One of the most striking realizations coming from the economic crisis is the global reach and interconnectedness of financial markets, and how quickly the pain is transferred worldwide. We’re learning about failing banks in Iceland, Britain, Germany, the United States, Latin America, etc. And the drying up of available funds is affecting projects everywhere.
One good thing that comes from globalization, according to economist Michael Mussa, is that we can expect a fairly quick and global rebound when things start trending upward. The jury is out regarding the timing of an upturn, but some predict things could turn around early next year, perhaps in coincidence with the next U.S. president taking office.
The web of investment money, and who owns what percentage of assets globally is a fascinating story to follow. There are many side stories to this whole mess, many having to do with infrastructure funding. Here’s an interesting story about the broad implications of a German bank based in Ireland that has ties to Wisconsin public schools and the Metropolitan Transit Authority in New York.
One good thing coming from all the financial turmoil is the geography lessons that can be learned by following such threads and seeing where they lead.
Reuters has a timeline and map of the crisis that indicates what each government has done to prop up their financial institutions.
The Financial Times also has an interactive map that details the lending guarantees, interest rate moves, band deposit guarantees and other regulations that governments have put in place to try and stem bank failures.
