The G-World

Hi friends, the fact that I can reach out to you all muses me.The world now functions as a single unit. The world virtually has no boundaries. We are so connected now .I just came across this book on 'Globalisation' and was literally amazed by the fact that how a certain small phenomenon occurring in even the most remote parts of the world can affect our lives. Lets rewind back the time and go back in 1996.It was nearly a decade after the cold war had ended(with the collapse of the Soviet union).The economy was reviving and the world was no longer divided. A new concept of 'globalisation' had evolved wherein every nation was more or less dependent on other nations for its progress. Everything was going well when a small imbalance sent ripples(make the effect mild) down the world economic structure. The year was 1997.The epicentre was 'Thailand'.

Thailand had a pretty stable economy prior to its decline in 1997.The people were opting for more loans from the bank to invest in more assets. As a result more financial banks were established which took loans from international bodies to cater to the increasing demands. But the notion went wrong. In 1997, Thailand government closed down 56 of the 58 financial banks. The Thai currency, baht had plummeted down by 30%.People now had to pay 3 times to repay the loans as compared to earlier due to 1/3 fall in the currency. The financial houses in turn were not able to pay their foreign lenders and the entire system sort of went in a gridlock.

The Thailand economy took a downturn; the economies of Malaysia, Indonesia got driven by speculation. The other economies in Asia suffered. the prices of gold, copper, aluminium and most importantly crude oil began to fall. This in turn affected the Russian economy which was trying to get out of its self-inflicted morass with the help of funding from IMF(International Monetary Fund-provides funds to economies all around the world).Russia started seeing the down road. It started selling out ruble bonds to bail out its economy. It increased the interest rate on its bonds by atmost 70% to attract the foreign investors. Though Russia was seeing the downfall, people were eager to purchase the bond because of the belief that even if the Russian government was unable to repay the money, the IMF would step in & return their money. More and more investors got attracted and many perceived this as golden opportunity. The big banks took loan from other big daddies to invest more & more.

But what was feared the most happened. The slump in the oil prices in Asia made it harder & harder for the Russian government to return the money. But then the worst happened. The Russian government devalued and unilaterally defaulted in the government bonds. It went down under a bed of massive loans and finally the economy collapsed on Aug 17,1998. The financial houses who had invested had no money and they began to sell whatever was liquid(cash in hand).They started selling assets in financially sound economies like Brazil. The capital started flowing out of Brazil. To keep the money in the country Brazil upped the interest by 40%. Investors also began investing in US T-bonds; as a result their value went up.

Just a small disproportionate in the economy in one part triggered the set of events that in turn travelled through the entire globe. Globalisation sure does bear the resemblance to the nuclear fission wherein just one proper impact leads to the colossal events which ultimately results in the explosion. The 'G' factor affects everyone. Those who wish to be left behind will get crushed brutally. Either you be with it or perish forever.

Just boil it down to individual level- One has access to internet; just by sitting at one place one can do a variety of stuff like shopping, finalising deals, social networking and on goes the list. One can now play a more major individualistic role. The decision you take will affect others. One can purchase shares from stock markets all around the world. They all have become interdependent now, one goes down the others follow it. Most conglomerates deal nowadays get finalised through video conferencing. The Globalisation heavily depends on the power of communication and its real potential lies in harnessing them to their utmost level.

In short welcome to the ‘G-World’!!!!