{"id":6943,"date":"2012-04-17T08:51:15","date_gmt":"2012-04-17T08:51:15","guid":{"rendered":"http:\/\/www.global-briefing.org\/?p=6943"},"modified":"2012-04-20T17:04:36","modified_gmt":"2012-04-20T17:04:36","slug":"the-interconnectedness-of-all-things","status":"publish","type":"post","link":"https:\/\/www.global-briefing.org\/2012\/04\/the-interconnectedness-of-all-things\/","title":{"rendered":"The interconnectedness of all things"},"content":{"rendered":"

Soaring budget deficits, weak economic growth, falling property prices, rising unemployment, and government cuts; the consequences of the 2007\/8 banking crisis are evident for all to see. A wholesale collapse of the banking system was averted, thanks to government bailouts and the nationalisation of banks, but the crisis rumbles on with little hope for an early end to the trouble.<\/span> <\/span><\/p>\n

Economists everywhere will tell that you that banking crises are an inevitable part of a market economy. Mervyn King, governor of the Bank of England, has gone so far as to say that “the words ‘banking’ and ‘crises’ are natural bedfellows”. So why has this one bitten so hard and so deep? Writing in this issue of Global<\/em>, George Magnus, the UBS analyst credited with predicting that toxic US sub-prime mortgages would trigger a global recession, says that leverage ratios (the amount of total liabilities relative to capital) brought about the downfall of the banking system. In some cases banks had built up liabilities that were 40 to 50 times their capital holdings. But perhaps what caused the greatest damage was the interconnectedness of the global banking system, both within and across national borders. Magnus refers to this as “the dark side of financial globalisation”.<\/span> <\/span><\/p>\n

Stefan Ingves, chairman of the Basel Committee on Banking Supervision, agrees. He points out that the interdependence between banks, and the high levels of contamination that spread throughout the entire sector, came as a surprise to many. “It is precisely these contagion effects that may have the most serious repercussions for the financial system and the real economy,” he adds. Too much attention was paid to the health of individual institutions and too little to the risk to the whole system. The new regulations his Committee have devised should help guard against this in the future, but only, Ingves warns, if they are rigorously implemented.<\/span> <\/span><\/p>\n

Rules, it seems, are essential to the health and vitality of any community – whether financial or, as in the case of Wikipedia, virtual. In an exclusive interview with Global<\/em>, Jimmy Wales, co-founder of the web-based encyclopedia, explains how the site – the fifth most popular in the world – has managed to generate a strong collective spirit and cultural identity among a remote and diverse group of contributors. Along with the value of a single unifying concept – the creation of “a free encyclopedia for everyone in their own language” – Wales puts this down to the strict enforcement of the community’s guidelines, which essentially boil down to: be nice to other people. Besides which, the Internet is a natural medium for breaking down social, political and economic barriers: “It just happens automatically without anybody making a specific effort to use [it] for inter-cultural dialogue.”<\/span> <\/span><\/p>\n

Wikipedia is working to make itself more inclusive, seeking to encourage greater participation from women and those from the global South. Wales predicts that the next billion people to come online will do so through mobile devices, most of whom will live in the developing world and can perhaps expect to have good access to the Internet before they have reliable access to food and water.<\/span> <\/span><\/p>\n

Elsewhere, we consider the United Nations Conference on Sustainable Development – Rio+20. Almost 20 years to the day since the first Earth Summit was convened, hopes are not high for a repeat of the extraordinary agreements that resulted from that groundbreaking meeting in 1992. Back then, a whole raft of decisions were made, committing the international community to action. By any standards, and certainly by those of the most recent UN climate summit (COP17 in Durban, South Africa), Rio was an incredibly productive and successful conference.<\/span> <\/span><\/p>\n

If the discussions stall in June this year, Kumi Naidoo, executive director of Greenpeace International, knows where the finger of blame needs to be pointed. “The fundamental problem is not the UNFCCC [but] the positions powerful countries come to the negotiations with,” he tells Global<\/em>. If bold steps are to be taken in Rio, decisive action from governments – especially those in the developed world – is needed. Unfortunately, it seems the will to forestall a climate catastrophe is failing, at the highest levels at least.<\/span> <\/span><\/p>\n

But, while Western governments continue to struggle with the fallout from the banking crisis, it’s no surprise that problems at home are taking precedence over wider, global concerns, like the environment. However, world leaders might do well to take note of Naidoo’s assessment of the interconnectedness of the problem of global warming: “Climate change is not solely an environmental issue,” he insists. “It’s an issue of peace, of development, of North South balance. It cuts across everything.”<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Soaring budget deficits, weak economic growth, falling property prices, rising unemployment, and government cuts; the consequences of the 2007\/8 banking crisis are evident for all to see. A wholesale collapse of the banking system was averted, thanks to government bailouts and the nationalisation of banks, but the crisis rumbles on with little hope for an […]<\/p>\n","protected":false},"author":10673,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[123,55],"tags":[],"_links":{"self":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/posts\/6943"}],"collection":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/users\/10673"}],"replies":[{"embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/comments?post=6943"}],"version-history":[{"count":0,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/posts\/6943\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/media?parent=6943"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/categories?post=6943"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.global-briefing.org\/wp-json\/wp\/v2\/tags?post=6943"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}