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Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse

August 6, 2012

Some thinkers see the challenges ahead and share their thoughts on what we can expect.

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By David Korowicz

This new study explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. I use a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.


As the globalised economy has become more complex and ever faster (for example,
Just-in-Time logistics), the ability of the real economy to pick up and globally
transmit supply-chain failure, and then contagion, has become greater and
potentially more devastating in its impacts. In a more complex and
interdependent economy, fewer failures are required to transmit cascading
failure through socio-economic systems. In addition, we have normalised massive
increases in the complex conditionality that underpins modern societies and our
welfare. Thus we have problems seeing, never mind planning for such
eventualities, while the risk of them occurring has increased significantly. The
most powerful primary cause of such an event would be a large-scale financial
shock initially centring on some of the most complex and trade central parts of
the globalised economy.

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