pimpjui

Bear Stearns’ Bailout by the Fed, JPM: A Century Old Conspiracy

It is clear that the banking system is favored by the government, for most of the reasons in the original post. However, banking now actually represents a disproportionate amount of total corporate profits. I think the number was 40% in 2007 (even worse, banking represents only 4% of the workforce). More than manufacturing and IT combined. If this is the case, the government is proping up banking in order to ensure the continued tax revenues they have been receiving. I guess the double-whammy comes when banking makes no profits (and pays no taxes), and the rest of the economy has been moved off-shore (so really no tax revenue for Uncle Sam at all). If you extrapolate that every $ banking makes filters down into the rest of the economy for goods and services (e.g. dining out, buying a car, etc.) it becomes pretty clear that banking is the core industry of the USA. Without it, the whole boat sinks. Indeed, at this point, I would say that saving it is a matter of national security. Hence, the bailout of the banks is really a cheap way of saving the rest of the country from going under. If a bank goes under, a manufacturing plant will not go up in it's place. Lower cost regions already have that wrapped up. Banking--this is the end game of capitalism. If banking cannot continue to produce inovative products that the global markets want to use (which it has clearly done in the past---including sub-prime, CDO, etc), the USA will not be in a very good position at all.