The ascent of money

The ascent of money

The financial sector in Singapore is not yet as big as that in Britain or America. Fortunately, one may think, or the downturn may have been worse.

The Ministry of Trade and Industry’s fourth quarter survey shows financial services accounted for just over eight billion Singapore dollars out of a total gross domestic product of 64.3 billion Singapore dollars ($42.6 billion). Manufacturing contributed 16.6 billion Singapore dollars and construction more than 11 billion. Business services contributed more than nine billion, wholesale and retail more than six billion and information technology more than two billion.

In other words, manufacturing and construction remain Singapore’s biggest industries. While there were more than 593,000 jobs in manufacturing as of September 2008, the financial sector employed more than 160,000 people – more than 135,000 worked in financial institutions and the rest in insurance. And they were the best paid of all the workers in Singapore, earning more than 6,000 Singapore dollars a month on average, while IT workers made more than 5,000 Singapore dollars, factory workers just over 3,600 Singapore dollars and construction workers just over 2,600 Singapore dollars a month, according to the Manpower Ministry’s 2008 third quarter labour market survey.

Financial workers are the highest paid for the same reason that the government wants Singapore to be a financial hub – for that’s where the big money is.

Read The Ascent of Money by Niall Ferguson to get an idea of the incredible amount of money in the stock markets and the banks. The financial sector dwarfs all other industries. Here’s a clip from The Ascent of Money, which was shown on Channel Four.

http://www.youtube.com/watch?v=o3C-OaWTB_U



Ferguson, a British economic historian, writes in The Ascent of Money, published last year:

In 2006 the measured economic output of the entire world was around $47 trillion. The total market capitalization of the world’s stock markets was $51 trillion, 10 per cent larger. The total value of domestic and international bonds was $68 trillion, 50 per cent larger. The amount of derivatives outstanding was $473 trillion, more than 10 times larger.

Planet Finance is beginning to dwarf Planet Earth. And Planet Finance seems to spin faster too. Every month seven trillion dollars change hands on global stock markets. And all the time new financial life forms are evolving… An explosion of “securitization”, whereby individual debts like mortgages are “tranched”, then bundled together and repackaged for sale, pushed the total annual issuance of mortgage-backed securities, asset-backed securities and collaterized debt obligations above $3 trillion. The volume of derivatives – contracts derived from securities, such as interest rate swaps or credit default swaps – has grown even faster, so that by the end of 2007 the notional value of all “over-the-counter” derivatives (excluding those traded on public exchanges) was just under $600 trillion. Before the 1980s, such things were virtually unknown.

Ferguson writes how the financial sector has grown in importance.

In 1947 the total value added by the financial sector to the US gross domestic product was 2.3 per cent; by 2005 its contribution had risen to 7.7 per cent of GDP. In other words, approximately $1 out of every $13 paid to employees in the United States now goes to people working in finance. Finance is even more important in Britain, where it accounted for 9.4 per cent of GDP in 2006.

http://forums.delphiforums.com/sunkopitiam/messages?msg=24868.1