First off, I thought I'd post this gem from the wiki.
It is possible with level 100 enchanting to cast spells without using magicka. This can be done by wearing multiple pieces of armor/jewelry with multiple enchantments that reduce spell cost of a certain school. The percentages stack directly making it possible to have more than 100% cost reduction. That is, two enchantments of 50% spell cost reduction would stack up to 100% spell cost reduction, so when a spell is cast with such cost reduction no magicka is used at all.
This means that magnitude can increase A LOT more than I thought it could. You just need to put a shitload of Perks into enchanting. So if you mages want to be viable in the late game... get enchanting!
As for your comment Frankie... considering the events of the previous games and the stuff in between Oblivion and Skyrim, it's easy to see why this happened.
- Morrowind is currently the property of the Khajit and Argonians. After the Red Mountain errupted, they swept in and conquered the country, basically in response to the hundreds of years of on-going slave trade in the region. Dunmer are currently pissed at the Argonians and Khajit, who are share the sentiment. Most of the Dark Elves have left the country as refugees.
- The Thaldor are explicitly Elve supremacists... and by Elve, they only mean High Elves. They conquered their region in a cue, then proceeded to steamroll the neighboring homelands of the Bosmer, Orcs, and Khajit. They are at peace with the Empire right now, but basically only because they don't want to commit genocide at the moment. This means everyone hates High Elves (more than they did before) and the High Elves hate everyone else.
- Blackmarsh left the Empire, mainly in response to their utter unwillingness to stop the Slave Trade in Morrowind. Thus the Imperials, Bretons, and Redguards aren't exactly happy with Argonians at the moment, who they view as fair weather friends.
- Nords are mainly pissed with the Empire, which hasn't done shit to help them since Uriel Septim died and the recent outlawing of Talos worship, which the High Elves don't like because Talos was originally a Nord. They don't want to revere a mere man because it doesn't fit in with their Altmer supremacy visions. Since the Empire is too weak to fight of the Dominion, they gave in to the demand. This and the long, brutal war with the Dominion has basically brought Skyrim to it's breaking point.
So yeah... it's not surprising that everything has gone to hell.