A Global Credit Squeeze Is Felt Unevenly

A “downside” to globalization struck when the US credit crisis had a global effect that neither Europe nor Asia could diminish or avoid. Many countries cannot borrow money to stimulate their economies as the US does and lack the savings of China, and some government leaders fear that the big economies will focus on domestic investments at the expense of poorer nations. Greater government involvement in the banking industry could emphasize domestic over foreign investments, and some economists, such as Alan S. Blinder, former chair of the US Federal Reserve, suggest that nationalization of banks may increase protectionist tactics. Other analysts question whether governments an do a better job at managing credit and lending in a highly integrated global system than the international bankers. Meanwhile, the financial crisis has prompted calls for worldwide standardized regulatory systems to improve understanding and transparency of finance. – YaleGlobal