Securitized debt markets depend on familial obligations as collateral substitutes

Evidence

What Strike Debt fails to take into account, however, is the fact that so-called private or personal debt is very often intergenerational, familial debt. As tuition fees have skyrocketed and lending thresholds have been raised, both the federal government and private lenders have pushed students towards loans that are signed by parents in the name of their children and where the obligations between parent and child serve as a kind of substitute for secure collateral. It is not the case then that we might undermine the debt obligations of high finance by valorizing our “debts … to our friends, families, and communities,” as Strike Debt advises us, since the global market in securitized household debt is entirely dependent on our intimate obligations to each other, particularly at the level of the family. The fact that we are unwilling to abandon such obligations serves a highly useful anchoring role for the market in securitized credit, ensuring that consumer debtors will typically remain wedded to a contract much longer than professional market players. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 258

Categorization

• DEEPTHINKING: Inverts the folk-radical assumption that family/community debt is the ethical counterweight to high finance: it is exactly the substrate that securitized markets monetize. This resists a one-line summary.
• XREF: connects to: Securitization made bankers believe dispersion minimized risk — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 181; Regimes with capital substitute purchase for direct coercion of subjects — Charles Tilly, Regimes and Repertoires, 129

Broader Connections

• Securitization made bankers believe dispersion minimized risk #expands (0.80) — Yanis Varoufakis, Technofeudalism, 181