Sociologist Saskia Sassen outlines the reasons for the financial crisis by it first makes a definition.
The financial world, in contrast to the traditional banking business:
Saskia Sassen:
Finance unlike, traditional banking that slowly accumulate capital, can be thought of as a capability for making capital, and hence enabling the launch of major projects.
Well, that is the financial sector to generate funds and that's just sometimes quite useful. It allows for large-scale projects.
Saskia Sassen:
Financial assets are basically debt, but debt with the special feature that it promises to make great profits.
resources that the Financial world are served, the kind of debt, that great gains can be achieved.
Saskia Sassen:
This ingredient of finance rests in turn on the need to "financial viagra" non-financial economic sectors. Because it needs debt finance is about grist - bits and pieces of the "real" economy - for its mill.
The growth strategy of the financial world: segments of the economy will be scrutinized for profitable debt. Debt can be traded and pooled, producing new financial products that can be traded like a currency. Even in sectors that have nothing to do with first-time Finance.
A popular tool the financial community in the U.S., the Credit Derivative: A bank may sell
the risk of a customer loan while the bank can continue to run the loan internally, as if not been. The customer has no idea - at least not before he is insolvent. For the people who take the risk, is a bit more uncomfortable than the bank.
similar happened the way this country than the HVB less attractive real estate loans to collection agencies passed on with a banking license. Once the new "bank" of the loan was to seize them, they drove the credit is a brutal - and people lost their homes quickly and were also a mountain of debt. Very clever. It was very in the manner of the financial markets generated a considerable profit with debt, not the traditional banks can create.
So now back to a specific form of the Credit Derivative: Sassen credit default swaps (CDS)
Saskia:
By 2000, the complexity of what was getting bundled had intensified - via derivatives on interest rates on long chains of corporate debt, credit default swaps (CDS)
A CDS is like an insurance policy, who is a lender with a third party to a loan. There are therefore in fees - for the insurance of a loan. Thus, a bank downgrading of the creditworthiness prevented if their loans are in default. The risk is outsourced. The "insurer" sweeps on a regular basis and fees must be in an emergency to pay for the loan.
Sounds like a nondescript Nischengeschäftchen. Far from it:
Saskia Sassen:
In fact CDSs had become the ultimate power-tool, a "made-in-America product Whose quantitative value jumped from $ 1 trillion in 2001 to $ 62 trillion in 2006 (more than the combined GDP of all the world's countries, $ 54 trillion).
GDP - gross domestic product - Gross Domestic Product.
in 2008 called for the payment of the loan to a large extent - - And so the system broke down.
Sassen also the author finds it not just good, now that everything has to start again, because the state and taxpayers have to foot the bill yes. The assertion without financial instruments is nothing more, belies the native European:
Saskia Sassen:
Small, local banks and credit unions can in great part meet the credit needs of economies-function complex. After all, most firms and households in major states (such as Germany, the United States and Japan) do not need high finance.
Why it's still more than would have been nothing?
The myth that so incredibly Finance komplex ist, das kein Politiker mehr durchblickt und eh' nix machen kann, funktioniert wie ein Schutzschild:
Saskia Sassen:
I just don’t see our political classes able or willing to do it. Not able because they simply do not do their homework on finance – they have decided it is too complex (which it isn’t) and so delegate matters to the sector itself; same thing in the US. And they are not willing because once you do not think you can understand high finance, you lose your political compass. I think thtis was also Obama’s problem in his (disastrous) selection of Summers/Geithner as his economic/fin team. Here I am with Gillian Tett’s intelligent stance: there is work to be done (not her words) - there is no easy and no perfect solution but we need to work at finding / developing workable ways of governing finance and pushing it in a different direction from where it has been the last two decades.
Admittedly, this was now all a bit dry and I was not particularly loose from the hand. Nevertheless, I contend that it may already understand, if one gives trouble.
safety - - the models behind derivatives are breathtakingly complex. Your application, however, is understandable. Yes it must not be mechatronics to create rules of the road.
source
http://www.opendemocracy.net/print/48568
A global financial detox
September 2009
Saskia Sassen:
Gilian Tett:
http://www.thedailybeast.com/blogs-and-stories/2010-05-16/the-most-powerful-woman- in newspapers /
