income ratio of roughly 1-to-1.

By comparison, here are the debt-to-income ratios of some of the leading corporations in America:

• IBM — 2 - 1
• Dupont — 3 -1
• United Technologies — 3 - 1
• Boeing — 4 - 1
• Caterpillar — 14 - 1
• JP Morgan Chase — 50 - 1
  

In other words, IBM borrows twice as much money as it earns annually. Boeing borrows four times more than it earns. And JP Morgan Chase, clearly not too big to borrow, borrows 50 times more than it earns — getting $50 from lenders for every $1 it makes...

While all of these numbers astound me, the JP Morgan Chase ratio boggles my mind!!

How can a corporation survive that borrows 50 times more than it earns? Wouldn't you worry that, if something went wrong with your financial affairs, you might easily go bankrupt if, say, the market had a major downturn or an economic bubble burst?

(Of course, we all know the easy answer to that question. If your suicidal financial plan blows up in your face and you happen to be JP Morgan Chase, you can count on the government to save your sorry ass with taxpayer dollars!)