Originally Posted by Wowbanger TIP

First of all forget "British" and "Spanish" banks. Banks have no allegiance to anything other than money, if someone wanted to grind up your kids for biscuits, and there was money in it, every bank in the world would advance them the capital at interest.

These banks are not owned by nations, their shares are held by multinational agglomerations of wedge which know no borders. The only sense in which they can be said to belong to any nation is the primary nationality of the victims on their debt farms and the government whose tax system they evade.

Is the metaphor of the "domino theory" appropriate?

To some extent. However that suggests that one collapse started the chain reaction. This is not the case, rather the financial institutions of the world were all struck by the same phenomenon, the credit crunch, at the same time. Imagine a table full of set up dominoes in an Earthquake. The least stable collapsed early on (Northern Rock, Bear Stearns) and their collapse weakened the "dominoes" still standing (through general loss of confidence more than direct losses through investments in those institutions). However all the dominoes, even if not within range of another, would/will fall if the Earthquake carries on. It is carrying on and its getting worse.

The truly terrifying thing is that not all the dominoes represent banks and financial institutions, some are governments which are in one sense financial entities just like banks. If that were not bad enough there is a very real risk that some people might quite like to tip a few dominoes over, the sovereign wealth funds of countries like China, Russia and the Gulf States all of which could flick a dominoe or twenty if they were prepared to sacrifice their dollars. If the US had devalued the dollar by bailing out the banks this would have been less of a sacrifice, maybe a thought which occurred to some American politicans....

An equivalent metaphor might be a nuclear chain reaction. Giving a 3D image and a more random and powerful process as well as a satisfyingly graphic allusion of just how much trouble we are in.