A sultan speaks

One hundred years ago, a story titled "Dying of Consumption" would most likely be about tuberculosis or other lung diseases.



We've done pretty well in making TB and a lot of those other contagious diseases very rare in the U.S.



But when it comes to our personal spending, it appeared as though the virus was slowly killing us.

So argues Steven S. Roach, chair of Morgan Stanley Asia.

As much as this recession hurts, it has finally compelled many Americans to cut back on spending -- which is a very good thing, he says.

Here are a few of the scary stats he cites:

As a share of disposable income, the personal saving rate fell from 5.7 percent in early 1995 to nearly zero from 2005 to 2007.

According to Federal Reserve calculations, net equity extractions from United States homes rose from about 3 percent of disposable personal income in 2000 to nearly 9 percent in 2006.

...As a result, household debt hit a record 133 percent of disposable personal income by the end of 2007 — an enormous leap from average debt loads of 90 percent just a decade earlier.

What does he recommend? No more tax cuts for now. Spending on infrastructure. Mandatory or incentive-driven savings. No tax increases associated with these mandatory savings.

I must confess that I was surprised to see Mr. Roach's byline -- I don't usually think of Morgan Stanley chairs as leading a rush to fiscal reform.

Given that today's progressive ideas can often become tomorrow's orthodoxy, it will be fascinating to see whether the new adminstration is listening.