Geographies of the financial crisis

Author: Aalbers, Manuel

Source: Area, Volume 41, Number 1, March 2009 , pp. 34-42(9)

Publisher: Wiley-Blackwell

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Abstract:

Real estate is, by definition, local as it is spatially fixed. Mortgage lending, however, has developed from a local to a national market and is increasingly a global market today. An understanding of the financial crisis is ultimately a spatialised understanding of the linkages between local and global. This article looks at the geographies of the mortgage crisis and credit crunch and asks the question: how are different places affected by the crisis? The article looks at different states, different cities, different neighbourhoods and different financial centres. Investors in many places had invested in residential mortgage backed securities and have seen their value drop. Housing bubbles, faltering economies and regulation together have shaped the geography of the financial crisis on the state and city level in the US. Subprime and predatory lending have affected low-income and minority communities more than others and we therefore not only see a concentration of foreclosures in certain cities, but also in certain neighbourhoods. On an international level, the long-term economical and political consequences of this are still mostly unknown, but it is clear that some financial centres in Asia (including the Middle East) will become more important now that globalisation is coming full circle. This article does not present new empirical research, but brings together work from different literatures that all in some way have a specific angle on the financial crisis. The aim of this article is to make the geographical dimensions of the financial crisis understandable to geographers that are not specialists in all – or even any – of these literatures, so that they can comprehend the spatialisation of this crisis.

Keywords: credit crunch; financial centre; globalization; mortgage market; predatory lending; regulation; securitization; subprime crisis

Document Type: Research Article

DOI: http://dx.doi.org/10.1111/j.1475-4762.2008.00877.x

Affiliations: University of Amsterdam, Amsterdam institute for Metropolitan and International Development Studies (AMIDSt), Nieuwe Prinsengracht 130, Amsterdam 1018 VZ, The Netherlands, Email: m.b.aalbers@gmail.com

Publication date: March 1, 2009

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