Thomas L Friedman’s The World is Flat

In Thomas L. Friedman TheWorld is Flat he explains the new “flat” playing field of world business created by a combination of technology and intertwined economies. In addition he notes that this global leveling can be both positive and detrimental. Evidence of one of the more detrimental effects of flattening is easy to view in the recent crisis of the Greek economy and its effect on the global economy.

Greece is one of the smallest economies in Europe, however between the technological ease of information of the Greek economies woes being broadcasted incessantly and the interdependency of the European and other world markets, what was once a regional concern about the amount of debt amassed by a small economy has rapidly turned into a worldwide economic contagion. “Worries that over indebted Greece could default sent investors scouring for the next ticking debt bomb. The euro zone has quite a selection to choose from: Portugal, Italy, Ireland and Spain, which, along with Greece, form the aptly nicknamed PIIGS. Yields on the sovereign bonds of Portugal and Spain have already risen, a sign that investors believe holding their debt is becoming riskier.” (Schuman, http://www.time.com/time/magazine/article/0,9171,1987598,00.html)

Greece’s economic turmoil combined with other EU member states poised to default has caused a global unease that endangers the recovery of the United States market as well. The U.S. was finally seeing some signs of growth after a trying recession but now fear is back with a vengeance.

On May 6th, 2010, amid simulcast images of rioting in Greece against the austerity actions, this fear bounced across the world as traders cast off bonds and blue chips with equal abandon and the U.S. stock market briefly plummeted by almost $1,000 points.

In addition, this air of anxiety has mushroomed to slow the confidence that the U.S. was on the road to recovery provided that the economy and job growth was positive. Concerns abound that the U.S. banking industry could go back to the stance that it had during 2008 where all types of lending were severely curtailed and what little toehold that the economy has gained would be eroded.

The time it takes for investor confidence to erode has hastened by the flattening of the world particularly in a time where “Investors' psyches are plagued by a fragile global recovery and traumatized by memories of the post--Lehman Brothers collapse. There's no way of knowing where contagion will stop once it gets rolling” (Schuman, http://www.time.com/time/magazine/article/0,9171,1987598,00.html).

Source:

Shuman, M. (2010). Ragin' Contagion. Time Magazine.

Retrieved on May 8, 2010 from website

http://www.time.com/time/magazine/article/0,9171,1987598,00.html