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Financial sector to 9%

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March 07, 2009 – Comments (4)

The financial sector is down to about 1/6th of its peak, but even being that much down it is still about 9% of the S&P.

That is mind boggling...  9% still seems high in terms of how much of the economy it should be to my way of thinking.  It seems it is there to be a middle man of counting money...  4% seems more reasonable to me...

4 Comments – Post Your Own

#1) On March 07, 2009 at 3:42 AM, TheGarcipian (60.53) wrote:

Hi D,

I'm glad it's finally coming down. Long past due. From what I've read and documented here: "Financial stocks have fallen from 22% of the value of the S&P500 index two years ago to about 16%" in November 2008. I can't remember the exact figures, but financial sector used to be something like 8%-9% in the pre-GLBA era (pre-1999). The repeal of those critical elements of the 1933 Glass-Steagall Act have gone a long way in hurting us all (again as I wrote about here).

Allowing so many banks and investment houses to get into bed together was a good idea ONLY in the minds of Corporate America. How could our Congressmen (Republicans passed the GLBA, but Clinton did sign it) not see that by allowing so much consolidation in an important industry, that they would be leading themselves to over-reaching and over-extensions that are the hallmark of this crisis?  What part of DIVERSIFICATION did they not understand?  By allowing 100's of large banks and investment houses to consolidate to one-fifth that number (each a giant in itself), we have to keep them from failing now (or so they say). This non-diversification in the financial industry is almost like a monopoly, except that it's unregulated. And all of it IMO can be laid at the feet of the passing of that now-notorious GLBA bill, thank you Sen. Phil Gramm very much -- NOT!

--Gar

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#2) On March 07, 2009 at 9:27 AM, kaskoosek (67.54) wrote:

Market cap does not mean that the financial sector is down to 4%.

 

There are still a lot of people employed in the sector.

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#3) On March 07, 2009 at 10:38 AM, angusthermopylae (39.24) wrote:

Interesting question; I never thought of it that way.  What is the % of S&P for other sectors?  For that matter, how does that compare with the %-age of the GNP or GDP?

The question could be relevant because it would indicate a) the vulnerability of the economy to certain weaknesses, and b) the value of the S&P as a model for the health of the economy.

For example, my understanding is that Iceland and Ireland both got hammered hard and early in this round because they were heavy on international banking as a percentage of their GDP.  Switzerland has about 16% (from a news article I recently read), so they are justifiably worried about both international banking and the effects of the UBS-tax haven hearings.

(I love it when a CAPS article brings up a fundamental question and sends me off on a tangent...)

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#4) On March 07, 2009 at 2:51 PM, ikkyu2 (99.31) wrote:

Fidelity had a neat desktop widget that allowed you to visualize what sectors are doing realtime, growing or shrinking as a percentage of the broad market.

I haven't been able to find it for a year or two, though. 

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