LATELY, AND COINCIDENTALLY, we have all been getting a barrage of news from opposite sides of the globe on two seemingly unrelated items sharing the same adjective.

On one hand are the so-called “toxic mortgages” that the US government is trying hard to purge from the financial system; on the other is the melamine-tainted toxic milk that China is trying hard to flush out of its markets at home and abroad.

Both are now seen as significant threats to their respective economies, and causing worry for much of the rest of the world as well. Because those directly involved are two of the largest economies in the world, their current troubles promise to have far-reaching implications, and the rest of the world, especially small countries like ours, can only brace ourselves and wait for the stories to unfold.

So different, so alike

Apart from the physical distance separating them, the two problems and their respective toxicity would seem to be of very different natures.

One concerns a real product, the other a financial one. But the differences end there. There are actually much more parallels between the two problems than meet the eye at first glance. Both suddenly came about as a big surprise, and yet in both cases, events of the recent past should have forewarned people of their coming. Both problems came about as a result of human greed, and both threaten untold harm to their respective economies.

Now, both governments are scrambling to find solutions to control the damage, both within and beyond their respective shores. And both represent jolting wake-up calls that provide valuable lessons for their governments and regulators.

I need not write much more than what has already been written about the toxic loans from America. For China, what is at stake is its status and reputation as the de facto “factory of the world,” turning it into the fastest-growing major economy in the globe. But with the quality and even the very safety of the myriad of products it supplies the world increasingly coming under question, its appeal as low-cost source for a wide array of consumer products has clearly diminished. This could very well spell the end of its brisk double-digit economic growth rate of the past decade or so.

Greed at the root

The melamine-tainted toxic milk has come about, we are told, because of the producers’ desire to make the milk appear to have a higher protein content than they really do, thereby raising their appeal to consumers. Why it was not appreciated enough by the culprits from the beginning that this substance would do such untold damage involving human lives is hard to understand. It seems hard to believe that the producers would do something so utterly irresponsible. Were people simply unaware how lethal the substance could be, especially to infants?

It is worth recalling a similar fiasco we Filipinos had in the not too distant past, although not as lethal perhaps. When the nata de coco craze hit us in the early 1990s, with Japan gobbling up large volumes of the coconut-based product and paying good money for it, everyone and his uncle in the coconut-growing areas of the country set up their own nata de coco backyard operation.

But the process of turning coconut into the prized product involved a painstakingly slow natural chemical process. It didn’t take long for enterprising producers to discover that adding some formalin -- yes, that chemical we use to preserve biological specimens in bottles -- sped up the chemical process.

And soon, nata producers out to make a fast buck were producing formalin-induced (or better, formalin-tainted) nata de coco. The Japanese discovered the trick, of course, and would not have any of the tainted product. That spelled the death of the Philippine nata de coco export industry, and we are told that the Japanese have since shifted to Thailand for their nata instead.

Lessons

For those of us in the sidelines of these two high-stakes greed games involving “toxic substances,” there is fear of the fallout from the negative impacts on the two giant economies. But while the fears are not unwarranted, and are indeed useful if only to keep us prudent, there may be some positives we can glean out of these toxic experiences.

At the very least, there are very valuable lessons now being learned by governments, particularly regulators. China, after having embraced the markets since turning its back on stage-managing the economy, now learns painfully that a market economy need not mean an ungoverned economy. There’s a proper place for government regulation, and one of them is in quality control and maintaining safety standards. In particular, quality and safety regulators need to be ahead of the problems, rather than reacting to them.

On the other side of the globe, America is similarly learning that failures in regulation had led to the proliferation of unsafe products of the financial kind -- with the effects on their economy and on people’s lives no less disastrous than China’s poisoned milk. We can expect much tighter regulation of financial markets from hereon, and the world economy should be the better for it.

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Comments welcome at chabito@ateneo.edu