Contagion

It is strange how when even one currency in a very small country is threatened, the entire global economy may become threatened. It is also surprising how we still rely on making last minute loans to a country in distress as the only way to prevent this from occurring. Globalization led to so many new markets that are being invested in that everything is tied together, which can result in Contagion. Because of the focus on perceived risk and value instead of actual value, countries and markets are subject to large stampedes of investors in and out of currencies and markets. Nothing has been done to shift these markets back towards their real value instead of the perceived market shifts except for loaning a country money until the crisis is over. Most major economic crises are the result of over speculation, yet the current global economic model is based on speculating on very high risk developing economies that investment companies in rich countries focus heavily on. It seems like we should try to eliminate some of the purely speculative parts of the global market instead of loaning large amounts of money until each crisis hopefully passes.