Globalization Has Role In This Double Whammy

WSJ | August 9, 2011

By Simon Nixon

On the face of it, there’s not much to link the London riots and the latest gyrations in global markets. The wave of violence and looting that has spread across the U.K. over the past few days has been mass criminality not a protest movement. And the global stock market rout was triggered by concerns over the euro zone, U.S. government debt and the global recovery rather than anything specific to the U.K. Indeed, the markets have singled out the U.K. as a haven, its debt now cheaper to insure than that of Germany.

“The middle classes only tolerated this,” Albert Edwards of Societe Generale notes, “because central bankers created housing booms to keep the impoverished middle classes borrowing and spending to give them the illusion of prosperity and stop them from revolting.”

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