Financialisation

Question 1

what was the first thing general motors did to do with financialization

Answer 1

general motors set up financial arm general motors acceptance corporation in 1919, prior to 1980s the main function was to provide customers access to credit to increase car sales

Question 2

what was the second thing general motors did to do with financialization

Answer 2

1990s broadened portfolio, entered mortgage lending and insurance banking and commercial finance,
heavily invested in subprime mortgage market and was bailed out by us government

Question 3

what is GMAC (general motors acceptance corporation) a case of

Answer 3

GMAC is a case of poor portfolio management but also indicative of a broader transformation of the economy over the last decades (corporations as financial investors)

Question 4

financialization d

Answer 4

financialization refers to the increasing importance of financial markets, financial motives, financial institutions, and financial elites in the operation of the economy

Question 5

what are the different approaches to financialization

Answer 5

coupon pool capitalism,
financialization as a class/elite project (Harvey, 2005),
financialization of daily life and culture

Question 6

explain approach to financialization coupon pool capitalism

Answer 6

explosion in trading of financial coupons such as shares, bonds etc, these influence households, corporate strategy as well as state

Question 7

explain approach to financialization, financialization as a class/elite project (Harvey, 2005)

Answer 7

a project to advance class interests through ownership of financial assets, financialization associated with higher compensation for executives and higher income inequality among employees

Question 8

explain approach to financialization, financialization of daily life and culture

Answer 8

everyday practices of saving, investment and borrowing has connected individuals and financial markets

Question 9

shareholder value maximisation d

Answer 9

the value delivered to shareholders because of management’s ability to grow earnings, dividends and share price

Question 10

by 2000 what had become the dominant ideology for corporate governance

Answer 10

maximising shareholder value

Question 11

what is a case study of corporate restructuring and outsourcing

Answer 11

blockbuster (9000 stores, 60,000 employees),

netflix (rents servers from amazon, 2000 employees)

Question 12

what are share buybacks

Answer 12

companies repurchasing their own stock thus reducing their number of shares, key strategy to boost stock price

Question 13

what is maximising share value often seen as

Answer 13

short term strategy because all companies want to do is increase share price as oppose to long term strategy

Question 14

is shareholder maximisation good

Answer 14

leads to growth of large investors who profit more

Question 15

how did the financialization of apple start

Answer 15

1980s adoption of shareholder value strategy,
focus on share price including large stock buybacks,
Steve Jobs returned share price increase

Question 16

what was the second part of the financialization of apple

Answer 16

outsourcing production and assembly (foxconn),
reorganisation of accounting behind product sales, profits and cash reserves,
offices in ireland (tax haven)

Question 17

how has the way apple has dealt with its cash changed

Answer 17

apple have tremendous cash reserves which is largely invested in American assets such as corporate bonds and US government debt