what the bears have been asking for

I'm no econ student, but what i dont get is what are the fundamentals of the US economy that are going to get the engine revving again? As far as I can tell, the last three decades have been bubble-driven -- junk bonds/whatever, dotcom, housing ...
This article is all about financial, which is nice, but as far as I can tell, we don't make anything anymore (China) we dont even service anything anymore (India) ... what do we do? I read a scary stat that something like 42% of the US economy is from Financial Services ...ie the creation of debt.
Maybe I'm coming off a bit like chicken little here, as I really am pretty ignorant about this, but can anyone enlighten me?
cheers

"Fifteen years ago, the combined assets of our six biggest banks totaled 17 percent of our GDP. By 2006, that number was 55 percent. Right now, it stands at 63 percent."

http://www.washingtonsblog.com/2010/03/15-years-ago-combined-assets-of-6.html

All together now: "Bye bye, Miss American Pie"

Tripel, the economy has been moving away from goods towards services for a long time, and the US is a leader in many of these areas (software, bio-tech, education, and yes, financial services). I'd rather see us embrace these areas than try and regain lost glories in manufacturing, which inevitably (see: new wage structures at GM/Ford) involve a race to the bottom with less-developed nations. Think of all the tremendous new products/services that have been developed over the past 30yrs (medical devices, drugs, that thing called the internet, wireless, etc.). I have no doubt that during the industrial revolution many lamented the move away from the agrarian economy, the loss of 'craftsmen', etc. The world moves on, and better to lead the change than to lament the past.

Pulaski - there has been consolidation in banking, yes. Ditto retail (Walmart, Target, Macy's, Costco, Starbucks, etc.), Telecommunications, Healthcare, Oil & Gas, Transportation, etc. what's your point?

tripel, since you are a student, maybe this will enlighten you:

From cnyexpat blog…

A common complaint by folks on all points of the political spectrum is that "we don't make stuff in America anymore, people just sit in offices shuffling papers around." It turns out that this is in fact just not true. Except for periodic recession-related dips, industrial production in the US has grown at a pretty steady clip and is currently more than double what it was in the 1970s. In fact the U.S. manufacturing sector, at $3.7 trillion in 2008, was bigger than the entire economies of all but Japan and China.

First, we don't make a lot of the name-brand commercial goods that actually carry a tag: clothes are made in Indonesia, Mexico etc., TVs in Taiwan or Japan, etc. Many of the products made in the US don't have "made in the USA tags" because they're things like industrial chemicals, computer chips, or building materials; or they're things like planes (Boeing) or heavy equipment (Caterpillar). The big change from the 1950s is that, other than cars, the US doesn't make a lot of durable consumer goods, other than computers.

Second, another big change from the 1950s is that the American manufacturing sector employs far fewer people. Companies have automated many of their processes, so as a percentage of the workforce, factory workers are far fewer than they used to be.

The third reason we hear the "we don't make things in this country any more" refrain so often is that the media (who are often the ones pushing this story) are typically quite isolated from areas where actual factories are located. Back in the 1950s (and earlier) factories were often located in central cities to be close to the workforce. For various reasons (white flight, rising land cost in popular downtown areas, taxes) factories decamped to smaller cities, rural or exurban areas, and especially to low-tax and anti-labor areas in the South. At the same time, the national media concentrated even more heavily in the very coastal cities (NY, DC, LA) being vacated by manufacturers. During this same period, the US experienced increasing educational stratification, where starting as early as elementary school, kids bound for desk jobs and kids bound for the factory floor wound up in different classes or different schools. Increasing population mobility meant that more people left their hometowns (and their hometown friends) when they went to college. The upshot of this is that in many cases, political and media elites don't actually know anybody that works in manufacturing - they know their classmates from college or law school or journalism school or whatever, but have lost touch with their former neighbors who may have gone on to work in factories. Of course it seems like we don't make anything anymore - we don't know anyone who makes anything!

The ultimate lesson from this is that a.) we should stop freaking out about how we don't make stuff anymore. (We do! However, we do need to figure out how to export more goods to other countries); and b.) this means that the problems of displaced industrial workers are to some degree different from the issue of whether the US is doing enough manufacturing.

very interesting, thanks for the replies.
i guess another big Q is how to stay competitive in manufacturing with other nations (esp developing ones, who can do things so much cheaper)

"and here is a 3rd party explanation of how things aren't nearly as bad as initially predicted"

I predicted this a couple years ago... "well, the world didn't blow up, so the bulls were right!"

I guess the bulls have nothing left... we literally have the longest and deepest recession since the great depression, the biggest housing bust of all time... and bulls are still trying the "well, it wasn't that bad" argument.

And its still not over!

"well, the world didn't blow up, so the bulls were right!"

The only one saying this is you.

pulaskis point has little to do with the consoldation that has gone on in various industries (disturbing as it is to me)

point is as written: concentration of banking's "contribution" to our gdp is frightening

and consolidatition in banking as a result bailout selectivity and other factors is also quite frightening, but not the point pulaski clearly made

> "well, the world didn't blow up, so the bulls were right!"
> The only one saying this is you.

You are simply incorrect here.

hell, ericho said it just yesterday!

Manufacuring emplploment is going down EVERYWHERE due to productivity gains...yes, even in CHINA! More automation is making factories more productinve everywhere on earth. China is manufacturing more things with fewer workers just like everyone else.

How does pricing hold up if we lose 4% of the jobs when the condo market was built for the expansion of employment in 2008 2009 2010 2011 2012?

In fairness, this is a good piece of information. Time will tell if this means we have seen the bottom in pricing...or anything within 10-15% of it.

I think there is some decent info in there, too.... but it just sort of points out again the huge mistake printer keeps making....

A recovery post-bubble DOES NOT mean a return to bubble prices.
Yes, we will recover.

But that justifying the RE bull prediction, thats a VERY illogical link.