GGRA02H3 Lecture Notes - Lecture 7: 1997 Asian Financial Crisis, Global Catastrophic Risk, Investment Banking
Document Summary
Finance: retail and investment banking, investment advice, accounting, stock brokers, tax services, the mortgage industry etc. 8% of gdp in the us is related to financial services. 40% of corporate profits are related to financial services. Increasingly firms are highly leveraged and invest very little in actual capital formation (plants, training, research, innovation). Growing importance of institutions such as stock-markets, central banks etc. that are outside of democratic control. Extension of massive loans from china, japan and asia to united states. Financialization of the global economy and crisis displacement and management. The economy becomes increasingly defined by acute booms and busts driven by intense speculative investments and financial crises. The rise of the real estate bubble. The credit crunch and emphasis on fiscal austerity. The increased role of finance in overall economic activity and the increased proportion of profits that are realized via financial channels are the two main empirical indicators of a process call financialization. (mann 155)
