Putting Humpty Dumpty Back Together Again: Financialisation and the Management of the Subprime Mortgage Crisis

Abstract

The subprime mortgage debacle in the USA and the subsequent global credit crunch provoked a wide range of crisis management responses in different national settings. Such interventions are typically figured as the sovereign state coming to the rescue of the markets and the banks. In contrast, and offering a critical analysis of the character and content of the principal interventions of authorities in the heartland of the crisis in the USA and the UK from Autumn 2007 through to 2009, we argue that these responses served to reproduce financialisation tendencies present across the seemingly separable domains of state and market which contributed to producing the crisis in the first place. Understood as a process co-constituted through pervasive but contradictory developments in capital accumulation, the risk management practices of lenders and the disciplining of borrowers, we show how, far from being seriously curtailed by crisis management, the financialisation of socio-economic life was actually buttressed during the very period in which its fragilities were most sharply exposed. In short, the management of the subprime crisis is a story akin to that of trying to put Humpty Dumpty back together again.