Financial asset prices reflect speculative circulation, not underlying real value

Evidence

But the reality is more complex. As we will see in a moment, while the real world of value exists, financial instruments are never perfect or unproblematic representations of that value. The prices at which financial assets are exchanged are not direct representations of the underlying value of the “real stuff” to which they allegedly refer. For instance, in 2007 the price of a sub-prime mortgage had almost nothing to do with the value of the house in question, nor was it an accurate reflection of the mortgagee’s ability to repay the loan (see McNally 2011, 97–112; Wyly 2012). Rather, the price of a sub-prime mortgage was a function of its circulation in a broader speculative financial economy (see Chapter 2). Its price represented its relationality to a vast array of interconnected speculative gambits. — Max Haiven, Cultures of Financialization, 80

Categorization

• DEFINE: Establishes the core working definition of financialization’s central premise: financial instruments as non-representational prices.
• XREF: Direct precursor to deWaard’s cultural argument — the same decoupling of financial signifier from real referent, applied to popular culture rather than sub-prime mortgages. — connects to: Finance’s profits came from three interlinked asset bubbles, not efficient markets — Mark Blyth, Austerity: The History of a Dangerous…, 625; Asset value derives from future earnings rather than intrinsic commodity value — Kean Birch, Rethinking Value in the Bio-economy:…, 73; Financial assets are largely imaginary, yet imaginary does not mean unreal — Max Haiven, Cultures of Financialization, 29 (+13 more)

Broader Connections

• Speculation prices assets by imagined future appeal to others, not actual value. #corroborates (0.92) — Aris Komporozos-Athanasiou, Speculative Communities, 138
• Speculation is an imaginative act detached from asset value, pricing others’ future desires #expands (0.88) — Aris Komporozos-Athanasiou, Speculative Communities, 215
• Derivatives do not reflect risk but actively produce contingencies and value #expands (0.85) — Aris Komporozos-Athanasiou, Speculative Communities, 390
• Derivatives are speculative techniques betting on future asset-price movements #expands (0.82) — Max Haiven, Cultures of Financialization, 153
• Asset prices can embed subjective probabilities of events that never actually occur #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1587
• Financialization shifts markets from calculation to speculation, destroying predictability #corroborates (0.78) — Wendy Brown, Undoing the Demos, 742
• Financial asset prices oscillate among competing claims to meaning, like word meanings #exemplifies (0.75) — Max Haiven, Cultures of Financialization, 80
• Competitive speculation wipes out predictable price moves #qualifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 279
• Markets generate wealth through disposable metaphors, not coherent narratives #expands (0.72) — Max Haiven, Cultures of Financialization, 136