The recent troubles faced by Greece bring to mind a fascinating way in which this financial crisis has been different from so many others. Namely, it has been the wealthy, Western countries that have been hit hardest and who have been made to look bad.
It was troubles in the United States, the world’s preeminent economic power, which first initiated the recession. Its sophisticated, modernized financial system self-destructed in a manner previously thought only possible in places like Indonesia or Argentina. For the first time since the Great Depression, First-World banks were in danger of falling; Great Britain even had an old-fashioned bank run.
And it was rich Westernized Iceland that was the first to collapse. Not some Latin American Argentina or Asian Indonesia – but Iceland. Today the country is still in financial chaos – an Icesave bill to restore stability has proven deeply unpopular, much like the bail-out bill for the banks. The bill is being put into a national referendum, where it will almost certainly lose.
Indeed, all of Europe has suddenly seemed vulnerable. In Eastern Europe, countries from Hungary to Estonia have been closely scrutinized, their finances built upon weak foundations. For a while Ireland appeared similarly weak, until its government enacted a set of bills to reduce debt. Now analysts are wondering about the Mediterranean PIGS (Portugal, Italy, Greece especially, and Spain). It looks like Germany will bail out Greece, to the fury of its citizens.
Meanwhile, the Third World has largely stayed above and out of the fray. China’s economic growth only briefly dipped from 13.0% to 9.0%, and practically no Third World countries have experienced financial crises of the type that roiled Iceland or the United States.
It seems that one legacy of the global recession may be to help close the gap between the rich and poor in the world. On the other hand, not all countries would benefit. Africa, for instance, is still plagued by the same problems that have beset it for generations. Finally -and quite unfortunately for the United States – more worldwide equality would probably lessen its relative power. What is good for the world is not always good for us, and vice versa.