From financing social insurance to insuring financial markets: The socialisation of risk and the privatisation of profit in an age of irresponsibility

Abstract

Since the onset of the financial crisis in 2007 states have expended trillions of dollars on salvaging ailing financial institutions and providing fiscal stimuli to fend off the spectre of depression. According to the International Monetary Fund (IMF), by 2009 governments had poured $432 billion of capital into financial institutions and underwritten debts worth $4.65 trillion (The Economist, 2009, p. 20). The legacy is record public sector indebtedness. Between 2007 and 2011 gross government liabilities amongst OECD countries increased from 72.9 to 100.7 per cent of GDP. The effects have been most pronounced in small economies that experienced major banking meltdowns including the Republic of Ireland, where gross government debt has quadrupled from 28.9 to 112.7 per cent, and Iceland, where it has more than doubled from 53.3 to 116.9 per cent, but there are a further 11 OECD countries, including the United States and United Kingdom, where such liabilities as a proportion of GDP have swelled by over half (OECD, 2010).