The Stealth Bubble
Investors Insight has hit on some facts about the growth of the "Money Shufflers" that we have pointed to in past rants. Money Shuffling & The Vig, from Meet the New Boss I,
"Our banking system has created $7.5 trillion since 1980. During this time, the market capitalization of the financial sector component of the S&P500 has grown from $50 billion to $2.3 trillion. Financial sector profits now comprise 45% of all corporate profits."
From Investors Insight: Financial services now representing 30+% of Russell 1000 profits for 2004, and 20+% of market capitalization, book values, dividends and revenues for the economy, though it still represents less than 10% of the employment in the economy.
Forty years ago, financial services comprised less than 5% on all of these metrics. In our industry, we sell risk management, risk reallocation, transaction facilitation, comfort and hope.
Question: is this a normal evolution in a more services-oriented economy, or is it abnormal for an industry that produces nothing tangible to be one-fourth of the economy?
"Our banking system has created $7.5 trillion since 1980. During this time, the market capitalization of the financial sector component of the S&P500 has grown from $50 billion to $2.3 trillion. Financial sector profits now comprise 45% of all corporate profits."
From Investors Insight: Financial services now representing 30+% of Russell 1000 profits for 2004, and 20+% of market capitalization, book values, dividends and revenues for the economy, though it still represents less than 10% of the employment in the economy.
Forty years ago, financial services comprised less than 5% on all of these metrics. In our industry, we sell risk management, risk reallocation, transaction facilitation, comfort and hope.
Question: is this a normal evolution in a more services-oriented economy, or is it abnormal for an industry that produces nothing tangible to be one-fourth of the economy?
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