The converging world economy has created a whole new paradigm for the 21st century. Global warming, credit crunches, currency meltdowns, food crises, and trade wars are just a few examples of how our everyday lives are being altered by a myriad of forces, many of which are economic in nature. And like nuclear fusion, which joins together hydrogen molecules and releases astronomical amounts of power in the process, the converging global economy is releasing a lot of new energy- we just need to outline out how to use it.
This new fusion economy brings together military and reactions in ways that are impossible to understand using normal linear forms of approach. It used to be that we could supervene a fairly simple path to arrive at an economic conclusion: a better goods or a more efficient enterprise meant more productivity, which meant a higher suitable of living for all. But today, things aren't so simple. How can we say that economic growth in China or India is a good thing if it increases global pollution or leads to food scarcity? How can we say that increased access to mortgage financing is a good thing if it entices sub prime borrowers to buy houses they can't afford to pay for, leading to failing banks in Europe and the United States, stock store crashes in Asia, and a worldwide credit crisis?
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With hundreds of billions of dollars worth of mortgage backed securities being traded annually, the store for sub prime debt became, at one point, bigger than the entire store for U.S. Treasury bonds- the biggest bond store in the world. When banks and mortgage fellowships realized they could pass on the risk of the mortgages they were issuing, they became more involved about increasing volume and less involved about either the borrowers could pay back their loans. Consequently, credit standards were relaxed and many poor and low wage borrowers were given mortgages to buy homes- leading to ever- increasing home prices. Many borrowers bought homes they knew they couldn't afford, but assumed that rising home prices would cover their loan commitments, allowing them to refinance at a later date, once the house's value had gone up.
When the housing store began to cool, many sub prime borrowers were unable to refinance their loans and were unable to make the interest payments on their former loans. Delinquencies-borrowers' failure to make their mortgage payments-began to rise, and the value of the bonds that were based on sub prime mortgages began to decline. When large numbers of these sub prime borrowers started going bankrupt, the sub prime mortgage securities had to be revalued downward. In the end, the banks and investment houses colse to the world that had bought these mortgage- backed securities were forced to write off large portions of their debt- up to 80 percent of their former value in some cases- leading to a credit emergency that spread colse to the world as other banks and investment houses refused to contribute the cash that the world's fellowships and financial institutions need to keep running. Banks colse to the world had to be rescued by cash- strapped governments. In the United States, Lehman Brothers, one of the largest investment banks in the United States, was forced into bankruptcy, and someone else investment bank, Bear Stearns, had to be sold off with help from the U.S. Federal Reserve- for a fraction of its former value. Aig, the largest assurance enterprise in the United States, also had to be bailed out by the Federal Reserve. Once the financial meltdown had started it was hard to stop.
In increasing to financial meltdowns, even cataclysmic events such as hurricanes and global warming are influenced by the increasing 21st- century economy, which is bringing military to bear that are production it impossible to predict what will happen in the future. For example, the destruction of the Amazon rain forest, primarily for economic reasons, has led to a sharp growth in the issue of carbon dioxide into the atmosphere. And market pollution in the United States, Europe, and China has contributed to the shrinking of the Arctic ice cap and an unprecedented melting of the permafrost, releasing even more carbon dioxide and methane gas into the atmosphere, leading to even more global warming. This greenhouse supervene has led to ever higher temperatures- absolutely a "meltdown" in some parts of the world. And no one seems to know where it will all end.
Even efforts to reduce global warming, such as the promotion of biofuels, have led to unintended and unforeseen consequences. In increasing to the use of huge amounts of water to produce sugar- or corn- based biofuels, the discount of farmland for the production of food for human consumption led to rising shortages of rice, corn, and wheat on the world markets-resulting in riots in some countries and calls for increased protectionism in others.
The converging global economy is also shaking up former patterns of trade and investing. Before the 21st century, for example, habitancy tended to limit their investments to purchases of domestic stocks and bonds. They then waited patiently for their investments to growth in value or contribute a safe, fixed wage over time. But in today's fusion economy, our money is being invested- either we're aware of it or not- in pension funds, governments, and banks in an increasingly complex array of securities and investment vehicles. The 21st century economy has brought strange new correlations between investors and between markets. And the results can be catastrophic. Investors who are losing money in one sector tend to sell investments in someone else sector- or someone else part of the world- to pay their debts. When stocks fall sharply in the United States, and Europe for example, emerging store funds from Brazil to Bangladesh often decline sharply- as investors sell their shares abroad in order to raise cash to pay for losses at home. Currencies in previously wholesome economies colse to the world crash as speculators rush to safe haven currencies such as dollars and yen.
It has been said that a butterfly flapping its wings over Tokyo could cause a rainstorm over New York's Central Park several days later. The 21st- century economy has taken this linear correlation to someone else level. Causes and effects are converging, fusing together in a complex web that no one- not even the experts- are able to fully understand. Just as Metcalfe's Law, which says that the value of a network is proportional to the square of the whole of its users, the increasing global economy is growing and increasing in ways we are unable to control.
What is The Fusion Economy?Tags : todays world news headlines
