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It's a fact. Financial services are a huge part of the economy.
Twenty years ago, financial services accounted for somewhere between 5% and 7% of U.S. gross domestic product, depending what you include in the definition of "financial services."
By the time markets peaked, and just before the mortgage bubble burst, that number had shot up to between 17% and 20%.
What's fascinating to me, and should be to you, is that shuffling paper for fun and outrageous earnings got as big as it did.
And just because some air in the bubble that drove a lot of those earnings gently escaped (not), that doesn't mean the financial services machinery isn't working overtime to pump up their earnings and profitability again. You know they're working at it all the time.
I could go on and on about what this all means, and how problematic it is for the long term future of America, but that's not the point of this message in a bottle.
The point is that we have become a nation of oligarchs (the powerful private interests of money men and oil men... same thing) running our government like a banana republic.
Let me show you what I mean...
When the Tail Wags the Dog
But I do just want to say this about that first. What does it say about our ability to make things (which is what the capital markets are supposed to support), when what we're making more and more of are the means to buy things; means of financing, means of consumerism, means of moving paper across thin air in a real world, where other countries are increasingly manufacturing the things we buy with the means provided to us by the men of means, the financial services money men? What does it all mean?
First and foremost, it means that money men are the tail wagging the dog. Maybe that's why our economy is in the doghouse and unemployment is stubbornly, now structurally, so high.
But the dog I speak of isn't just the economy. The dog that matters is the body of government that dictates our future by the choices it makes... on our behalf?
We can debate what they (our lovely legislators and the powers that prevail in the offices that matter) do on our behalf.
But there's no debating what they do on behalf of the money men - who are tragically and criminally bought and paid for by big businesses across America (yes, it's criminal, however Constitutional it may be... maybe we need some Constitutional changes... ya think?).
And here's the rub... That means increasingly by the money men whose "contributed" share to our GDP has become enormous.
So, is it any wonder that the men with the means to finance stuff, including campaigns and political parties en masse, are financing their own future pathway to making more and more money?...
No, there's nothing to wonder about, that's what's happening; that's what's been happening.
That's why there were no rules, regulations or laws governing so many of the derivative products that enriched money men to the tune of hundreds of billions of dollars (think about that, hundreds of billions of dollars made in an unregulated business in America) while at the same time driving the country, and the world, to a place that ain't Lover's Lane, but where we were all
screwed.
The Best Legislation Money Can Buy
But I digress.
So some laws were conjured up.
You know, like that Dodd-Frank monster, 2300 pages of double-spaced (between every letter as well as every line) rubbish, written as still unwritten, and with all those spaces in between, so loopholes could be inserted at will by the lawyers and lobbyists (same thing) of the money men.
Frankly, Dodd-Frank is the best legislation money can buy. The proof is in the pudding.
The financial services industry and its earnings clout, if left unchecked, will continue to be politicized for the good of the parties, both of them (for heaven's sake, why don't we have a third and fourth party?), that write laws that make making money easier for them, the money men.
It's about jobs, don't ya know?
They're there to finance business development and growth. And if we ever curtailed their power to make the business of America business, then where would we be? It's about jobs. And I don't mean your jobs. I mean their jobs - the money-men.
We're caught in a vicious circle. The means of production, and more importantly in America today, the means of consumerism, are in the hands of the financiers and money men who own Congress.
I'm sick of it. I'm sick of Obama not putting them in their place, but instead lining his pockets and Nancy's knickers with their money. And I'm sick that if Romney gets in to office, he'll be even more in their back pocket, given where his bread has always been buttered.
I'm sick and tired of them all.
I'm sick that WE THE PEOPLE aren't so sick of all this pimping and pandering to all these money-men that we throw them all out, that we don't demand a third party of the people, by the people, FOR THE PEOPLE.
Are you sick too?
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About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.
Yes. Yes. Yes
Hi,
secret service guy.
(Not you Shah, the goon looking over my shoulder)
Anyone out there feel man enough to sign Leah McGrath's Petition to be let back onto Jersey Island where she was evicted from, for trying to report on the child rape on Money Island?
Satan's playground.
http://www.change.org/petitions/ukhomeoffice-restore-the-tier-1-uk-visa-of-journalist-leah-mcgrath-goodman-freejersey?utm_source=supporter_message&utm_medium=email
We need REAL change. Let the pain come for a brief time, and we will recover stronger that ever. This same song was sung during the last financial crisis. Only problem is, the money handlers are
busy lining their own pockets. We have been suffering from this hangover for four years now. It will come to a crisis point some day. I hope to be prepared for me and my family.
Go Shah Go. Please keep at it.
it is so refreshing to every once in a while to read just how it really is. It makes a nice change from the usual 'make obscene profits from little known loophole' stuff we usually get! Face it guys,you are "moneymen" just like them but maybe just not of the oligarch type(yet?).
Yes, like many, I am so tired of them all and agree they should be exsponged from our gov't offices paid by our taxpayer dollars to flounder any penny they can contrive from our pockets. So let's start now, replacing them all until we come up with true governance for the people and by the people. And if the new guard doesn't work, remove them immediately regardless of party no matter it be a new party or an old. It's time for another change! Great subject matter in your article.
Given that we are stuck with these oligarchs, what do we do about it? How about going into a barter economy, where you buy goods and services through a bartering system? If nobody uses the oligarch's oiled dead trees, they can't have as much influence over our lives?
I have never before responded to any articles however much I sympathise but I do believe that as with many of your articles you speak straight and say it how it is. The problem is how to make a change in the structure to get the changes needed. We in the UK fit the same bill – promises of action and "nothing changes" one watches in wonder at how ineffectual our politicians are in addressing the foundation of the problem, allowing the whole corrupt structure to remain in place – as they subscribe to the mantra that there is no effective alternative, it's "slapped wrist" but carry on !!
They will fiddle whilst London burns.
The magnitude of the crimes and corruption by politicions and big money is truly hard to believe, but how do we do something about it ?
Constitutional Amendments would be a start but a huge concentrated effort needs to be mounted by someone with the skills and money to get it started.
I believe term limits are the only way to get rid of the professional politicians.
In the near future we will have a majority of our population on the government handouts of some type and why would they vote for anyone who didn't promise them more of the same ?
I'm in if someone has a plan.
Never thought I'd hear it! This kind of Honesty is rare today. But, Shah, is spot on! I have been preaching the gospel since the Crash.
There is nothing wrong with Capitalism, per say. It's the Self-serving Predators that are in charge of our, "Systems;" Social, Economic, and Political – – that are at fault! The Founders, John Locke, and Adam Smith would go ballistic, if they knew how their models of Government and Economics; were being perverted.
Good job; and keep exposing the Truth! Not many are willing to do that today; out of fear of the Dark Money Cartels – – who pretty much CONTROL Everything today! Some fear reprisal from Wall Street as well. We turn it around soon! Least we lose it all!
Your article is a breath of fresh air!
don (subscriber)
Americans are so deeply divided that the only sensible solution would be to divide America into one nation for liberals and one nation for conservatives, but what most Americans really want is to force their values on others, so none of us will ever have a good country! Every kingdom divided against itself is brought to desolation; and every house divided against itself shall not stand.
Amen brother you finally came down to the very best of conclusions of this gov. now how do we get rid of all those phonies
Our electoral system is set up for Ceasar voting for Ceasar. Until we change the electoral laws things won't change. And we can't change the laws, because Ceasar is making the laws also. Until we take up arms and go to our capitals, all the way down to our city government offices, we will not see a change. But before that happens, Ceasar will take our right to bear arms away from us. There is no unity in the people of the USA. This pathetic 2 party system is not working. The people here are soft, catered to with tidbits of hopefullness, the American Dream, etc., that they don't have the guts to get up and fight. The government is happy that the generation of today is sitting in their homes with their high tech gizmo's, instead of going out and knowing what the world is really about. We've turned into pantywaist's, and the government loves it. We need to set a pressident before it's too late, but I think it's too late, short of a revolution. Remember, we're pantywaist's and nobody has the guts to start a revolution. It's pathetic.
Shah, I would be surprised if you were not a moneyman yourself!?
Spot on as usual, Shah. But please use "vicious cycle" unless the expression changed.
Well certainly we all are Shanh… but not until there is a revolution… or we are actually in a crisis…not just facing one (or many)… but are actually in one. But I dread the possibility of more political parties… how about just a couple of new ones? You surely are familiar with the mathematical possibility of the least favored candidate being elected in a three-way race. Despite Ross Perot's denial I am certain that many of us who supported his campaign efforts elected Bill Clinton… who at least turned out to be a politician… having no morals, no standards and no ethics… it was easy for him to make to necessary compromises to survive.
Yes! The wealthy run the country but what will happen to them when they ruin it for all? This says nothing for organized labor leaders (now especially those representing government services… even FDR knew better than this!) who continue the round robin of funneling money to their favorite politicians only to receive more and more unrealistic benefits for their members… is this not also greed? And isn't it the primary problem of the present local, state and federal governments. And isn't it in fact the primary reason GM went down? Unfunded pension liabilities?
We all know the full chain of events leading to here… the creation of the FRB (FDR), the Vietnam War (JFK), the dropping of the Gold standard (RMN), the establishment of financial services for banks (Clinton), the creation of financial bubbles by the Fed, and the greed of susceptible representative politicians.
Just watch where the easy money goes… presently it's in your court (that is inflated stocks and commodities)… what are you going to do about it?
My home was recently in foreclosure. WF had told me in Feb. of this year there was nothing they could do for me, but, miraculously, there apparently was. I was granted a second HAMP loan modification which lowered my mortgage(including taxes and insurance), by slightly less than half what I had been paying. It took months of not knowing, a great deal of stress, and a mountain of paperwork before granting the modification. I am 70 yrs. old, in incredibly good health, retired from a career as a registered nurse, and would like very much to have a part time job. Social Security pays the bills, but my discretionary spending is extremely limited. I actually quit my last job because I will not work in the healthcare industry for people whose only motive is to get rich off the backs of their workers and those who are sick, disabled, or simply in their declining years. It's unethical and morally wrong. After leaving my last employer, I gave my car back to the bank, and learned the importance of living within my means. In spite of my decreased income, I am more physically comfortable, much less stressed, and actually have a small savings account. What I have found is that when the disgruntled revolt and take power, they eventually become the same as those who preceded them. I believe very little of what the politicians proclaim, if anything at all.
Carole Bye
Instant Runoff Voting–it works in Australia, gives 3rd parties a chance without "wasting your vote". Check it out.