Accumulation by dispossession and savage sorting
A review at the Global Sociology Blog. Here is a taste:
In this system, crisis is not a bug, it is a feature:
“‘Crisis’ is a structural feature of deregulated, interconnected, and electronic financial markets. These same features also fed the sharp growth of finance, partly based on the financializing of non-financial economic sectors, leading to overall extremely high financial deepening. Thus, if crisis is a structural feature of current financial markets, then crisis becomes a feature of non-economic sectors through their financializing. (…) The overall outcome is extreme potentials for instability even in strong and healthy (capitalist) economic sectors, particularly in countries with highly developed financial systems and high levels of financialization, such as the US and the UK.” (36)
In this sense, and as has been noted by many authors [ahem], the sub-prime crisis was not one of irresponsible homeowners buying homes they could not afford but has more to do with the structurally-based high demand for asset-backed securities for speculative investments. As Sassen shows, the defaults on sub-prime mortgages would have been too small to generate the crisis that hit in September 2008. Increasingly complex financial instruments are the roots of this: the fact that they were in high demand and the fact that the capital was not there when CDS holders came cashing in, a crisis of confidence, as Sassen notes.
As with structural adjustment programs and the new land grab, the sub-prime crisis has to do with deepening extraction, or accumulation by dispossession. This is a form of violence that is easily enacted as it is done by computer and since the bundling of mortgages into complex financial instruments also involve a complete delinking with the material basis (houses) so that extraction-by-software can be done with total disregard for anything else involved (the human factor).
Be afraid. Be very afraid.