Beyond a certain point, financial development is bad for an economy. Instead of supplying the oxygen that the real economy needs for healthy growth, it sucks the air out of the system and starts to slowly suffocate it.
Stephen Cecchetti , Bank for International Settlements
- When the capital development of a country becomes the byproduct of the activities of a casino, the job is not likely to be well done.
– John Maynard Keynes
- If [a banker] is very busy, it is a sign of something wrong. Either he is working at detail, which subordinates would do better . . . or he is engaged in too many speculations
– Walter Bagehot, 1873
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Capital markets are no longer mechanisms for putting money into companies, but mechanisms for getting money out.”
– John Kay
- With returns sky-high, there was then a great sucking sound as both people and monies were drawn into banking, in particular the high-risk/high return, sharp-suited parts such as investment banking. A generation of scientists’ and mathematicians’ heads were turned towards finance. Funds flowed into the bank money machine, with balance sheets rising fivefold in less than 20 years, much of it to support short-term trading activities rather than long-term investment.
– Andrew Haldane, Bank of England
- “Financing for households and corporations accounted for just over one-fourth of the rise in global financial depth from 1995 to 2007—an astonishingly small share, since providing credit to these sectors is the fundamental purpose of finance.”
– McKinsey Global Institute
- “Finance literally bids rocket scientists away from the satellite industry. The result is that erstwhile scientists, people who in another age dreamt of curing cancer or flying to Mars, today dream of becoming hedge fund managers.”
Stephen Cecchetti and Enisse Kharroubi, Bank for International Settlements
- “Great industrialists once viewed markets with disdain. It is hard to imagine Alfred Sloan of General Motors or Harry McGowan of ICI making regular checks on their company’s share price, still less taking time out of their schedules to schmooze junior analysts at investor conferences.
– John Kay
- This quiet cross-subsidy from North and West to South East has been running un-noticed for a long period of time. Its unanticipated result is a kind of regional moral hazard: the metropolitanisation of gains, and the nationalisation of losses.
– Adam Leaver
- There may of course be disadvantages in hosting a major financial centre. Salaries and wages may be forced up, thus driving up rents and house prices, with undesirable social consequences. Regional disparities may be exacerbated and the congestion of local transport systems may be aggravated. The economy may face risks due to over-dependence on a single sector. The operation of monetary policy may become complicated by the need to nurture the financial sector. Regulation may need to be more complex than otherwise. Finally, it has sometimes been argued that the financial sector merely preys on the rest of the economy,” adding to costs and distorting other markets-by, for instance, attracting able individuals who might be more socially productive in other areas such as manufacturing.
– Bank of England, 1989
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I would rather see Finance less proud and Industry more content.
Winston Churchill