[TreeFarmer]

Guys and Gals we are going through the throes of Peak Finance. I for one do not ever expect to see the finance industry be as large as it was before this debacle/crash/charade.

To many people were making way to much money for what amounts to getting lenders and borrowers together. From what I've read and heard the finance industry grew from 6% of the US econmony in 1980 to 20%? of the US economy when the bottom fell out. We can't support a finance industry that large in the long term, it needs to go back to the 6% it used to be.

The huge financial costs worked their way into everything in the economy. It is no wonder that products like cars go to be so expensive that our own workers could not afford them unless they used a five-year payment plan.

All this financial nonsense made it so that we could not afford our own products.

Now we all are seeing up close and personal what the back-side of a peak looks like.

TF

[Petrodollar]

From what I've read and heard the finance industry grew from 6% of the US econmony in 1980 to 20%? of the US economy when the bottom fell out. We can't support a finance industry that large in the long term, it needs to go back to the 6% it used to be.

...Yes, and that is basically the point that Kevin Phillips made in his recent book, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. I highly recommend this book, which came out in April 2008, and more-or-less predicted the current financial crisis...



The problem for the US is that 25 years ago manufacturing was 20%+ of the US economy, but is now less than 8% of the economy. Kevin Phillips argues that during the Reagan years, their was a concerted effort in the US Gov/Federal Reserve to dramatically expand the "FIRE" industry (Finance/Investment/Real Estate) in the US, since we were not going to be able to compete head-to-head with Germany, Japan and other nations in the manufacturing space - at least not under the "laissez-faire" market ideology of the Reagan administration and its ideological followers in Congress.

The sad result was the rapid growth of greedy "money movers" - with the FIRE growning to 20% of our "economy" - yet this massive sector does not produce anything of lasting value for US society as a whole. Phillips defly points out the growth in the FIRE sector was to the direct detriment to the entire US manufactoring sector - which has effectivley swapped places with the previous much smaller FIRE sector from 25 years ago. The result, as accurately predicted by Phillips, is the global financial crisis that formally started in Aug 2007, and went into high gear in September 2008...but many of us did see this train wreck coming.

Here's the synopsis of Bad Money:

http://search.barnesandnoble.com/Bad-Mo ... 0670019076

Synopsis
The bestselling author reveals how the U.S. financial sector has hijacked our economy and put America's global future at risk

In American Theocracy, Kevin Phillips warned us of the perilous interaction of debt, financial recklessness, and the increasing cost of scarce oil. The current housing and mortgage debacle is proof once more of Phillips's prescience, and only the first harbinger of a national crisis. In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. America's current challenges (and failures) run striking parallels to the decline of previous leading world economic powers-especially the Dutch and British. Global overreach, worn-out politics, excessive debt, and exhausted energy regimes are all chilling signals that the United States is crumbling as the world superpower.

"Bad money" refers to a new phenomenon in wayward megafinance-the emergence of a U.S. economy that is globally dependent and dominated by hubris-driven financial services. Also "bad" are the risk miscalculations and strategic abuses of new multitrillion-dollar products such as asset-backed securities and the lure of buccaneering vehicles like hedge funds. Finally, the U.S. dollar has been turned into bad money as it has weakened and become vulnerable to the world's other currencies. In all these ways, "bad" finance has failed the American people and pointed U.S. capitalism toward a global crisis. Bad Money is the perfect follow- up to Phillips's last book, whose dire warnings are now proving frighteningly accurate.

..one more important book explaining why the 21st century will not be "America's century" - but rather the dramatic erosion of US global supremacy.