More on the So-Called "Financial Sector" and Balance of Trade and so forth

Years ago as American manufacturing began to move factories elsewhere and the steel plants shut down it became apparent that this country's heavy industry was dying. At that time, we were afraid of Japan. Japanese cars, Japanese electronics and optics, hell, of the world's 10 biggest banks a half-dozen were Japanese. Japan had Canon, Nikon, Konica-Minolta, Yashica, Mamiya, Chinon and so on and we ... we had Bell & Howell and Kodak. Which was like comparing a jet fighter to a piper cub. We had Buick and Olds and Mercury while Japan had Toyota, Subaru, Honda, Lexus, Acura, Mitsubishi.

Now even Japanese manufacturing has moved to Korea or Taiwan or Singapore rather than the Home Islands. 15 years ago I was buying a VCR. Only Panasonic's at that time was still "Made in Japan." I got a returned Panasonic then returned it too because it seemed noisy; got a new Motorola made in Guatemala or Honduras or Malaysia instead; shoulda stayed with the Panasonic. My LP's Honda Prelude was one of the last American sold Honda's to be Made in Japan and shipped to Port of Los Angeles. Good car, though it's steering linkage needed work at well under 200k miles. Anyway...

So the pundits started saying that the future of the USA was in the "service industry," whatever that meant. They claimed it meant computer software and repairs, but I think it meant cleaning bathrooms and assembling hamburgers at McDonalds and selling off our hard assets to the Ay-rabs, Japanese and Chinese.

Actually as it turned out, a big part of "the service economy" was in the financial sector, where we sold imaginary things to ourselves and to others. Where we stripped good undervalued companies and sold the parts for salvage. Where a big part of our economy was in hawking stocks, bonds and various highly creative and nonsensical pseudo-investment vehicles from telephone boiler rooms.

Where "savings" was replaced by home equity and retirement, both of which could be borrowed against to pay off sky-high credit card debt.

That is what that guy Frank Rich was talking about in the NYT article I linked to in my previous post.

What would our GDP be if we excluded transactions in the financial sector? I think we would far more worried about what has happened to our country if we looked at the economy that way.

Stock sales and purchases, except for IPOs are a zero sum game, that add nothing real to our economy, IMO. Damn stock exchanges ought to be outlawed, same as numbers running and non-injun casinos.

Now we have an economy based on "the financial sector" plus our national consumer buying frenzy that moves dollars to China which we borrow back in order to finance our national debt. Our biggest national security is that we--the USA--are too big to fail. Because if we failed, what would the Chinese do with all their dollar-denominated holdings? They have to keep us afloat just as we have to keep them afloat.

So thus the world's economies are like a group of one legged men holding each other up.