I think it was Joseph Stiglitz who - when interviewed - explained that a lot of people outside the US are not aware of the construction of mortgage contracts in the US. It appears to be if I understood well, that when a person in the US buys a house he is able to return it to the bank when the value of the house gets lower than the mortgage.
Nice clause I thought.
This supports the main argument of this article, that global business doesn't change the fact that knowledge is a local construction.
Globalization has exchanged a lot of ideas, concepts and most of all products and in to lesser extent services, but knowledge remains always a local expertise.
The main area where this is seen is in law. Lawyers are the best examples of professionals where local knowledge is key in solving cases. Medical specialists on the other hand are part of a global professional network where the knowledge is universal. Some countries may use more advanced techniques than others. Care taking on the other hand again is more a local business: customs differ amongst countries and cultures.
The financial world had so far a global image, the same as those medical specialists, but this crisis shows that the financial world is much less globally organized than we could imagine. Where most people thought to understand the financial rules and system, they where misjudging it to a large extent.
This is not the main cause of the crisis, but it is indeed a factor that influenced it a great deal.
Now we know (more) but a bit late.
H. J. B.
© 2008 Hans Bool