Politics Created Financialization
Greta Krippner traces historical political evolutions that led to the financial crisis. Firstly, the US government struggled to satisfy the people’s needs due to limited resources and unfair wealth distribution. Krippner argues that these problems created the need for financialization to avoid social, economic, and political dilemmas in the late 1970s and 1980s. Therefore, financialization was not a deliberate outcome but a strategy by policymakers to solve problems.
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The financial crisis did not cease with world wars but was experienced in 2008. In 2008 politicians and other policymakers deregulated the financial systems. They argued that financial administrators had strong incentives to protect their financial shareholders and prevent bankruptcy. Policymakers were driven by greediness and did not mind the impact of deregulation on financial systems. This clearly shows that policymakers facilitated the financial crisis. At the time and in the future, an alternative would be to regulate financial options that use too much leverage. Besides, critical analysis of the credibility of policies made regarding financial processes may help mitigate greediness.