Financial Statecraft-Government of the market, by the market, for the market

The bailout of Wall Street has been called socialism for the rich, but the reason finance has maintained it’s chosen status throughout this recession is not about propping up Capitalism. It is an indication of how the role of the financial sector today differs from the 1920’s. The financial sector has become a major sector of the economy and a major instrument for executing American foreign policy around the world.

In 1970 90% of international transactions were accounted for by trade, today 90% is from the purchase and sale of financial assets. More than $2 trillion in currency moves across borders every day, 90% of that is money not related to trade in goods or services.(Litan and Steil, pg. 3)

Since the 70's the financial sector has risen to account for 21% of the GDP.

The effectiveness of trade privelages, tariffs and trade sanctions has declined as instruments of foreign policy. Since the 1980’s increasingly we have relied on using capital flows, and underwriting debt to achieve our foreign policy objectives. It may be a reason the trade towers were a target in the attacks of September 11th. It is the reason we are not allowed to challenge free market notions in any real way in the marketplace of ideas, our democracy.