The Lexus and the Olive Tree

The book begins with Thomas Friedman in Thailand during the financial crisis in 1997, as his cab driver points out all the investment banking firms that have recently closed. These were significant catalysts, or the “first dominoes in what would prove to be the first global financial crisis of the new era of globalization – the era that followed the Cold War.” (xi) Following events in Thailand, the economic crisis spread to the rest of South East Asia, then to Russia, and finally the hedge fund Long Term Capital Management in the United States. From there, the crisis spread to a friend’s internet bank that Friedman had invested in. In other words, it took nine months for events on a high street in Thailand to hit Friedman’s main street. This is the first example of how the fixed, divided, Cold War system that dominated the world since 1945 became the new system of globalization in 1989.

The period prior to World War One was similar to the current era of globalization in terms of global interconnection and ease of economic contagion. World War, the Russian Revolution, and the Great Depression ended this first era of globalization by fracturing the world both physically and ideologically, creating the Cold War system.