Financial Tail Wags Economic Dog: Asia Sentinel

The ability to pay for goods and services now dominates economies and the processes of financing have become a larger goal than actual production. “Financialization involves the growth and transformation of finance such that with its hugely expanded size, scope and concentration, finance now overshadows, dominates and destabilizes the productive economy,” explain Jomo Kwame Sundaram, Michael Lim Mah Hui, adding that “financialization as a process… turns every product into a commodity to be traded.” They point out the financial sector has grown rapidly, in the United States now representing more than 20 percent of GDP is almost twice as large as both trade and manufacturing sectors. Shadow banking and non-traditional finance firms, like hedge funds, are subjected to fewer regulations. The essay concludes with an ominous warning that societies are embracing systems with cotss and risks that they do not really understand. The 2008 global financial crisis offers a reminder that problems for these dominant industries can mean trouble for the global economy. – YaleGlobal

Financial Tail Wags Economic Dog: Asia Sentinel

Financial industries shape the global economy more so than production, and societies may not understand all costs and risks
Jomo Kwame Sundaram, Michael Lim Mah Hui
Monday, June 3, 2019

Read the article from Asia Sentinel about financialization dominating the global eocnomy.

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. Dr. Michael Lim Mah Hui has been a university professor and banker, in the private sector and with the Asian Development Bank.

(Source: Blue Water Credit)

US GDP as % of Global GDP

(Source: Y Charts)

Copyright Asia Sentinel

Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.