Killing the Host: How Financial Parasites and Debt Destroy the Global Economy, Author: Michael Hudson.
By Michael Hudson – As an economic process, financialization makes money through debt leverage — taking on debt to pay for things that will increase income or the value of assets: for instance, taking out a loan for education or a mortgage on a property to open a store.
But instead of using credit to finance tangible industrial investment that expands production, banks have been lending to those who want to buy property already in place — mainly real estate, stocks and bonds already issued — and to corporate raiders — those who buy companies with high-interest bonds.
The dynamic is more extractive than productive. Corporate financial managers, for example, can raise their company’s stock price simply by buying back shares from investors — financing the move by borrowing money. But in addition to raising debt-to-equity ratios, these short-term tactics “bleed” companies, forcing them to cut back on research, development and projects that require long lead times to complete. more> https://goo.gl/hNGmM3