“Financialisation” is a neologism invented to characterise certain trends on the American economic scene, and so the international economic scene, in the opening years of the 21st century. Would it be fair to propose another neologism, “financialitis”, to describe the inflammation of hostile commentary on capitalist financial institutions and, in particular, on organisations which label themselves “banks”?
Traditionally, British newspapers have been friendly towards these institutions, but recently the Financial Times has positioned itself as a critic of the financial structures found in free-market societies. Its chief economic commentator, Martin Wolf, has written a series of outspoken articles advocating more state intervention and control.
The inability of Northern Rock to fund its balance sheet last summer and the subsequent run on its deposits may have started the latest bout of financialitis in Britain. But the condition has been aggravated by the US Federal Reserve’s decision to extend a loan to Bear Stearns as part of a larger rescue effort, even though Bear Stearns is not, strictly speaking, a deposit-taking bank. Bear Stearns is instead a market-maker and underwriter of securities. These two activities are not only the most distinctive and riskiest in modern capitalism, but are also very highly paid.