For the past several weeks, alarm bells have been going off in my head. I expected Greece to default on its debt, and I was concerned about the possibility of contagion. I am afraid that the game of monetary musical chairs that keeps the derivative economy moving, will crash to a halt when the music stops, revealing a whopping gap between the debts owed and the actual assets that underpin our global economy. 

I (and the rest of Patty's Pioneers) have been watching and conversing about the stock market rout in China's overheated economy, which is backed by a lot of bad loans.

Then, the US stock market came to a temporary halt on Monday of this week, and United Airlines' computer snafu kept planes from flying. Today, the head of the FBI revealed that the records stolen from the Office of Personnel Management, purportedly by Chinese hackers, included millions and millions of confidential investigative reports on government personnel and their families and friends, going back 20 years.

"What's next? A global Internet melt down?," I thought, pessimistically. Oh, and in my small town of 7,000 there have been 4 murder-suicides in the last 2 weeks. We don't know for sure, but these may well have been triggered by financial woes.

The only glimmers of light I see on the horizon are the writings of reason emerging from the German press and shining through the denial and obfuscation taking place in most of the mainstream media. Here are links to a couple of really useful articles, that have helped me restore my equilibrium.

The first article is one of many references to the Interview Thomas Piketty gave to Die Zeit on July 6th, in which he points out that Germany--whose bankers are among the most agressive in demanding full and prompt repayment of their loans to Greece--defaulted on 60% of its own post-war loans.

The second article is a great (and recent) description from Der Spiegel of how Iceland pulled out of its bankruptcy. It includes a prescription, credited to Paul Krugman as his description of the "Iceland Solution":

"Allow your ailing banks to collapse; devalue your currency if you have one of your own; introduce capital controls; and try to avoid paying back foreign debts.

That may sound like an extremely self-serving recipe -- and it was. Whereas billions of public money was pumped into the banking system in Ireland so that financial institutions could pay back their creditors, Icelanders voted against this route in two separate referenda. They couldn't see why they should pay for the greed of foreign investors who followed the Siren song of high interest rates to the island nation."

Here are the two articles:

• Thomas Piketty blasts Germany for unyielding stance on Greek debt
• Out of the Abyss: Looking for Lessons in Iceland's Recovery

I'd love to know what YOU think about the state of the global economy and what you think it means for your business and your customers.