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Faculty of Economics

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Palma, J. G.

Financialisation as a (it’s-not-meant-to-make-sense) gigantic global joke

On how easy rents lead to lazy elites (and a ‘latinoamericanised’ West); on perpetual manias; on how theory and policy confuse ‘means’ with ‘ends’; and on emerging countries as “financial markets of last resort


Abstract: This paper analyses events in financial markets since the 2008 financial crisis in both the developed and the developing worlds, giving especial attention to the processes of ‘financialisation’; that is, to the combined effect of the growing size and dominance of the financial sector relative to the non-financial sector, and the diversification towards financial activities in non-financial corporations. The main conclusion is that we are paying the price (and a huge one) for two related phenomena; one belongs to the realm of ideology and knowledge, the other to ‘power play’.

Keywords: manias, panics, financialisation, QE, excess liquidity, ‘disconnect’ between the financial and the real worlds, emerging markets, Latin America, Asia, Keynes, Kindleberger, Minsky, Buchanan

JEL Codes: E22 D70 D81 E51 F02 F21 F32 F40 F63 G15 G20 G30 L51 N20 O16

Author links: Jose Gabriel Palma  


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