Skip to main content

Research Repository

Advanced Search

The performance of liquidity in the subprime mortgage crisis

Langley, P.

The performance of liquidity in the subprime mortgage crisis Thumbnail


Authors



Abstract

‘Liquidity’ is highly significant to representations of the crisis that gripped financial markets from the summer of 2007. A wide-ranging ‘liquidity crisis’ is typically traced to the collapse of prices in markets for assets backed by or derived from the repayments of American subprime mortgagors, while public authorities are said to have responded by ‘restoring liquidity’ to markets in these now ‘distressed’ and ‘toxic assets’. Here the category of performativity is developed to enable a critical investigation of liquidity. The performance of liquidity in booming subprime markets is shown to have turned on the affirmation and exemplification of wider norms present in wholesale asset markets, and upon specific calculative and emotional valuations of risk through underwriting procedures, bond rating and hedging. However, the performance of liquidity contained its other, illiquidity, and this surfaced in subprime markets because asset prices symbolised risk valuations which could not capture incalculable future uncertainties. As the crisis broke, talk of liquidity and illiquidity licensed particular policy responses and closed down wider political debate.

Citation

Langley, P. (2010). The performance of liquidity in the subprime mortgage crisis. New Political Economy, 15(1), 71-89. https://doi.org/10.1080/13563460903553624

Journal Article Type Article
Publication Date Jan 1, 2010
Deposit Date Dec 12, 2011
Publicly Available Date Mar 29, 2024
Journal New Political Economy
Print ISSN 1356-3467
Electronic ISSN 1469-9923
Publisher Taylor and Francis Group
Peer Reviewed Peer Reviewed
Volume 15
Issue 1
Pages 71-89
DOI https://doi.org/10.1080/13563460903553624
Keywords Liquidity, Illiquidity, Subprime mortgages, Performativity, Risk, Uncertainty.

Files





You might also like



Downloadable Citations