1. Debt Business Ethics

2. Debt At All Levels  Low-income Pay-day loans Predatory lending  Wealthiest fifth Highest ratio of debt to disposable income

3. Debt At All Levels  A baby is born with $26,000 in debt.  Students graduate with an average debt of $26,000.  Graduate students come out of school with a median debt of $46,000.

12. How much debt is there? The average American household is sitting on $7,200 of credit card debt. All told, Americans owe $800 billion on credit cards, more than double the amount of just ten years ago.

13. Credit cards  Much of recent debt has been taken on by lower-income and lower-middle-income families.  They have borrowed aggressively to maintain their standard of living.

14. Credit Cards  Increased bankruptcy rates.  Slower economic growth 2/3 of the economy comes from consumer spending.

15. How much debt is there? Americans owe another $1.3 TRILLION in installment debt — on cars, appliances and personal loans.

16. How much debt is there? Biggest of all: Americans owe $8.8 trillion of mortgage debt. And home equity loan debts have climbed to $715 billion. Both are new records.

17. Mortgage Debt  Millions have refinanced.  In some quarters, 80% have taken on larger loans.  Home equity rose to a record $715 billion

26. Mortgage Debt  Less available for retirement or emergencies.

28. Mortgage Debt  Housing bubble

31. Business Debt S&P analysts are reporting a record 618 corporations poised for debt downgrade consideration Only 318 are positioned for possible upgrade. The number of firms and dollars in or nearing below investment grade status looks to be at, or approaching, record levels these days. (October 18, 2005)

32. Foreign Debt  America’s trade deficit continues to increase.  It has risen to $650 billion.

34. International Debt  JP Morgan Chase estimates that government bond supply will be $2,320 billion, up 2/3 from 2001.

35. Loose Lending Practices  Innovative alternative financing No-down-payment loans Interest-only mortgages Optional-payment mortgages Adjustable-rate mortgages

37. Consequences  Bankruptcy filings increased 320% between 1980 and 2004.  40% of S&P profits are related to financing.  Debt is left for future generations.

38. Consequences  The economic rebound since 2001 is not self- sustaining.  Lack of growth in Capital investment Employment, wage, and salary income

39. Consequences  Budget deficits no longer stimulate, but become a drag on the economy.  Eventually, taxes will be higher.

40. The Future  Rising interest rates could lead to an economic disaster.  Yet, not restraining debt will justr make the problem worse.