In the course of our Transformative Responses project, we are starting a new project module. Starting in October, we release work on the detrimental effects of financial markets on the real economy.
Financial markets have massively profited from the pandemic, while unemployment numbers remain high and the real economy is far from recovering. 2020 was the most successful year ever for Hedge Funds and brought equity markets to previously unforeseen levels. After the great financial crisis in 2008 one would have expected regulation to reign in financial market exuberance and re-align it with its original purpose: financing the real economy. However, financial markets remain disconnected from the real economy and are a huge road-block for the social-ecological transformation.
The disconnect started with the deregulation of financial markets in the 1980s and has been an ongoing process. While crucial to the transformation, it is not easily explained over a cup of coffee. Therefore, we will highlight the issue with different case studies that highlight why financial markets are standing in the way of the transformation and what we can do to change this.
Report on the Activities of Private Equity in the European Care Sector
When looking at the sometimes detrimental effects of finance on the real economy, we cannot shy away from dealing with private equity funds. In a recent study, we have therefore analyzed the toolbox of these specialized financial market actors in the care sector.
Our report looks at the care sector and more specifically at the role that private equity firms have played in it, as part of the „financialisation” of this vital area of our societies. This focused approach, looking at cases in France, Germany and the UK, shows financialisation as it hap-pens in the real world. The care sector seems to be the perfect investment target for private equity firms, and the investors they serve. Demand for care has grown rapidly and will continue to grow in response to ageing populations. It provides reliable income streams through public insurance schemes and taxpayer money. Care home chains’ real estate is an attractive asset for investors that can be re-packaged and sold to other investors.