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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsKRUGMAN: In short-we’re giving huge sums to the financial industry while receiving little or nothing
Three Expensive Milliseconds
Paul Kriugman
April 13, 2014 (April 14th, 2014 Edition)
Mr. Philippon starts with the familiar observation that finance has grown much faster than the economy as a whole. Specifically, the share of G.D.P. accruing to bankers, traders, and so on has nearly doubled since 1980, when we started dismantling the system of financial regulation created as a response to the Great Depression.
What are we getting in return for all that money? Not much, as far as anyone can tell. Mr. Philippon shows that the financial industry has grown much faster than either the flow of savings it channels or the assets it manages. Defenders of modern finance like to argue that it does the economy a great service by allocating capital to its most productive uses but thats a hard argument to sustain after a decade in which Wall Streets crowning achievement involved directing hundreds of billions of dollars into subprime mortgages.
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In short, were giving huge sums to the financial industry while receiving little or nothing maybe less than nothing in return. Mr. Philippon puts the waste at 2 percent of G.D.P. Yet even that figure, Id argue, understates the true cost of our bloated financial industry. For there is a clear correlation between the rise of modern finance and Americas return to Gilded Age levels of inequality.
So never mind the debate about exactly how much damage high-frequency trading does. Its the whole financial industry, not just that piece, thats undermining our economy and our society.
MORE:http://www.nytimes.com/2014/04/14/opinion/krugman-three-expensive-milliseconds.html?action=click&contentCollection=Opinion%C2%AEion=Footer&module=MoreInSection&pgtype=article&_r=0
Romulox
(25,960 posts)back then?
Response to Romulox (Reply #1)
edhopper This message was self-deleted by its author.
el_bryanto
(11,804 posts)is supposed to accomplish one job i.e. getting capital from people who have it to people who need it or can make good use of it. What it actually does though is make lots and lots of money for the finance companies.
Bryant