Gillian Tett: Worth Listening To
Source of picture: afponline.org
By John Richardson
The excellent journalist Gillian Tett, whose book on the financial crisis - Fool's Gold is well worth a read - again hits the nail on the head in this piece in today's Financial Times.
She says that if the whole of Greece suddenly vanished into the ocean it wouldn't make that much of a difference to the global economy in terms of demand for tangible things, real things - including chemicals, of course.
But she argues that what matters is how Greece interconnnects with bond and banking markets, with signs emerging that banks across Europe are once again becoming reluctant to lend.
It is the lack of understanding of these interconnections that's perhaps creating the fear factor behind the falls stock markets in Asia and the West.
Bear Stearns was just one bank that failed, but it was its connections with the wider financial system that ended up mattering . Its collapse also pointed to rot throughout the system
The same could apply to Greece if Portugal, Spain, Italy Ireland - and even the UK - follow.
Chemicals company CEOs were careful to point out on the release of strong Q1 results that there were lots of risks ahead, including what BASF's Jurgen Hambrecht warned was the likely withdrawal of national goverment stimulus from the second half of this year.
Peter Voser, CEO of Shell, highlighted this same risk during a press conference earlier this week to mark the offiical opening of the company's new cracker complex in Singapore.
But if the Greek crisis spreads, more not less government money might be needed to shore up developed-world economies.
Just where is that money going to come from?