Subprime Cities: The Political Economy of Mortgage Markets

By K. Jacobs. 2014

112 citations recorded by the source corpus.

There have been numerous explanations of the US subprime mortgage crisis and its impact on the global economy. Subprime Cities adds to the literature by considering the "crisis" as a symptom of the failings of the capitalist system. Through their critique of capitalism in the longue duree, the authors are able to provide a set of insights that are often missing in those studies that focus mainly on the role of USA government policy-makers and the banking system. The collection, therefore, provides an alternative viewpoint to the mainstream explanation of the subprime crisis that has gained a foothold of late. The mainstream view of the crisis is that "deregulation" policies made it possible for banks to transform mortgage default risks by "bundling up" mortgage and other non-standard assets into "liquid" securities that could be exchanged on the global finance markets. This bundling-up, often termed "securitization", meant that profits could be made with little regard as to whether or not borrowers could repay their loans. In short, the cause of the global financial crisis is explained as being a consequence of maladministration, abetted by compliant policy-makers who caved into the demands made by Wall Street lobbyists.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/76c68bf531114d6b04ecd5d028f67a5048f7a5c6

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Citations in the corpus

The Handbook of Neoliberalism (2016, background): “But the worst was yet to come for the neoliberal city during the 2008 financial crisis, as much as the meltdown originated in and unfurled its furore over the world’s urban landscapes: both suburban expanses littered with foreclosure signs and central city financial economies that saw the failure of”
The false promise of homeownership: Homeowner societies in an era of declining access and rising inequality (2020, background): “Despite ongoing economic restructuring that saw rising employment insecurity and polarisation gradually erode the middle-class (see Beck 1992; Giddens 1999), concomitant processes of mortgage credit expansion and financialisation maintained access to homeownership for many households (Crouch 2009; A”
Centring Housing in Political Economy (2014, background): “That does not imply, however, that we are not interested in seeking a dialogue with political-economy-within-economics (see Aalbers 2012; Dymski 2012).”
How real estate became ‘just another asset class’: the financialization of the investment strategies of Dutch institutional investors (2017, background): “The credit crunch of 2007 revealed how financial actors are deeply motivated to liquefy illiquid assets such as real estate to further enlarge the financial sphere, further integrating real estate and financial markets (Aalbers, 2012; Gotham, 2006; Hudson, 2010).”
The alternative financialization of the German housing market (2017, background): “However, the literature has generally focused on housing markets that were heavily exposed to the global financial crisis (GFC), including those in Spain (e.g. CoqHuelva, 2013; García, 2010), Ireland (e.g. Fraser et al., 2013; Waldron, 2016), the United Kingdom (e.g. Martin, 2011; Wainwright, 2009) ”
Building cities on financial assets: The financialisation of property markets and its implications for city governments in the Paris city-region (2016, background): “Introduction From infrastructure to real estate, multiple portions of the urban built environment have morphed into financial assets (Leyshon & Thrift, 2007; Torrance, 2008; Aalbers, 2012; Guironnet & Halbert, 2014).”
The de-contextualisation of land use planning through financialisation: Urban redevelopment in Milan (2016, background): “The relationship between financialised capitalism and the rescaling of statehood on city regions is characterised by a de-territorialisation of financial capital and liquid assets and the formation of new spaces of governance (Aalbers, 2012; French et al., 2011; Gotham, 2006; Pike and Pollard, 2010)”