I've never understood the financial sector and their increasingly byzantine trades. Somehow I stubbornly believe that society's wealth must ultimately rest on people making things. Of course a healthy financial system is necessary to facilitate this, but to this layman, the financial sector seems more and more to exist for itself. The FT comments (27 April 2006):
"By facilitating economic expansion, the financial system plays its part in raising living standards. For these functions the banks have always taken their cut. However this has increased dramatically in recent decades. US financial companies earned 10-15 per cent of total US corporate profits in the 1950s and 1960s, but now account for 30-40 percent of the total."
"This trend for finance to grow much faster than the "real" economy is also apparent in the UK and elsewhere. In return for absorbing a rising share of society's resources, especially highly qualified workers, what is being delivered in return?"
Good question.
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