The Great Financial Meltdown
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The Great Financial Meltdown

Systemic, Conjunctural or Policy Created?

Edited by Turan Subasat

The Great Financial Meltdown reviews, advocates and critiques the systemic, conjunctural and policy-based explanations for the 2008 crisis. The book expertly examines these explanations to assess their analytical and empirical validity. Comprehensive yet accessible chapters, written by a collection of prominent authors, cover a wide range of political economy approaches to the crisis, from Marxian through to Post Keynesian and other heterodox schools.
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Chapter 12: Inequality, money markets and crisis

Simon Mohun


By the end of 2009, all impaired Alt-A and subprime mortgage-backed securities amounted to about $300 billion, about 2 per cent of gross domestic product. So how did problems in only a small part of the financial system cause the imminent collapse of the whole financial system? This chapter focuses on the underlying structure of the United States financial system in order to explain the systemic nature of the financial crisis, offering a more focused historical perspective on its evolution. The growth of the neoliberal financial sector and its compensation packages is generally considered to be one of the proximate causes of the growth of inequality. This causal chain also works in the opposite direction: the growth in inequality at the top of the income distribution is a major cause of the growth of the neoliberal financial sector and its instabilities. The chapter explores in detail how and why this was so.

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