Financialization of Everyday Life

Question 1

Financialization

Answer 1

• “’profits accrue primarily through financial channels rather than through trade and commodity production’, especially through the process of the securitization of debt [where debt is transformed into an asset and traded on financial markets]”
• Accumulation of wealth through debt
• Not employment-intensive
• Future-oriented
• ‘Financialization of everyday activities’ – credit and debt have become central to securing a living (e.g. home ownership and the purchasing of consumption goods)
• money itself as a commodity or product

Question 2

3 distinct features of money as a commodity

Answer 2

1. Money is the commodity through which the generation of surplus in contemporary capitalism takes place, especially money in the form of securitized debt
2. Money as a commodity is pervasive in everyday life
3. Money as a product or commodity in the context of present-day financialization is by no means straight-forward. Involves more and more monetary forms, financial instruments (e.g. derivatives)

Question 3

What Caused the 2008 Financial Crisis?

Answer 3

• Originated in the U.S. with the collapse of 5 major U.S. banks, housing and stock markets
• Financial liberalization
• Lack of oversight/regulation of the financial sector
• Risky financial products – mortgage backed securities, credit default swaps, derivatives - marketed to financial investors around the world
• Incentivized excessive risk taking
• Subprime mortgage crisis
• Credit rating agencies
• Ripple effect across the globe (as a result of the growing interconnectedness of local, national and international economies)
• Decline in demand for exports from developing countries

Question 4

Subprime Mortgage Crisis

Answer 4

• Sub-prime mortgages – high risk loans
• Extension of mortgages to borrowers with low credit ratings, few or no assets, low income
• Higher risk = increased interest rate
• “Teaser rate”
• Predatory lending
• Assumption that housing prices would continue to increase
• Housing bubble – 2006 – housing prices decline
• When the cost of food and oil, and interest rates increased, people could no longer afford their homes
• For many, the value of their home was less than their mortgage
• Foreclosure crisis

Question 5

Racial and Gender Discrimination

Answer 5

• Predatory lending in minority communities since the 1990s
• Creditor bias
• Legacy of housing segregation
• African Americans and Latinos more likely to receive subprime loans than whites (Dymski, Hernandez, & Mohanty, 2013)
• Women generally, and African-American and Latina women in particular, were disproportionately targeted for subprime loans (Bedford and Rai, 2010)
• In some instances African American women were given subprime loans even when they qualified for prime loans
• Resulted in significant loss of home equity and wealth, especially among African Americans (Phillips, 2011)
• Intergenerational impacts

Question 6

Overexposure to risk

Answer 6

“my point is that exposure to financial risk – an exposure that has no necessary relationship to income – is a driver for socio-economic positioning. One implication of this is that in our contemporary financialized moment, feminism should focus its concerns less on the redistribution of income, and more on such exposure, for example on the financially exposed female subject who is locked into a whole lifetime of securitized debt repayment, whose household is dependent on securitized debt relations, and whose debts – if indexed against income – can never be repaid”

Question 7

Gendered Implications of the recession

Answer 7

• Women and men (in different regions of the world) were impacted differently by the recession
• Attention to the impact of the economic downturn on both the spheres of production and reproduction illuminates these gendered differences
• Men in the U.S. experienced higher rates of unemployment due to job losses in male-dominated sectors including industry and construction
• “Mancession”
• Preoccupation with the impact of the recession on men

Question 8

Austerity

Answer 8

What is austerity?
• Policy response to economic crises
• Continuity with neo-liberal ideology
• Reduced state spending
• “Belt tightening”
• Targets public sector for budget cuts (health care, education, elder care, child care, public housing, welfare etc.)
• Dismantles public sector programs, benefits, employment, unions

Question 9

In what ways are the implications of austerity policies gendered?

Answer 9

• Women are disproportionately the recipients and providers of public sector services
• “Women form on average 69.2 per cent of public sector workers in the EU” (Elson 204).
• Female unemployment in the EU increased at a faster rate than male unemployment in the aftermath of the recession
• Women’s labour as elastic
• Women’s unpaid workload increases as public sector services are cut
• Impact on women’s mental health and well-being