I remember when I first started this site, the bottom had just dropped out of the economy, and economists everywhere had declared the United States had been in a recession for more than several months already but that most people hadn’t really realized it yet. The rest of the world announced their recession shortly thereafter, and we found ourselves in what has essentially become, our first global recession since World War II.

Today’s stock drop, I’ve read, is predominantly due to the failure of the Greek economy, and how it affect on the European nations around it has brought Europe to the verge of an economic meltdown. A failure in one euro zone country, Greece, has caused the other nations and the European Central Bank to consider extending aid to the country, or risk damaging the European economy as a whole. This in turn has affected the United States, casting doubt on how this turn of events could damage our economic continued recovery as well.

It’s interesting to see the impact of such events in modern times, as the world has changed a great deal since World War II. The economy is much more globally dependent, with the influence of corporations in Japan, the United States, France, and others maintaining a global sphere of influence. A major caveat of this state of affairs is that a failure by one link of the chain has the propensity to affect so many other links in a very short period of time, and it’s a sign of the times that we’re seeing a lot of these global communities and corporations maneuvering to find better ground as the world economy becomes larger and more complex.

Companies are spreading out, resources are being developed, and people are looking at a larger slice of the world pie than they were fifty plus years ago.

Two things happen when you move into a larger segment from a smaller one:

First, resources begin to devalue.

Take for instance cars, once made almost exclusively in America, automobiles were expensive, with high margins, and people bought them because that’s what was available. Now we have cars coming from everywhere, imports, domestic builds, even cars made in Americas, by Americans. As the world gets smaller and resources become more diverse, a failure by any one party generally becomes less obvious.

Still, in a lot of industries, this diversity just isn’t present in our current way of doing things. A failure by one country for instance doesn’t necessarily allow for a lot of redundancies of shared resources or economic interactions, and the larger economy stumbles because of this. I see this changing in the future. The European Central Banks refusal to maintain an economic bailout of Greece is one indicator that this is already happening, since all involved parties will be forced to find new and better ways of doing things for themselves.

Greece will, in fact, survive. But it won’t look the same when it’s done.

Second, failures in far off places have greater affect on our smaller economy.

For instance a war in the middle east could affect oil prices in America or Europe. An oversupply of glass for LCD screens could cause a price drop and a glut on product for the production of world wide televisions. Or a failure to find adequate supply of certain rare minerals found only in China could force corporations to look elsewhere for new methods of creating electronic devices, driving up production costs, and maybe even sales prices.

It’s an interesting conundrum to be sure and something to be aware of as countries such as China and Brazil become less focused on basic manufacturing and take a greater role in new product development and services.

The reality is that economies of scale is a big 800 pound gorilla that we don’t quite fully understand at this point, and it’s going to be a while before things get fully worked out to anybodies satisfaction. Not to say that this recession won’t end, but after this one there will be another, and another and another until most of this gets ironed out.

Hopefully we’ll learn something.