Financial-sector growth from asset inflation may have exhausted its own model.

Evidence

Having pumped and dumped every asset class on the planet, finance may have exhausted its own growth model. The banks’ business model for the past twenty-five years may be dying. If so, saving it in the bust is merely, and most expensively, prolonging the agony. Anticipating John Quiggin’s Zombie Economics, we may have endured austerity to bring back the nearly dead. — Mark Blyth, Austerity, 629

Categorization

• XREF: Direct precursor to John Quiggin’s ‘Zombie Economics’ thesis; also connects to Gabor’s finance-centric work and the broader ‘financialization’ literature on banking’s declining social utility. — connects to: Post-1990s growth ran on government-facilitated asset inflation rather than direct investment — Andrew deWaard, Derivative Media: How Wall Street…, 83; Index-fund growth created an informationally-inefficient price anomaly its own theory rejects — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1152; Finance theory altered its own empirical object of study — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 388 (+3 more)
• QUESTION: Whether retail banking dependence on the real economy under austerity creates a downward spiral worth examining with more recent post-2013 data.

Broader Connections

• Post-1990s growth ran on government-facilitated asset inflation rather than direct investment #corroborates (0.82) — Andrew deWaard, Derivative Media, 83
• Finance theory altered its own empirical object of study #exemplifies (0.78) — Donald MacKenzie, An Engine, Not a Camera, 388
• Index-fund growth created an informationally-inefficient price anomaly its own theory rejects #epitomizes (0.75) — Donald MacKenzie, An Engine, Not a Camera, 1152
• Financialization shifts markets from calculation to speculation, destroying predictability #qualifies (0.72) — Wendy Brown, Undoing the Demos, 742
• Market conditions moved toward the model’s assumptions partly because of the model itself #expands (0.70) — Donald MacKenzie, An Engine, Not a Camera, 1155