Gendering capital&Debt and (not much) DeLeveragIng

Gendering capital: Financial crisis,

financialization and (an agenda

for) economic geography

Jane Pollard

Jane Pollard discusses in Gendering capital, about the importance of feminist theory in the establishing of future economic policies. Feminism provides insight into spaces and places that are (have been) left out prior to the 2008 financial crash. The crisis was gendered, and according to her, a bi-product of `testosterone capitalism`. Finance has long been a male centric sphere, led by the thought that humans are autonomous creatures and non-influenceable. A classic in neo-liberal ideology. Feminism has been in the forefront to uncover such ingrained gender biases, and in turning the economy more humane, based on needs rather than scarcity, efficiency and maximization of profit ridden of purpose.

Pollard also problematizes the notion that the economy functions in a way that all the baggage (e.g. cuts, taxes) is displaced on households, which are supposed to absorb the shocks and `deal with it`. That `passivity`, is coupled with other gendered notions, mainly that women are `emotional` as well as `risk averse`, features that are ultimately counterproductive to the predominant masculinities inherent in economic structures. Another important aspect of feminist theory is its insistence on making more visible the links between the private, state and households. Feminism pushes for a wider acknowledgment of the importance of households in constituting, producing and not merely consuming for the greater economy. Households can have far reaching effects on these other sectors, and are deeply shaken by crisis affecting, parenting, educational achievements and overall-wellbeing. Not only have they been undermined but also unfairly treated in the process of policy making. Pollard argues for decision making that links informal production (e.g. caring, love) to financial prosperity. Households and their financialization provide important bulding blocks to the economy, and shouldn’t remain on the bottom of the `food chain`.

Inequality is highly dependent on geography, and Pollard argues that women in certain countries, occupy mostly insecure jobs, making them especially vulnerable to economic downturns, despite an egalitarian agenda. This egalitarian agenda, pushes for equal opportunities, but doesn’t erase or medicate the unequal outcome. In that case, women are observed to take the extra-social responsibility to patch up the damage, through volunteering or activism, reinforcing Pollards idea that they are the ones to take up the slack. The text sheds light on the importance of considering sites other than factory’s and offices, while looking at global capitalism. Churches, households and streets are integral part of the system, and should be counted as important in furthering the economy. Feminist scholarship shows commitment to advancing such democratic and ethical ideas.

Debt and (not much) Deleveraging

McKinsey Report

 

The McKinsey Report sheds light on debt post 2008. According to its findings, debt has been increasing at an exponential rate, which seems unusual after such a profound recession. Countries have not been deleveraging enough, making their debt higher relative to GDP. Government, household and corporate debt have been rising, calling for new ways of dealing with it, preferably in a sustainable manner. As debt remains an important tool for economic growth, it needs better monitoring, as high levels of it (public or private) can stagnate future growth and put the stability of the economy at risk.  The Report stresses the importance of creating new pathways to avoid a drag on GDP and that also hamper economic volatility. Some of the suggestions are:

Government, Household & Corporate

•        An answer to reduce government debt might be increasing productivity therefore accelerating GDP growth, one-time taxes or restructure debt. However according to current growth projections, government debt seems far from being diminished. An ageing population and shrinking labor forces, are some of the aspects that challenge the needed growth.

•     Household deleveraging is rare because of mortgages and rising housing prices, which contributes to more borrowing. There is a strong correlation between housing prices and household debt. Household debt, asks therefor for more flexible mortgage contracts, clearer personal bankruptcy rules and stricter lending standards.

•   Although Shadow banking has retreated, and bank lending is likely to remain constrained due to new regulations, non‑bank lending has increased. Credit funds operated by hedge funds have doubled as has peer-to-peer lending. The risks associated with these intermediaries appear low, but should be monitored as that could change. 

Another important point the Report touches upon, is Chinas rapid increase in debt. Historically, a period of rapid debt increase is followed by crises. Three areas of risk for China are:

·       Real estate

·       Increase in lending (at risks of not being repaid)

·       Growth in shadow banking

Though Chinas debt is manageable, the need for an intervention should be avoided. Since 2008 much progress has taken place. Effective financial markets are possessed of an all-encompassing legal system that protects creditors, minority shareholders, provides transparent accounting as well as financial reporting. The Financial Stability Board, the Basel Committee, national regulators and other institutions have done important work to reduce systemic risk. Debt won’t be diminished anytime soon, therefor it will ask for continuously monitoring and effective management.