Today I was reading one of the most widely discussed topics of the market!! That’s the deep credit crunch which may sack the global economy. The article on the Lehman Brother's worst financial crises gives clear indication that how risky the market is and what can be of the currency market. It is clearly mentioned in the end about that, the credit crunch can lead to the liquidity crunch which may lead to de inflate the housing bobble currently happening in US and affect the USA economy to a greater extent ("This $150 billion gap, leveraged 14.5 times (the average gearing for the industry), translates to a $2 trillion reduction in liquidity. ").
During the great depression a similar kind of fall had happened to Japan's (Presently $4.5 Trillion Economy). It happened to Japan during the 1930s not because of any reason but due to this de inflation of housing bobble. So a similar kind of consequence can be expected to USA unless the Fed Reserve's help by which the 4th largest investment bank may bail out of the credit crunch and at the same time help to control the housing bobble of inflating and suddenly de inflating exposing the economy to a greater risk.
The second part of my view is whether the USA economy is a consumer driven economy in reality!!! After reading to the comments given by one of the regular critic of many financial related Articles in The Economist, I still doubt the policies of the Fed. Is it taking the country to a deep recession or strengthens the economy virtually by allowing people to spend just by tax cut, rate cut, bringing money from the Arabian nations and producing more $. So from this argument I feel USA economy is not exactly a consumer driven but a normal economy like any other country. By both ways it is adopting a bad policy which may give a short term benefit but uncertainty in long term.
The link to the Article is:
http://www.economist.com/finance/displayStory.cfm?story_id=12231236&source=features_box1
The Link to the JKEYNES's Comments on this is:
http://www.economist.com/members/persona.cfm?econUId=2926983
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