The 2007-08 financial crisis was caused by aggressive lending and securitization practices that obscured risks, leading to widespread defaults and a global recession.
Tag: banks
2: Using debt to drive growth
The implications of financialisation spread across the UK housing market and broader economy. The shift from productive activities to profit-driven financial practices has destabilized traditional banking, leading to increased dependence on consumer debt and profit extraction from wages, while contributing to stagnant productivity growth.
1: The power of banks to issue debt
What happens when flooding risks affecting UK housing end up impacting the financial system’s reliance on mortgages as a savings vehicle? Banks have the unique ability to create money through issuing debt, fundamentally transforming loans into financial assets with multiple ownership claims. This profit-driven model enables extensive capital generation, significantly impacting households and the broader economy.
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