1. Financial Globalization and the Crisis of Neoliberalism
Jaehoon Lee
Iljoon Song

2. Overview of Presentation
What is Neoliberalism
Historical Background
The roles of Neoliberalism
What is financialization?
The relationship between Neoliberalism and Financialization
Financialization and the Crisis of Neoliberalism

3. What is Neoliberalism Economic Liberalization
Increase Freedom in Economic Markets
Decrease the Role of Government

4. Neoliberalism Rule of Markets Deregulation
Eliminating the concept of “The public good” or “Community”

5. Rule of Markets Back to Basic Knowledge of Capitalism
Increase Economic Power through Devrease the role of government in the economic Market
Possibility of Human Rights Abuse, Monopoly....

6. Deregulation Decrease the central power of government
Increase freedom on companies’ economic actions

7. ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY"
Decrease of welfare system
It decreases productivity of labor
Lack of Motivation

8. Two Tales of Neoliberalism
Police brutality against worker’s strike at Honda car plant, Gurgaon (2005)

9. What is Financialization
Financialization is result of neoliberalism and the rise of neoliberalism is explained by the growing role and power of finance in the political economy of capitalism.

10. Financialization is a systematic transformation of capitalism
The massive expansion of the financial sector where finance companies have taken over from banks as major financial institutions, and banks have moved away from old commercial banking practices to operate directly in capital markets as investment bankers;
Large previously non-financial multinational corporations have acquired new financial capacities to operate and gain leverage as investors in financial markets;
Domestic households have become players in financial markets (the ascendancy of shareholder capitalism) taking on debt and managing assets;
Financialization is a cultural change in ideology about unregulated markets that infuses all policies

11. Financialization and Neoliberalism
Volatility of short term financial flows increase vulnerability to crisis
Part of bigger picture of de-regulation as neoliberalism seeks to increase profitability, attack labour
Entails capital restructuring nationally and internationally
Developed States act as agents, not victims of corporate globalization
Inflation targeting; freedom for finance

12. Financialization and Neoliberalism
Autonomy of finance
Proliferation of financial actors and markets
Penetration of finance into greater areas of economic and social reproduction – health, education, energy, telecommunications, transport, pensions, housing
Corporations funding investment from retained earnings and private markets, less dependent on banks
Banks seek alternative sources of profits
Qualification: companies act as financial actors in their own right

13. The Roots of the Crisis of Neoliberalism
Financialization + labor flexibility = Neoliberalism (Causes Inequality)
Profit soar
Wages stagnation
Increasing in inequality
Consumption kept up thanks to Financialization
Banks are lowering interest rate (Borrowing money)

14. The Sequence of the Crisis of Neoliberalism
Household debt and bubble in the housing sector, low interest rates coupled with global imbalances and saving glut
Fall of 2007: US housing sector crisis and collapse of the sub-prime market.
Default correlations on mortgages spread to the world through the complex system of securitization.
Credit markets seized up, expectations worsened, interbank lending crunched, banks failed, Interest rates went up with more trouble for mortgage owners and increased default correlations. This resulted the burst of bubble

15. Domino Effects of Crisis

16. Results
Mortgage Delinquencies

17. Results
Housing price
Commodity price
Mortgages

18. Thank You