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Politics : View from the Center and Left

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To: thames_sider who wrote (93182)	11/5/2008 5:44:27 PM
From: TimF	Read Replies (2) of 541403

The financial sector did get bloated, but its undergoing a correction (even with the bailout reducing this correction) And even during the bubbles (tech stock bubble, housing bubble etc.) financial investment had a net positive real world impact. Other than the fraction of this investment that represents investment in the actual costs of running the financial system, the financial investment is indirect investment in the "real-economy". The problem of over investment in people, facilities etc. for the financial sector itself was real, but the main problem was misallocation of investment in the real economy. This is not a new or unique problem. It happened in bubbles throughout history.

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