A fetish and fiction of finance: unraveling the subprime crisis

Erica Pani and Nancy Holman ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: As the moderately strengthened financial regulation of Basel III comes into effect over the next seven years, this article sets out a cautionary reminder as to why regulation needs to move beyond a focus on the mitigation and distribution of risk. To do so, the article unravels the much-misunderstood experiences of eight Norwegian municipalities whose investments plummeted as the subprime crisis unfolded: investments that had no immediate ties to subprime mortgage lending or mortgage-backed securities. Focusing on the processes, practices, and instruments of financialization, the article puts forward two new analytical concepts—“the fetishization of the knowledge of risk” and “fictitious distance”—to help explain how the crisis spread so quickly and extensively that it threatened not only the municipalities' investments but also the functioning of global finance as a whole. In so doing, it becomes clear that financialization has set a far more risky form of capitalism that is manifest through concrete economic geographies, from towns and cities in the United States to “distant” Norwegian municipalities. In the highly interconnected entanglement of geographies and finance that make up the global financial system, the fetishes and fictions of finance cannot be ignored.

Keywords: financialization; securitization; risk; subprime crisis; fictions of finance; financial regulation (search for similar items in EconPapers)
JEL-codes: F3 G3 N0 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2014-04-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Economic Geography, 6, April, 2014, 9(2), pp. 213 - 235. ISSN: 0013-0095

Downloads: (external link)
http://eprints.lse.ac.uk/52731/ Open access version. (application/pdf)

Related works:
Journal Article: A Fetish and Fiction of Finance: Unraveling the Subprime Crisis (2014)
Journal Article: A Fetish and Fiction of Finance: Unraveling the Subprime Crisis (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:52731

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().