....lybob Posted June 2, 2015 Share Posted June 2, 2015 “Wall Street is back,” says the New York Times, and the economic cost is high. The excessive financialization of the U.S. economy reduces GDP growth by 2% every year, according to a new study by International Monetary Fund. That’s a massive drag on the economy–some $320 billion per year. Wall Street has thus become, not just a moral problem with rampant illegality and outlandish compensation of executives and traders: Wall Street is a macro-economic problem of the first order. http://www.forbes.com/sites/stevedenning/2015/05/31/wall-street-costs-the-economy-2-of-gdp-each-year/ Link to comment Share on other sites More sharing options...
GG Posted June 2, 2015 Share Posted June 2, 2015 So according to the blogger who has a site on Forbes, the US financial sector should emulate Gambia. Brilliant insight. Link to comment Share on other sites More sharing options...
Rob's House Posted June 2, 2015 Share Posted June 2, 2015 So according to the blogger who has a site on Forbes, the US financial sector should emulate Gambia. Brilliant insight. That's what I expected when I saw the misleading thread title. Link to comment Share on other sites More sharing options...
Chef Jim Posted June 2, 2015 Share Posted June 2, 2015 Rampant illegality?? Ooookay. Link to comment Share on other sites More sharing options...
Nanker Posted June 2, 2015 Share Posted June 2, 2015 Thus it is written. Thus it is so. Link to comment Share on other sites More sharing options...
DC Tom Posted June 2, 2015 Share Posted June 2, 2015 Yes, I'm sure a paper on the impact of excessive debt-to-GDP ratios impacting volatility in GDP growth in emerging markets is completely applicable to the US economy. Particularly when they're misquoted. Link to comment Share on other sites More sharing options...
....lybob Posted June 2, 2015 Author Share Posted June 2, 2015 Yes, I'm sure a paper on the impact of excessive debt-to-GDP ratios impacting volatility in GDP growth in emerging markets is completely applicable to the US economy. Particularly when they're misquoted. If the hallmark of emerging markets is exporting more agricultural products and natural resources than manufactured goods then we are an emerging market. Link to comment Share on other sites More sharing options...
GG Posted June 2, 2015 Share Posted June 2, 2015 If the hallmark of emerging markets is exporting more agricultural products and natural resources than manufactured goods then we are an emerging market. Please explain to me the great virtues of manufacturing in the 21st century economies? Link to comment Share on other sites More sharing options...
DC Tom Posted June 2, 2015 Share Posted June 2, 2015 If the hallmark of emerging markets is exporting more agricultural products and natural resources than manufactured goods then we are an emerging market. Yes, our banking system costs us $320B annually because we export corn. Where in either of the IMF papers referenced does it say that? Oh, that's right...you didn't read them. You read a blog post that confirmed your preconceived notions, and now you're finished. And you wonder why we consider you massively ignorant. Link to comment Share on other sites More sharing options...
....lybob Posted June 2, 2015 Author Share Posted June 2, 2015 Yes, our banking system costs us $320B annually because we export corn. Where in either of the IMF papers referenced does it say that? Oh, that's right...you didn't read them. You read a blog post that confirmed your preconceived notions, and now you're finished. And you wonder why we consider you massively ignorant. 26. In contrast to previous literature, the estimated relationship is general enough to capture the link between growth and financial development for countries at various stages of development. Indeed, the empirical analysis suggests there are no “EM-specific” effects and no significant variation in the relationship between growth and financial development across levels of income. This is in stark contrast with the results of similar regressions in previous work that use narrower measures of financial development, such as the private credit to GDP. This weakening of observable heterogeneity in the finance-growth relationship when using the FD index suggests that it is overall a better measure of financial development, capturing more accurately relevant differences across countries. 27. Looking at two components of growth—total factor productivity (TFP) and capital accumulation—the empirical evidence suggests that the “too much finance” effect reflects primarily the impact of financial development on TFP growth (Figure 8). The results indicate that high levels of financial development do not impede capital accumulation, but lead to a loss of efficiency in investment, suggesting that the quality of finance—for instance, the allocation of financial resources toward productive activities and that of human capital across sectors—is impaired at high levels of financial development. In other words, many functions of the financial sector, such as mobilization of savings and transaction facilitation, may remain intact at high levels of financial development, but other functions, such as efficiency in the allocation of capital and the efficacy of corporate control, may begin to break down. Again, the estimates suggest no evidence of an EM-specific effect in this decomposition exercise http://www.imf.org/external/pubs/ft/sdn/2015/sdn1508.pdf Link to comment Share on other sites More sharing options...
GG Posted June 2, 2015 Share Posted June 2, 2015 If the hallmark of emerging markets is exporting more agricultural products and natural resources than manufactured goods then we are an emerging market. And this has nothing to do with the paper, whose conclusion is basically that in a bull market, more people will use financial engineering to optimize returns, rather than invest more in companies' operations. Earthshattering. Link to comment Share on other sites More sharing options...
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