Hello eileendn,
It is heartening that someone, somewhere, is attempting to hold an investment bank accountable. The political, as well as economic, power of banks like J.P. Morgan Chase and Goldman Sachs is intimidating.
I am one of those who believes that the financialization of the economy is both an important part of the problem and a source of bias in our attempts to understand the problem. Financialization is indicated by the rise of the proportion of our GDP that is the result of financial transactions, and the corresponding decline in the proportion that is the result of manufacturing. I agree with those who say that this is a big problem.
Financialization becomes a bias because the sheer amount of digital wealth that has been created by financial transactions draws our attention away from the problems we have in the production and distribution of goods and services. I regard this as the "real" economy, over which the trillions of dollars in derivatives expands like a giant bubble. Corporations first sent manufacturing operations from the "rust belt" to the "sun belt," and then from the U.S. to the countries where they could find the cheapest labor. At the same time that corporations, with the help of the government, were outsourcing jobs, the number of workers seeking jobs has been growing, not because of our birth-rate, but because of immigration and the movement of many more women into the labor force. The combination of increased supply of workers and decreased demand for labor has resulted in poorer wages. The massive increase in consumer debt is a direct consequence of this.
I have been reluctant to post this because I suspect that those who are likely to read this post have seen all of this before, and in much greater detail. I decided to post it because I think it is part of the background or context within which a discussion of Lonergan's economics has to take place. I am a sociologist, rather than an economist, and I think about economics in terms of what sociologists call the "sociology of economic life."
Best regards,
Dick Moodey