Financialization is wearing out its welcome

Originally published at:


Did the seller of the assets lie to investors about the quality of these assets? Yes, they did. Did they get help from the ratings agencies, who failed to do their one job? Yes they did. Was this basically fraud? Yes, it was. Were many people punished for this fraud? No, no they were not.

Are we still mad about this? Yes, yes we are.


What happens when the interests of an individual investor run counter to the interests of the marketplace? Shouldn’t investors have a duty to protect the marketplace, and not just the government or quasi-governmental groups (i.e. chambers of commerce)?

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Interestingly that seems to be the strategy of the Republicans right now:

  1. Load the country with debt to be shifted to people who work for a living
  2. Loot all public resources functionaries can get their hands on
  3. Avoid all legal responsibility for the ensuing shtshow.

Perhaps companies can focus on their products meeting customer needs for a change?

Who am I kidding?


When it was decided in 2009 that Giving the Banks More Money would be the solution to the crisis we were locked into this timeline.

Man the next bubble burst is gonna get ugly


The ability of individuals to make money in a marketplace is determined by the rules of the marketplace. It’s the duty of the marketplace to prevent moral hazard. If the marketplace doesn’t prevent this, it will eventually fail.

It’s the duty of government to require that markets prevent moral hazard (and enforce those requirements), and to limit their harm to individual investors (and the economy at large) when they do fail.


The number one rule of the marketplace is to make money, damn the rules. At least that appears to be what they’re teaching in business school these days. Boundless greed and chicanery is rewarded with piles of loot, so there’s really no incentive to play by the quaint rules.

Or have I misread the news for the last 20+ years?


The number one rule is survival. A marketplace can’t make money if it doesn’t exist.

Unfortunately, “to big to fail” means falling back to rule #2: Money at all costs. The current incentives favor boundless greed, which leads to chicanery, which at scale leads to marketplace collapse, and recession or worse.

Until government can incentivize those running marketplaces to favor fear over greed (jail time, shutdown, takeover), I don’t see the situation improving.


This seems like wishful thinking to me. These kinds of risky financial instruments can’t go away, because there is so much money sloshing around at the top that everybody is looking for someplace to stash it. Supply side economics has created an oversupply of capital. Regular investments get drowned in cash and diluted to the point of worthlessness, so people have to seek out new and innovative forms of risk that offer better rewards (and much larger downside, but we’ll buy insurance against that because insurance companies never go bust).

The only lessons learned from the last financial crisis is that the taxpayers will step in and bail you out if you’re super big so they’re back to their old tricks. It’s inevitable that we’re going to see another big crash, probably in the next few years. The fundamental forces behind the crash are still there because they make a ton of money on the upside for extremely rich and well connected people and the FTC is absolutely terrible at accessing systematic risk.


I think that individuals should share in this burden as well.

This pattern is repeating everywhere: where once corporate raiders could seize a company, loot it, load it up with debt and sell it on to suckers, now everything from energy bonds to shale gas are being pounded by the markets after private equity looters tried their usual shenanigans

I attribute the reduced tolerance for this behaviour to a critical mass of people watching “Goodfellas”


Sorry but I haven’t the faintest fucking idea what financialization means.

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The process by which the financial services industry tries to eat the rest of a nation’s or the rest of a planet’s economy.

One concrete example would be the way rental properties in the US have mostly stopped being a mom and pop dominated operation with millions of landlords renting out a few properties each, replaced by a few very large corporations who bundle up their rental property income and sell that rental income as financial instruments. (about which Cory Doctorow has ranted here at Boing Boing several times before).


Ah, the ol’ Chrematistics posing as Oeconomia game.

Chrematistics (χρηματιστική) can be defined as the branch of political economy relating to the manipulation of property and wealth so as to maximise short term monetary exchange value to the owner. Oeconomia (οἰκονομία) by contrast is the management of the household so as to increase its use value to all members of the household over the long run.

  • Herman Dalley and John Cobb Jr, For the Common Good

The buzz-words and narratives may change but they’re basically still cover stories for money sequencing without limit.

This won’t be a popular thing to say, but the government didn’t “give” the banks the bailout money. It partially nationalized them, later selling its shares for a profit that went into the treasury. Was this fair or right? Maybe not, but the facts matter.

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Basically mom and dad bought a new house for their 20something when he decided to burn not only his own house but his entire neighborhood down out of rational self interest.


“Nationalisation”, partial or otherwise, implies that the state dictates the bank’s application of the bailout funds. That’s not what happened. Instead, Prince Bush and his cronies trusted the bankers with taxpayer money, and the bankers repaid that trust by giving themselves bonuses and hoarding the funds to ride out the storm almost as soon as the cheques were deposited. What they didn’t do with the funds was use them to authorise commercial paper to get the economy going again.


Yes QE.

It woulda been nice to see what that looked like had it been invested in the American people, instead we get a fracked planet and a billion empty condos. :man_shrugging:


I agree, though I don’t think any society has figured out how to address those that don’t share in the burden in a just way.