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September 15, 2008
historical perspective . . .
For the past few years something unpleasant has been brewing in the financial services industry.
That industry - banks, credit card and insurance companies, stock brokerages - is now twenty-one percent of the USA's gross national product - and is the largest sector of the USA's economy.
By contrast, in the 1970s, manufacturing was the largest sector - by a 2 to 1 margin. Today manufacturing is just twelve percent of the gross national product.
In other words, the USA has become a country that no longer primarily produces merchandise or physical items - iron or food or automobiles. Instead, in the past 30 years the USA has become a nation that primarily produces pieces of paper that promise payment of interest.
McClatchy Newspapers is an unfailingly good source of reliable information. This article from McClatchy gives an historical perspective on how-and-why the regulation of the financial services industry began in the 1930s (essentially because unregulated greed led to the Great Depression).
The article details how the 1930s regulations have been gradually removed during the political era that began with Ronald Reagan's presidency in the 1980s - and implies that their removal is the reason that the world markets face a crisis in the waning days of summer 2008.
'Wall Street crisis is culmination of 28 years of deregulation'; McClatchy Newspapers; 15 September, 2008
see also: 'The Destructive Rise of Big Finance' by Kevin Phillips; Huffington Post; 31 March 2008
Posted by williamfrick at September 15, 2008 8:43 PM