From Tax Research, on a presentation made at a conference in Copenhagen:
Perhaps most interesting was the contention from Anastasia Nesvetailova from City University who argued we’re seeing a real change in capitalism itself, although she was not alone. Once we assumed (maybe even knew) that capitalism was structured around the idea of trade, where the idea was that value was added within the process of creating, transformation and exchange. But that may no longer be where global capitalism sees much of its return arising; the whole shadow banking structure of repo markets, securities lending and securitisation may actually be all about capturing a synthetic profit that may redistribute wealth (as I am sure it does) but where in fact the whole process is, as Minsky would have it, a giant Ponzi scheme which is not only not zero sum but is actually destructive.
This is a serious charge with implications that make the Greek crisis seem like a storm in a teacup. (More accurately, the Greek crisis is just one manifestation of this much bigger secular trend, it seems.)
So where is the shadow banking sector located? Well,
“the EU shadow banking sector – centred more on the City of London, Luxembourg, the Netherlands and Ireland – may be worth $20 trillion or more.”
Take a look at this, in more detail, in a Greek context, and in pictures, here. Put this in the wildly overflowing ‘more research is needed’ box.
Nesvetailova had a paper on this in 2008, and others have done research in this broad area, and she told me this morning that there is a major update coming out in the Review of Radical Political Economics later this year. She sent me a draft copy which is fascinating, though I don’t have permission to quote from it yet; I will ask and will comment further if and when I get permission.
I and others have compiled a trove of analysis on the links between tax havens and the financial crisis, with plenty of attention to the shadow banking sector.