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Wall Street Breakfast: Must-Know News

The growth of the financial engineering, since its first vehicle in 1972, is covered by Kevin Phillips, in: “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.” He wrote:

“Between 1987 and 2007, debt—in all flavors, from credit card and mortgage to staid U.S. treasury and exotic Wall Street—became one of the nation’s largest, fastest-growing businesses. Over those two decades, so-called credit market debt roughly quadrupled from nearly $11 trillion to $48 trillion. This was abetted by a revolution in marketing, packaging, and propaganda—in reality, public debt wasn’t the big ballooner, private debt was. Without much publicity, the financial services sector—banks, broker-dealers, consumer finance, insurance, and mortgage finance— muscled past manufacturing in the 1990s to become the largest sector of the U.S. private economy. By 2004–6, financial services represented 20 to 21 percent of gross domestic product, manufacturing just 12 to 13 percent. And finance enjoyed an even bigger share of corporate profits.

“Risky” doesn’t begin to describe this new focus in the American economy. Bingeing on debt is reckless, and financialization has a long record of being an unhealthy late stage in the trajectory of previous leading world economic powers. Moving money around instead of making things is always dicey, and the U.S. transformation has been the most grandiose to date."

I wish I'd read this when it was first given to me as a publisher review copy in 2007. As it was, I learned about the contents from his In Depth BookTV interview on December 7, 2008
www.booktv.org/watch.a... and didn't read the work until last month. There is a one hour show from May 9, 2008 on BookTV at www.booktv.org/watch.a...
The paperback with an update will be released on Mar 31, 2009.