Eight years after the worst financial crisis since the Great Depression, the economy is doing much better in many important ways.
We have now seen almost 80 straight months of job growth, unemployment is down below 5 percent, and some numbers suggest that wages are ticking upwards, however slowly.
But make no mistake: The next crash is coming.
It's not a question of "if," it's a question of "when."
And that's because the underlying cause of the 2008 crisis is still with us today -- the economy is too financialized.
According to government statistics, the financial services sector of our economy -- i.e. Wall Street, the big banks and all their various tentacles -- only employ about 4 percent of our workforce, but now account for something like a quarter of all corporate profits.
In 2015, no other individual industry came even close to matching
finance's dominance over the economy.
This is just not sustainable.
Although there is a role for banks to play in the economy -- they facilitate commerce, after all, when just doing "normal banking" -- 30-plus years of Reaganomics have made banks increasingly vulnerable and prone to crisis.
Giving banks this kind of powerful role to play in the economy is just asking for trouble. Wall Street is literally a ticking time bomb, and when it explodes it will take the rest of the economy down with it.
This is not hyperbole -- it's fact, and we're seeing more and more evidence every day that the moment when the Wall Street time bomb will explode is rapidly approaching.
As Greg Ip points out in the
Wall Street Journal, stock prices, housing prices and stock prices are now hovering around decades-long highs.
The last time they were this high?
You guessed it: 2007, right before crash.
Meanwhile, net wealth is now equal to about 500 percent of America's national income. As
Ip also points out, "net wealth has reached that level only twice before: from 1999 to 2000 during the Nasdaq bubble, and 2004 to 2008 during the housing boom."
In other words, history appears to be repeating itself in the worst possible way.
So what's the endgame here?
