FIRE economy
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A FIRE Economy is any economy based primarily on the paper intensive sectors of Finance, Insurance, and Real Estate (FIRE).
It's New York City's largest industry and a prominent part of the service industry in the US overall economy and other western, developed countries. FIRE activities are unique in that they generate relatively large profit margins with little productive resources or capital employed other than people and paper.
In recent years, FIRE has created a positive feedback loop for rapid suburban development in the US as new real estate developments generate finance (mortgage) activities and associated insurance activity. This activity in turn creates demand for yet further real estate development and the cycle feeds upon itself.
This term is used in the financial press and blogs; it's origin is unknown.
The term may be subtly pejorative as the major output of a FIRE economy is paper; there is thus a corresponding implication of paper burning, or of paper fueling a fire -- indicating perhaps a false sense of economic well being upon which these economies are based.
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[edit] Examples of FIRE Economies
New York City
Richmond, VA
Much of Suburban America
[edit] Criticisms
Much criticism exists on the internet and in the blogosphere for the shifting of the US economy to a FIRE economy at the expense of a manufacturing and export-based economy. As the consumer of last resort, many believe that the United States has eschewed productive elements of its economy in favor of consumption to its long term detriment. A common theme of these criticisms is that FIRE is really a non productive, paper-based system in which participants trade pieces of paper and are not in fact involved in any real productive activity.
Particularly after 1973...pundits of the status quo hailed the proliferation of the “FIRE” (finance, insurance, real estate) economy as the coming of a new “service” “post-industrial” economy that would replace the old “smokestack” economy and the jobs lost through plant closings, restructuring, and down-sizing...
