Sucker punched by the invisible hand


Apologies are in order for the long gap since we’ve posted new content here at Debt & Society. All we can say is that our founding contributors have been distracted by research, scholarly publishing, and the vagaries of the academic job market. Fortunately, the academic drudgery of our founders is starting to yield a bounty of new findings on the causes, consequences, and meanings of debt and financialization for society. We’ll be featuring a number of the best recent and forthcoming studies from them in the coming weeks. Zwischen den einzelbestandteilen des komplexes hausarbeit schreiben muster und dem komplex stellt sich in der lösung immer ein dissoziationsgleichgewicht ein, das durch die dissoziationskonstante kdissoziationbeschrieben wird? We’re excited to start this off here with an article by Neil Fligstein and our very own, Jacob Habinek, that appeared in the final 2014 issue of Socio-Economic Review. explains why the 2008 U. S. home mortgage crisis caused financial havoc in so many foreign and multi-national banks. Fligstein and Habinek show that large banks throughout the industrialized world followed the same strategy as U. S. banks in using asset-backed commercial paper to leverage massive investments in mortgage backed securities. As a result, banks suffered tremendous losses and liquidity crises when mortgage defaults took off. “Sucker Punched” argues that both national deregulation and differences between banks within each nation matter for explaining the crisis. They show that most of the banks which over-invested in mortgage-backed securities (MBS) were from countries that had deregulated their banking systems to allow more extreme debt leveraging. But, they also show that some banks from deregulated countries did not enter this market. So to fully explain why some banks overlooked the risks of MBS investing, we need to understand how major banks can assume different identities, roles, and strategies within the same global markets. To read how Fligstein and Habinek think this works, check out the article at Socio-Economic Review.

Charlie Eaton

Charlie Eaton is an Assistant Professor of Sociology at UC Merced. His research examines the role of organizations in the interplay between economic elites and disadvantaged social groups. His primary current research project investigates relationships between financialization and growing inequalities in U.S. higher education. You can follow him on Twitter @eatoncharlie