Vampire Banking

Paul Krugman has a posting on his NY Times blog with this picture:

What this shows is that financial institutions are a vampire feeding off the soon-to-be corpse of American industry and the taxpaying public. That's is my politically incorrect way of translating Krugman:

Financial-industry profits have soared, probably because banks that can borrow money cheaply — because they have an implicit guarantee from the feds — are more or less guaranteed money machines unless they do something stupid; and gross stupidity has been placed temporarily on hold.

This has been good for the TARP, which won’t lose much money.

Beyond that, however, I find this ominous. We got into this mess because we had an over-financialized economy, with finance making a share of profits out of all proportion to its actual economic contribution. And now it’s baaaack.

The American taxpayer can't continue lugging the dead weight of a blood sucking financial industry on its back. Something like the Progressive Era's breakup of the trusts and monopolies is needed once again. It needs to start by cleaning up the Wall Street banks.