None of the Brazilian banks has come under the suspicion of being weak. The balance sheets are very strong. The Brazilian corporate sector is extremely underleveraged. The Brazilian citizen is underleveraged. The credit to [gross domestic product] ratio in Brazil is just above 30 percent. It used to be in the low 20 percent range, and 30 percent is still quite a low figure. Despite all that, what we’re witnessing with European and American banks has made everybody more cautious and has brought [the credit markets] to a halt here.
—Candido Bracher, Chairman, Banco Itau, December 18, 2008
It is a cliché—indeed, an article of faith—among most Americans that the United States is the richest country in the world. But, alas, this is no longer true. Unfortunately, most of us appear to have missed an important bulletin that dates back to 1494—two years after Columbus discovered America. That’s when the Tuscan friar Luca Bartolomes Pacioli surprised the world with his Summa de Arithmetica, the first book in print to explain the mysteries of double entry bookkeeping.
Fra. Pacioli’s work sparked a realization that in order to accurately appraise your wealth it is not enough to just add up your assets. You must also subtract your liabilities. Hence the bad news for those who still believe that the United States is the richest country in the world.
I am reminded ...