Paul Krugman is hitting on Andrew Mellon and Joseph Schumpeter's liquidation bias; "Liquidate Labor, Liquidate Stocks, Liquidate the Farmers" in his editorial in the New York Times referring to David Stockman's The Great Deformation. I Think Paul ought to revisit his March 2009 editorial where he pretty much agrees with the point of this blog which is that financial activity as a percent of our economy should go down and I believe it has. Mortgage brokers selling toxic loans and living large is a rot that has been purged out. TBTF Banks are finding it difficult to sell financial engineered products to others so that the likes of Bank of America in banking and G E in industry are out of it.
Not being an economist with data on hand I can't prove it but it feels like finance is a smaller part of our economy and that's a good thing.
The Market Mystique
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