Price Wars: The Crisis and the Future of Financialized Capitalism
Popular theoretical explanations of the recent financial crisis suggest that finance, due to a combination of cheap credit, speculative investment and ‘irrational exuberance’, created a bubble in particular asset prices that proved impossible for underlying cash flows to justify. In this case, the inability of subprime borrowers to keep paying their debts undermined confidence in the value of financial assets constructed upon those cash flows. The central claim in such explanations is that finance periodically ‘overreaches’ the ‘fundamental’ capacity of some part of the ‘real’ or ‘productive’ economy to support it.
KeywordsCorporate Governance Cash Flow Private Equity Capital Asset Price Model Leverage Ratio
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