Plenary address to International Conference on Microfinance, Bordeaux, France (Oct 2015)

1. From Good Credit to Bad
Debt
Dr. Johnna Montgomerie
Political Economy Research Centre (perc.org.uk)
Goldsmiths, University of London
International Conference on Microfinance (Bordeaux, France)
Oct 27-28, 2015

2. Making Debt Revenue Source and Asset Class
• Corporate governance - Enron to Northern Rock
• Banks create money by issuing debt contracts & ASSETS
• National Gov’t debts bailout banks, asset buy-back & QE
Ex April 2009 FTSE100 = 3542 in 2014 = 7103 (up 100% with 5yrs of QE)
• Households increase scale and scope of debt
Ex UK in 1993 at £400 billion in 2014 at £1.5 trillion
Debt crisis defining feature of financialised economies
1998 - LTCM targeted bailout
2001 DotCom market bailout
2008 – 2009 coordinated global bailout
Debt is the defining feature of financialisation

3. Limited understanding of debt & what it does
Rigid categories & established frameworks
Money & Credit – essentialist/functional definition unhelpful
Accounting Norms - National Accounts / balance sheet obscures
what debt does in financialised economies
Household still ‘black-box’ where production, consumption and
social reproduction coalesce – we just don’t know how

4. Follow the Money
Public/Private distinction between
government/central banks and
private households/firms debt does
not stand up to scrutiny
Financial system is underwritten by
government guarantees all debt is
both public and private –at the
same time!

5. Analysing the Household Economy
Opening up the black box of the household allow us to understand
what debt does to the economy & society
How debt is managed through relations of obligation & care
How debt is made an asset through legal contracts and financial
technology
How debt impacts emotional wellbeing and material necessity
Default, Bankruptcy and Debt Drones

6. How debt transforms the household economy?
Housing
Investment and (no) savings
Consumption
Safety-net
Education

7. Why Debts Matter
• Debt has tangible negative consequences for debtors and the wider
economy
• Debt is wellspring of financial power and most direct route to ending
Austerity
• Solving Endless Debt Crises: if debt at first creates economic activity
then destroys it, then destroying debt will create economic activity?

8. Imagining Alternatives
Crafting an alternative politics of debt
• Debt Audits: national, local and household
• Financial Market Restructuring
• Debt Governance Reform
For more see latest research on perc.org.uk
The Politics of Indebtedness
Financial Melancholia