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spyguy

Fsck By Finance - Bis Find Cause

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Pretty damming investigation about how finance has screwed over the wider economies.

http://ftalphaville.ft.com/2015/02/16/2119138/crush-the-financial-sector-end-the-great-stagnation/

From BIS too. Hardly Socialist Worker.

Competing for talent is OK/fair - pay your money, take your choice.

Getting very expensive, implicit subsidy for being 'too big to fail' is not.

Then using that subsidy to extract rent and financial is the economy.

Save UK Inc - Shoot a banker.

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https://www.bis.org/publ/work490.htm

Why does financial sector growth crowd out real economic growth?
Working Papers No 490
February 2015
In this paper we examine the negative relationship between the rate of growth of the financial sector and the rate of growth of total factor productivity. We begin by showing that by disproportionately benefiting high collateral/low productivity projects, an exogenous increase in finance reduces total factor productivity growth. Then, in a model with skilled workers and endogenous financial sector growth, we establish the possibility of multiple equilibria. In the equilibrium where skilled labour works in finance, the financial sector grows more quickly at the expense of the real economy. We go on to show that consistent with this theory, financial growth disproportionately harms financially dependent and R&D-intensive industries

I presume it's this paper?

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More on the same from Buttonwood.

http://www.economist.com/blogs/buttonwood/2015/02/finance-sector-and-growth#comments

Basically, countries have a choice:

Do you want a short-lived (lasts for a short time then crashes the economy) , small, high-paying finance sector?

Or do you want a growing, broader-based economy that lasts?

In a democracy where politicians only look to the next 4-5 years, where the transition to a sustainable economy will probably be a painful one, I think we all know the answer to that.

Looking at how SYRIZA has so far told the Eurocrats where to go, I think the answer has to be in voting for non-establishment parties. If they are not on the gravy train, like tory/labour, they wont want to protect it so much.

I just hope SYRIZA stands firm.

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