The Great Iceland Meltdown

If you're looking for a single example of how the globalization of finance helped get us into this mess and how it will help get us out, you need look no further than British newspapers last week and their front-page articles about the number of British citizens, municipalities and universities - including Cambridge - that are in a tizzy today

because they had savings parked in Icelandic banks, through online banking services like Icesave.co.uk.

As Dave Barry would say, I'm not makin' this up.

....

It will be a world in which America will not be able to scratch its ear, let alone roll over in bed, without thinking about the impact on other countries and economies. And it will be a world in which multilateral diplomacy and regulation will no longer be a choice. It will be a reality and a necessity. We are all partners now. [full text]

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The "butterfly effect" comes to the global monetary system. In this fine article, Friedman postulates that sub-prime wing flapping melted Icelandic banks, hurt British institutions and enabled financing for Third World industry.

He talks about democratization and monetization in noting that various countries have established equity stakes in US companies as weak companies are gobbled up by strong ones. This is one of the forces engaging the foundations of financial systems to come. It brings the world together in increases mutuality of consequence.

The impact of subprime mortgages is still unfolding. With the "butterfly effects" now engaging our monetary systems, it is apparent that we are tied together in manners unprecedented.

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