The Advancing Leadership Blog

“Why is a raven like a writing desk?”

It’s reputed that Lewis Carroll never meant for this question to be answered and when I first read the May report from Dr Peter Andersen, I wondered if perhaps the same held true for the question: “Why is a country like a bank?”

Multiple news outlets such as Bloomberg (Lehman Crisis Veterans Say Europe Shouldn’t Push Greece Too Far) and CNN Money (Is Greece the Lehman of 2012?) and business commentators (see the Peter Andersen Monthly Economic Report) are likening Greece’s economic situation to Lehman Brothers, and I’ve been finding it hard to rationalize how one can be used as a metaphor for the other. A country is built on geography, ethnicity, culture and politics, while a bank is built on business. A country is about people and a bank is about profits.

Looking beyond the obvious differences, the comparison with Lehman’s is useful to give context to the potential impact a Greek collapse could have on international financial markets. In this era of the global economy, the eurozone, and countries behaving like businesses looking to find efficiencies and an elusively magical surplus, the finances of a country are inextricably linked with not only those around it, but all countries around the world.

Ultimately, the fundamental point of comparison between Greece and Lehman Brothers is the potential ‘domino effect’ of both. In 2008, Lehman Brothers was the first financial institution to fall, starting a vast chain reaction of banks and businesses falling behind it. Greece has the potential to do the same, although many of the commentators using this comparison point out that the effects of a Greek exit from the euro is unlikely to cause an international financial crisis on the same scale. The Greek crisis has had a longer, more visible struggle, and global financial institutions (including national reserves) are better prepared to manage a crisis now than in 2008.

Read more

Members receive the Andersen Report by email each month. If you didn’t receive your copy, please let me know.

Read what Bloomberg has to say at http://www.bloomberg.com/news/2012-02-16/lehman-crisis-veterans-warn-europe-leaders-against-provoking-greek-default.html.

CNN Money also has two good articles on the Greek situation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Basic HTML is allowed. Your email address will not be published.

Subscribe to this comment feed via RSS

%d bloggers like this: