Even though Occupy Wall Street has lost some of its muster, the message has been loud and clear, people are pissed off. The easiest target has been Wall Street, and it will likely remain that way for some time. They certainly deserve a lot of the blame, blame they’ve been getting since 2007. Over the last handful of years a lot of stuff has come out. Some of it criminal, quite a bit of it immoral, and still more simply questionable.
However, there comes a time when the law of diminishing returns kicks in. I suspect as we enter the 6th year of housing issues we’ll start to see that. For some perspective, one should note that there are very few people left at the big finance companies that can be considered responsible for the crisis. Most of the execs that were running the show at the most screwy companies are gone. What’s left are people who are simply cleaning up the mess others left behind. Many of the ones most responsible for the financial crisis have quietly stepped out of the spotlight and most of them left before you ever had a chance to know them. Heard of Sandy Weill, Herbert and Marion Sandler, Martin Sullivan, Daniel Mudd? I could keep going. And you can look these people up on your own. They disappeared, and if 1% of the Occupy Wall Street protestors could tell you who they were I’d be shocked.
It’s not just the public who have turned their backs on Wall Street, Wall Street has too. The financial companies are worth so little these days, and they continue to struggle. The stock market would actually be up this year if it wasn’t for the banks getting killed so much. And their five year performance is just as bad. Below are the average market caps (investing term for company size or value) of the five largest companies in four sectors of the S&P500 exactly five years ago yesterday:
- Technology: $158 billion
- Consumer Staples: $121 billion
- Energy: $168 billion
- Financials: $188 billion
It’s clear who the big dog is in 2006. However since then the landscape has changed. Here’s how things look now for those companies:
- Technology: $158 billion—————-> $236 billion (50% increase)
- Consumer Staples: $121 billion——–> $139 billion (7% increase)
- Energy: $168 billion———————> $170 billion (1% increase)
- Financials: $188 billion—————–> $130 billion (38% decrease)
This is far from scientific*, but no matter how you measure it, finance is literally a fraction of what it once was. Hundreds of billions in value are gone. It continues to shrink too. 2012 won’t be a good year for these companies, even if it is for other industries. They can’t make money on loans, and they can’t even do it on checking accounts any more.
There has been a generational change in finance. It has and always will play in important role, but finance will likely be so regulated for the next couple of decades it will be relegated to the background, where it rightfully belongs. Out of sight, out of mind. Finance has entered the dark ages.
For now though the targeted attacks simply start to have less and less meaning. And not just because there might be better targets out there. But please continue to attack greed and corruption, it will help keep it out of this industry and others in the future. Technology: you’re on watch.
*Nerds can email me for specifics.
Image: Look him up
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
