MSc in Financial Services and Society

Starting in September 2009, the University of Nottingham is offering an MSc in Financial Services and Society, for which I will be the Course Director.  This interdisciplinary Masters provides a research-led teaching and learning programme on money and finance within the context of the disciplines of Business, Geography and Law.  It will provide students with an understanding of contemporary monetary and financial systems and will equip students with critical evaluation of core theoretical and empirical developments within the social sciences to equip them for research related careers.

It is available both full-time (one year) and part-time (two years) and it is possible to apply for funding to support your studies sufficient to cover fees at the UK/EU rate.

For more details on the course and the funding opportunities available you can click here, e-mail me on andrew.leyshon@nottingham.ac.uk, or call me directly on 0115-8466147.

Geographies of the New Economy

Geographies of the New Economy: critical reflections (2007), a book that I co-edited with Peter Daniels, Mike Bradshaw and Jon Beaverstock,  is now available in paperback through Routledge’s print-on-demand service.  While at $44 it’s much cheaper than the hardback (which is priced at an eye-watering $130) it still seems expensive for a paperback (well in the UK at least due to the collapse of the £ against the $!), especially when the point of POD is to lower costs by preventing the over production of books in the first place.  Nevertheless, given the subject of the book it’s appropriate and welcome that it is now available in a new format and at a lower price through the application of digital technoogy.

Financialization, Space and Place

Financialization, Space and Place

The 3rd Annual Meeting of the International Working Group on Financialization, Thursday 23^rd April 2009.

Sponsored by the Economic Geography Research Group of the Royal Geographical Society.

Venue: University of Nottingham’s London Office, 41-42 Berners Street, London, W1T 3NB[1].

Capacity at this venue is strictly limited and the event is almost full.  If you wish to register, then e-mail Louise McIntyre (louise.mcintyre@nottingham.ac.uk).  The registration fee is £25, which includes a buffet lunch, payable in advance.

Background and aims

The concept of financialization seeks to account for the empowering of financial markets and their influence over the unfolding of economy, polity and society. Processes of financialization are manifest at a number of scales, ranging from higher levels of instability within the economy as a whole, through pressure exerted on corporations by capital markets, to the equity effects of the financial system on individuals and households. To date, the growing body of work on financialization has only fitfully addressed its relationship to the geographies of money and finance. The workshop aims to provide an opportunity for the connections between financialization, space and place to be explored within an inter-disciplinary context, with contributions from geographers and non-geographers alike.

Schedule:

10:15-10.50 Registration

10:50-11:00 Introduction

11:00-12.30 Session 1

Gary Dymski (UC Riverside/Sacramento): What’s left of banking after the subprime crisis? spatial implications and policy directions.

Abstract: The subprime crisis arose in large part because of the intersection between four elements: changes in banking retail strategy, housing bubbles in key locations, historical patterns of financial exclusion and discrimination, and the emergence of an integrated set of liquid secondary/reinsurance markets. The unsustainable surge of fee-taking and loan-making in the subprime-driven phase of the housing bubble has compromised the entire edifice of banking and financial institutions and markets that had been built up during the 20-plus years of global neoliberal experience. That neoliberal institutional edifice was not completely functional in either social or economic terms – its dynamics gave rise to the problematic of financial exclusion, for example – but it had a certain logic. The utter desolation wrought by the banking/financial crisis of 2007-08 now raises the question, what remains of banking and finance after the subprime crisis? What will be the elements, how will they work in the context of the larger economy? This paper explores some possible futures for the banking and financial system, with special attention to the impact of this system on the distribution of economic activity and inequality in space. The paper concludes by exploring the implications of these possible futures for pro-growth, egalitarian policies vis-à-vis banking and finance.

Shaun French (Nottingham), Andrew Leyshon (Nottingham) and Nigel Thrift (Warwick): A very geographical crisis: the making and breaking of the sub-prime crisis.

Abstract: In this paper we argue that an understanding of the historical geography of money and finance is essential for apprehending the catastrophic collapse of sub-prime, both as market and as securitized income stream, and of the ensuing financial crisis. The paper argues that the origins of the crisis can be located in four spaces. First, in the international financial centres of London and New York and, in particular, in the longstanding competition that has existed between the two for the title of pre-eminent international financial centre. Second, in the insularity of the everyday geographies of money that have emerged in such centres in the wake of the apparent hegemony of financialization. Third, in the geographical recycling of surpluses and deficits and more particularly the structural dependency that has grown up between China and the United States. Fourth and finally, the growing power of the financial media, centred in international financial centres and an increasingly significant agent in performing money and the economy in general, and in engendering mimetic forms of rationality. As a result, the current crisis is one that has been founded in an active use of financial space.

12.30-13:30 Lunch

13.30-15:00 Session 2

Anastasia Nesvetailova (City): The end of a great  illusion: the global credit crunch and liquidity meltdown.

Abstract: This paper argues that the credit crunch is the result of a particular problem in the world financial system, that is, of the phenomenon of ‘liquidity illusion.’ At the heart of this still poorly understood phenomenon lies the spiral of financial innovation and its effects on systemic liquidity. I examine the political-economic mechanisms that had sustained the illusion of liquidity during the boom years, and the mechanisms which contributed to its evaporation during the ongoing crisis. My analysis demonstrates that that while increased investment inflows have been one of the factors behind the North Atlantic credit boom of 2003-2007, the boom – including housing and securitization bubbles – has disguised the fact that the financial system in Anglo-Saxon economies has become progressively illiquid. Drawing on the scholarship of Hyman Minsky, I identify three pillars of the liquidity illusion – Ponzi finance; collective thinking by investors; and the credibility function performed by the credit rating agencies – and examine their role in the unravelling of the global liquidly illusion.

Sarah Hall (Nottingham): Financialized elites and the changing nature of finance capitalism: investment bankers in London’s financial district

Abstract: This paper uses the ongoing financial crisis to develop understandings of financial elites in London’s international financial district. In particular, I focus on the different modalities of power associated with the changing nature of ‘financialized elites’. I argue that in contrast to earlier generations of financiers, the power of contemporary investment bankers emerges through their role choreographing transnational networks of financial actors associated with securitised and structured products rather than being purely read off their social or educational background. I suggest that these networked forms of power relation are significant because, on the one hand, they have prevented investment bankers distancing themselves from the ongoing turbulence and uncertainty within the international financial system. Meanwhile, on the other hand, the ability of investment bankers to (re)produce such networks indicates that suggestions of the demise of ‘financialized elites’ in the wake of the ‘global credit crunch’ may be too hasty as previous financial crises demonstrate the considerable ability of ‘financialized elites’ to seize moments of conjunctural opportunity to reinvent themselves through new financial products and organizations.

15:00-15:30 Tea/Coffee

15:30-17:00 Session 3

Ewald Engelen and Anna Glasmacher (Amsterdam): Self-representations of financialization: international financial centres on the internet.

Abstract: The 1990s has spawned a large number of initiatives to present national financial centres as hot spots for international financial activities. While the competition for the footloose agents that dominate the financial markets plays itself out along multiple dimensions – regulation, taxation, human capital, infrastructure and lifestyle – it is striking that each and every would be financial centre has crafted an image of financialization and its unique place within it on the internet. In this paper we present a critical cultural geographical analysis of the images that are constructed of International Financial Centres on the worldwide web. Questions addressed in the paper are: Which identities are being promulgated? What kind of mixtures of contextual uniqueness and global similarity are used in the construction of the images of different financial centres? To what extent are these images gendered? Are the website mainly serving marketing functions or do they serve other, more substantial functions? Can we perceive differences between European, American and Asian financial centres? How to account for these differences? What role does history and its cultural reflection play in the representation? And finally, do we see reflections of the credit crisis that is currently playing itself out in the self-representations presented on the internet?

Julie Froud, Alan Harding, Sukhdev Johal, Adam Leaver, Karel Williams (CRESC/Manchester): Does the UK have a sustainable business model?

Abstract: Questions about the sustainability of the national business model are back on the agenda as Peter Mandelson discovers “Britain needs an economy with less financial engineering and more real engineering”. The paper divides into three sections. The first section considers successive dystopias or grounded fears about a future that does not work, starting with 1980s deindustrialisation fears about whether manufacturing could generate a suitable quantum of exports and employment. The second section, on the UK economy since the mid 1990s considers the contribution of finance as leading sector, the North’s dependence on New Labour reflation and the national ecology of islands of affluence adjacent to deprivation. The third sector considers what is to be done when our anaemic private sector has created no net new jobs since the mid 1990s and the imploding financial sector requires hugely expensive bail outs.

17:00-17:30 Discussant and open discussion session

Paul Langley (Northumbria)

Andrew Leyshon, Jon Beaverstock, Shaun French and Sarah Hall, School of Geography, University of Nottingham (andrew.leyshon@nottingham.ac.uk).

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[1] The office is a five minute walk from Goodge Street, Oxford Circus and Tottenham Court Road underground stations.

Presentation on the Buy to Let market at the Financial Services Research Forum Spring seminar

I will be presenting a paper, co-written with Shaun French, on the UK’s Buy to Let market at the Financial Services Research Forum’s Spring meeting at the Central Hall, Westminster, on Tuesday 17th March 2009.  The paper is entitled, ‘”We all live in a Robbie Fowler house”: the buy to let market in retrospect and prospect’. The paper is based on research funded by the Forum over the past 12 months.

Current and former PhD students

POSTGRADUATE SUPERVISION

I am always keen to supervise PhD students and would welcome applications in any area of economic geography and/or geographies of music. The School of Nottingham currently has four PhD scholarships available each year, and more details on the application process can be found here:

http://www.nottingham.ac.uk/~lgzwww/research/postgraduate%20research/

Please contact me if you would like more information on the application process: andrew.leyshon@nottingham.ac.uk

Note that to be eligible for ESRC funding you must have been resident in the UK for three years prior to taking up the award and will require the completion of an ESRC recognised masters course (1+3). For more information on the range of masters courses available at Nottingham, go to:

http://www.nottingham.ac.uk/~lgzwww/taught-courses/postgraduate-courses/

Current PhD students

James Corah, ‘The Economic Geographies of Religious Institutions’. Economic and Social Research Council.

Amanda Huskinson, ‘Blues, Identity and Place’. Economic and Social Research Council.

Kevin Milburn, ‘Re-imagining the city: shifting time, space and place in modern electronic ballads’, Economic and Social Research Council

Former PhD students

Chiung-wen Chang, ‘Taiwanese high technology production in the Yangtze River Delta, People’s Republic of China’. Self-funded.  Examined and passed October 2009.

Thomas Wainwright, ‘The Geographies of Securitisation and Credit Scoring.’. Economic and Social Research Council.  Examined and passed September 2009.

Karen Lai, ‘Approaches to ‘Markets’: The development of Shanghai as an International Financial Centre’, 2004-2007. University of Nottingham/ORS Scholarship. Examined and passed January 2008. First destination: Killam Postdoctoral Research Fellowship, Department of Geography, University of British Columbia.

Keith Jones, ‘Networks of Ambience: networks of sound, technology and society’, 2001-2004. Economic and Social Research Council Scholarship. Examined and passed March 2005. First destination: ESRC postdoctoral fellowship, University of Nottingham, 2005-2006.

Julian Clarke, ‘The development of call centres within the context of the retail finance sector’, 2000-2003. University of Nottingham Scholarship. Examined and passed, March 2004. First destination: Research Associate, University of Leicester.

Martin Roche, ‘Constructing spatial accounts of social capital: case studies of the Catholic Church in the UK and Ireland’, 1995-1998. Economic and Social Research Council Scholarship. Examined and passed December 1999. First destination: Research Associate, University of Wolverhampton.

Shaun French, ‘Bristol and the reconfiguration of financial space in the UK: fields-of-learning in the Life Assurance industry’, 1994-1997. Economic and Social Research Council Scholarship. Examined and passed, November1998. First destination: Research Associate, University of Bristol; Subsequently Lecturer, School of Geography, University of Nottingham.

Duncan Fuller, ‘Financial exclusion in Hull’, 1994-1997. University of Hull Scholarship. Part-time. Examined and passed, April 2000.

Jonathan Pratt, ‘Re-placing money: the evolution of banking systems in Britain and Germany’, School of Geography and Earth Resources, University of Hull, 1991-1994. Part-time. University of Hull Scholarship. Examined and passed, February 1996. First destination: Teaching Assistant, University of Southampton; Subsequently, Research Manager, Stepahead Research Ltd., Kent.

Rethinking economy/economic geographies

Roger Lee, Andrew Leyshon and Adrian Smith, “Rethinking economy/economic geographies”. Final submitted version of paper published in Geoforum (2008)

R000239472 – Putting e-commerce in its place: constructing electronic times and spaces

Funded by the Economic and Social Research Council

Award/Grant Name: Putting e-commerce in its place: constructing electronic times and spaces

Award/Grant Holders: Andrew Leyshon, Shaun French, Louise Crewe and Nigel Thrift.

Duration: November 2001 – January 2004

For the full End of Award Report, click here and for a Project Summary click here

Non-Technical Summary

The research focuses on e-commerce from producers’ perspectives, and sets out to investigate claims (made before and during the dot.com boom) that the internet would fundamentally change the relationship between supplier and consumer.

Detailed observation of organisations in the sectors chosen – music, fashion, and retail financial services – constituted the bulk of the research activity. Interviews and analysis of texts were also undertaken.

The main objectives were (in brief):

1. To modify the concept of ‘virtualism’ to incorporate a broader set of participants beyond academic economists, and to include types of abstractions outside formal economic theories.
2. To analyse ways in which such ideas and concepts are translated into practices.
3. To produce an audit of the e-commerce knowledge community (EKC)
4. To consider the take up of ideas and concepts among managers in the chosen industries.
5. To map the material impact of e-commerce on the chosen industries.
6. To consider the ways in which e-commerce has forged new interaction between companies and consumers, and the effects of its outcome.

Key findings

1. Broadly, virtualism is the translation of abstract ideas and concepts into material form. The dot.com boom was integral to transforming ideas to reality, and then to acceptance as the norm.
2. Following the dot.com collapse in April 2000, the role of e-commerce was fundamentally reassessed. Dot.com companies faced the same success criteria as traditional business – sufficient revenue has to be generated to cover the cost of capital and make profits. This led to a change in the assessment of the desired outcome for many e-commerce activities. Most companies now have web sites, but for a variety of purposes. Many are not directly aimed at, nor designed to make sales, but used for promotion, information dissemination, research, assessment of success/failure and other measurements.
3. Evidence supported the hypothesis that a discernable EKC has emerged, and that it is a more diverse and dynamic group than originally envisaged, with boundaries which are constantly shifting. The ECK is wide ranging, encompassing management consultancies, business schools, the media, etc. at one end, and practitioners such as software and technology providers at the other.
4. Practical, incrementally gained, and even mundane knowledge was frequently more influential in shaping e-commerce than researched theory and concepts, particularly for smaller businesses. Larger organisations, such as financial service providers, were more likely to use formal and consultancy findings than were smaller companies such as fashion retailers. In general, the better the economic climate the more experimental firms become in using new e-commerce technology.
5. Originally it was thought that e-commerce was best developed by start up and stand alone businesses. With some notable exceptions, the most successful e-commerce has been undertaken within existing organisations. Cost absorption, market knowledge and the use of established brands have all contributed to this success.
6. i. The internet has provided faster access and better knowledge of commodities and prices.
   ii. The ability to exchange information in both directions between producer and consumer has created a relationship not previously possible, and can result in modification of the product or service.
   iii. Information exchange and web chats for fan club members, hobbyists, collectors, etc. is enabled. It poses questions about the relationships between formerly ‘isolated’ individuals with shared, but sometimes competitive, interests.
   iv. Consumers appreciate being able to make fast transactions, search for unusual items, participate in auctions, and track markets.
   v. The screens on electronic devices have become a motif of cultural transmission, and a new way of monitoring activities. All organisations are now expected to have a website.
   vi. Speed has become the accepted ‘ambient’ pace.

The impact on the three sectors researched differed considerably:

• fashion retailing relies to a large extent on touch and fit. E-commerce has had little impact beyond specialist items.
• established financial service providers use e-commerce as an additional distribution network.
• the music industry’s value chain has been completely destabilised by piracy, leading to a major restructuring.

About the study

The project was started in November 2001 and ended on 31 January 2004. It involved five researchers: Professor Andrew Leyshon (Principal Researcher), co-applicant Dr S French, and Professor L Crewe (all from the School of Geography, University of Nottingham), Dr P Webb (University of Birmingham) and Professor NT Thrift (University of Oxford).

Key words

E-commerce, producer/consumer relationship, internet transactions, information dissemination, dot.com boom

Books

Peter Daniels, Andrew Leyshon, Mike Bradford and Jon Beaverstock (Eds) (2007) Geographies of the New Economy: critical reflections, Routledge, London

Andrew Leyshon, Roger Lee and Colin Williams (Eds) (2003) Alternative Economic Spaces, Sage, London

Andrew Leyshon, David Matless and George Revill (Eds) (1998) The Place of Music, Guilford, New York

Andrew Leyshon and Nigel Thrift (1997) Money/Space: geographies of monetary transformation, Routledge, London

The software slump: digital music, the democratisation of technology and the decline of the recording studio sector within the musical economy

Andrew Leyshon. “The software slump: digital music, the democratisation of technology and the decline of the recording studio sector within the musical economy”. Submitted to Environment and Planning A. Please do note cite without permission. Comments welcome.

“There’s unlimited supply, And there is no reason why”*

The leaks emanating from the private equity firm Terra Firma about the excesses they claim to have found at record company EMI has no doubt ensured that large helpings of schadenfreude have been hungrily consumed within the rest of the musical economy in recent weeks. Terra Firma bought EMI in the summer of 2007 and has been poring over its books and accounts ever since as part of the standard private equity project to reorganise a company so that it be flipped back onto the market in three to five years time at a profit. Terra Firma has a track record of buying companies with ‘failed’ business models ; ironically, it has already given the private equity treatment to Thorn, previously part of the Thorn- EMI conglomerate before it was demerged in the 1990s. This in itself should have sent some kind of message to the outgoing executives of EMI that Terra Firma hardly had a positive view of their managerial abilities. The revelations of extravagance approaching the bacchanalian seem to have so shocked the sober-suited bean counters Terra Firma that they were simply unable to keep it to themselves. Admittedly, the disclosure reveals business practices that one might think a tad unusual and indulgent, such as the £20,000 spent on candles to decorate a Los Angeles apartment used to entertain clients, and a £200,000 annual budget for fruit and flowers.

Over the last couple of years, as part of research I’ve been conducting on the musical economy, I’ve talked to large numbers of people who work in recording studios and associated activities, and it is safe to say that they do not hold recording companies and their employees in high esteem. Indeed, one senior member of this community was so dismissive of their abilities that he insisted that should anyone care to undertake an comparative analysis of management ability across the British economy he was confident that it would record company executives would be found way to the left of the bell curve. So, while those working at the sharp end of the musical economy would certainly have found Terra Firma’s revelations of interest, they probably would not have been all that surprised. The recording studio sector in the UK and elsewhere is under going a crisis of significant proportions, which has meant that the institutional base of the sector has been receding at a rapid rate. Many studios have closed and those that remain open often struggle to get by. Redundancies have followed while those that remained in employment have found their conditions casualised or degraded.

But in addition to spinning against the old management, the head of Terra Firma, Guy Hands, has also discredited the established record company business model, and argued that executives in the company were slow to embrace the possibilities of transforming the demand for downloads into a viable business model. In this respect, Hands echoes findings from earlier research which has argued that one of the problems for record companies was an industry-wide corporate cultural crisis, and the inability to think beyond the business model that has sustained the recorded music industry for the past 100 years or so. The problem is finding a new business model that will enable to the industry to sustain itself – and allow Terra Firma to get their money back and more. Ironically, one band that left EMI to strike out on their own rather than work for Terra Firma was Radiohead, but which at least provided conclusive evidence of one model that they can safely discard: the pay what you think it’s worth model. Customers wishing to download the album were invited to set their own tariff, plus an obligatory 45 pence to cover administrative charges. As many as 60% of people chose to pay nothing at all. Radiohead are rich enough so that this level of freeloading doesn’t really matter, and can easily make this back in ticket sales from a stadium tour. But it is hardly a promising business model for new bands without Radiohead’s brand recognition. Terra Firma’s urgent need to find a coherent business model for the music industry will be worth watching.

* ‘EMI’, The Sex Pistols, Virgin Records, 1977.