The Game-Changing Financial Crisis

Posted by: Steve LeVine on March 02

We already know how the financial crisis has changed the landscape around us. After a drumbeat of reckoning that has brought low the titans of Wall Street and Citibank, today we hear that the venerable American International Group is breaking itself up. The crisis also provided the opening for President Obama to seek all his main campaign pledges at once — universal health care, education reform, carbon-emissions trading, a green economy, and a reordering of the tax code.

Investors, businessmen and diplomats who poured in to the Soviet Union and Eastern Europe two decades ago are familiar with how upheaval creates opportunity. Today, I have a piece in Business Week on how today’s crisis has shaken up the economic equation abroad, creating potential openings where little chance of progress previously existed.

Three examples are China and climate change; Iran and Russia. On all three, the U.S. the West, and the countries themselves can or already are capitalizing on the changed atmosphere to their own advantage. In the case of the latter two, the financial crisis could alter the natural gas chessboard in Europe.

As in the case of the investment banks, the financial crisis also holds much potential peril for economies abroad. I wrote a piece over the weekend on how development banks are trying to stave off potential dangers of the crisis in Eastern Europe. The New York Times’ Steve Erlanger, my former colleague in Moscow, has a good piece explaining the fears of a fresh East-West divide in Europe.