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THE HIDDEN BOMB BEHIND THE FISCAL COLLAPSE
Robert Creamer, Huffington Post - Over the last several decades, the financial sector has grown relentlessly. It has doubled in size over the last 14 years. During the period 1973 to 1985 the financial sector never earned more than 16% of domestic profits. This decade, it has averaged 41% of all the profits earned by businesses in the U.S. In 1947 the financial sector represented only 2.5% of our gross domestic product. In 2006 it had risen to 8%. In other words, of every 12.5 dollars earned in the United States, one goes to the financial sector, much of which, let us recall, produces nothing.
That growth has not been among community or regional banks -- or credit unions. I'm talking about Wall Street. . .
By 2007 the top 50 hedge and private equity fund managers averaged $588 million in annual compensation each - more than 19,000 times as much as the average U.S. worker. And by the way, the hedge fund managers paid a tax rate on their incomes of only 15% -- far lower than the rates paid by their secretaries.
This huge wealth transfer from the "real" economy to the world of finance has also created a vicious cycle of increased credit dependency. If your family's real income isn't going up, but costs are, you try to borrow to stay afloat. That is one reason why private debt now equals 350% of the Gross Domestic Product - the highest ever. The more debt that consumers owe to the shrinking number of big financial institutions, the greater the share of their shrinking or stagnant incomes that is siphoned off to the finance sector - and the cycle just gets worse. And when the disposable income of ordinary Americans shrinks, they don't have the money to buy the new products and services that will fuel long term economic growth in the real economy.
In fact, as last year's financial collapse make ever so clear, the increasing dominance of the financial sector - and its deregulation -- has become a mortal danger to our economic security. The financial sector - including the big insurance companies - has morphed into a cancer growing on our economy - a cancer that could easily strangle our prospects for our long-term economic security.
That growth has not been among community or regional banks -- or credit unions. I'm talking about Wall Street. . .
By 2007 the top 50 hedge and private equity fund managers averaged $588 million in annual compensation each - more than 19,000 times as much as the average U.S. worker. And by the way, the hedge fund managers paid a tax rate on their incomes of only 15% -- far lower than the rates paid by their secretaries.
This huge wealth transfer from the "real" economy to the world of finance has also created a vicious cycle of increased credit dependency. If your family's real income isn't going up, but costs are, you try to borrow to stay afloat. That is one reason why private debt now equals 350% of the Gross Domestic Product - the highest ever. The more debt that consumers owe to the shrinking number of big financial institutions, the greater the share of their shrinking or stagnant incomes that is siphoned off to the finance sector - and the cycle just gets worse. And when the disposable income of ordinary Americans shrinks, they don't have the money to buy the new products and services that will fuel long term economic growth in the real economy.
In fact, as last year's financial collapse make ever so clear, the increasing dominance of the financial sector - and its deregulation -- has become a mortal danger to our economic security. The financial sector - including the big insurance companies - has morphed into a cancer growing on our economy - a cancer that could easily strangle our prospects for our long-term economic security.
2 Comments:
Americans have been more concerned with shoveling around the means of exchange to one another, i.e., a fiat currency, than creating wealth.
There's trouble, trouble right here in Rivercity and that starts with tee and that rhymes with pee and that stamds for pool,
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