Wandering Thoughts

December 30, 2008

Tales from a Globalised World

Filed under: Ramblings and Musings — terence @ 9:35 am
Tags: , , ,

In the wake of the last financial crisis South East Asian countries accumulated US dollar reserves to make sure the same thing never happened again.

Newly wealthy and responding to rising insecurity as their social safety net was dismantled, people in China upped their savings rates.

These two factors (plus a bit of OPEC oil money) gave us a savings glut. You can’t make money off of money if it’s locked in bank vaults so people came up with new and ingenious ways to lend it – including sub-prime loans.

And here we are.

My point isn’t to argue the rights and wrongs of all this but simply to marvel at the strange and direct lines that run from the last meltdown to the current one and from one country’s domestic policy decisions to another country’s crisis (especially when that other country is, amongst others, the Ukraine).

To (very, very) loosely paraphrase Kant, globalisation means we’re all in this together.

(Oh, and the NY Times has an interesting article about the US/China thing).

[Update: I should add, that’s a simplified version of the tale and other things went on – domestic policy decisions in the borrowing countries for example. But the main point about our interconnected world is unaffected by all this.]


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