Financialisation

Financialization was one of three megatrends that swept the world in the last thirty years – the others being free markets and globalization. Financialization is defined as the growing importance of finance in daily activities, both at the national and global levels. Kids grow up these days wanting to be financial engineers instead of civil engineers. The effect was massive credit creation and financial turnover in terms of scale, speed and geography, turning finance from an agent of the real sector to a power in its own right. Hence, the solution to unsustainable financialization is not more debt, but more equity or the net worth of real sectors — households, enterprises and the government sector. That has to be generated through real sector reforms — the asset side of the balance sheet. Andrew Sheng, Star Bizweek 14.9.2013