Year of Global Crisis

Some Nepalese rupees and 20 US Dollars. Which one's worth most next year? Photo copyright by Morten Svenningsen.

We’ve had the global oil crisis, the global food crisis and now the global financial crisis. Next to that we have the global warming issue and a global war on terrorism. Well, at least a fairly international war on terrorism.

One crisis after another, I’d like to investigate this further so I’ve hereby created this new ‘tag’ on my blog: ‘Global issues’. So let’s begin with a little look at the current crisis, the financial one. (Please give me this chance to demonstrate my ignorance!)

It’s been an expensive week for our friend, George Bush. From what I’ve heard, he’s had to dig out well over 300 billion dollars the last couple of weeks. The thing I’m wondering, they’ve got this huge deficit on the state funds. Obviously they must be loaning all this money. And for what? To loan money to the banks! Anyone else here see the irony? Are they loaning money to each other? Is that sustainable? What if it isn’t? Is the American economy going to crash? And what effect will it have on ordinary people who don’t own a bank, like myself?

Well, maybe it’s a coincidence, but this week I’ve had two high-profile assignments canceled from two renowned American magazines - without explanation. In the big picture, of course, my fees don’t amount to much. But as consumers and advertisers are running out of credit sources, circulations are likely to decrease.

Note that I say credit, not cash. Americans love their credit cards, at least they did when I was there around 1999-2001. They bought everything on credit. Buy now, pay later. Don’t worry. And that, I suppose, is a large contributing factor to the current circumstances. Together with their hopeless war in Iraq. It’s interesting to note how the renowned economist and Nobel laureate, Joseph Stiglitz, explains the crisis: The war has cost the American society around 3 Trillion dollars, roughly 2.9 trillion more than first estimated. Simply stated, it led to rising interest rates and suddenly people couldn’t pay their loans any longer. (update: From 2004 to 2006, US interest rates increased from 1% to 5.35%! source: BBC.) One after another, family houses were foreclosed and businesses didn’t do so well anymore.

And now, as an effect, financial institutions a in ruins.

So where does that leave us, the world at large? Honestly, I don’t really know. There’s a lot of aspects here. The future of capitalism, market economy and speculations? Is money still a tool for us humans or has it become a force we have to obey? Will it become a battle of rich nations against poor ones?

I think I’ll look a bit more into this from now on. It’s feels quite interesting and important. And I’ll blog a bit about my thoughts and realizations. Follow me here if you like...