The Interconnected World

Thomas Friedman's articles "A Question from Lydia" and "Bumper to Bumper" on the interconnected world are worth reading. "Situational Values" and "short-term thinking" are the bane of civilization in recent decades. The margin for error is seriously reduced but leadership in setting standards and devising methods is sorely lacking.

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Economic News Update 21-May-10

Dubai reaches another agreement with creditors to postpone repayments (and pay low interest rates in the meantime). “It’s fair to say terms of the deal are not commercially attractive, but it’s better than the other option, which is not to repay at all,” said Paul Cooper, managing director at Sarasin-Alpen & Partners Ltd. in Dubai.

Will the Euro die ? Matthew Lynn seems to think so.

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The Weakest Link

Daniel Gross, writing in Newsweek, points out how Corporations and Governments adopt the zero-sum approach of allowing the weakest link to fail. Their refusal to help an entity that is "going down" may well come back and hit them with greater force.

He cites three examples :

a. Oil companies not coming together to handle the BP Oil Spill --- the repercussions on the rest of the industry, not BP alone, will be severe

b. Banks in 2008 not coming together to bail out their failing brethren -- now they suffer much greater public ridicule and oversight

c. The EU not putting it's act together on Greece -- other countries may well get dragged down as well.

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