The Upcoming Financial Crisis... in US?

Germany's market was down 7.4 percent, Japan's 3.9 percent and Britain's 5.5 percent. Hong Kong's Hang Seng index nosedive 8.6%, Tokyo's Nikkei 5.7% and Mumbai's Sensex 12.9%.

Time Magazine call it a worldwide mini-meltdown. George Soros declare it as the the worst market crisis in 60 years

In his book entitled The Return of Depression Economics, Paul Krugman wrote on how bad things could happened to good economy largely due irrational expectation and market psychology.

But can good thing happened (for a while) to a badly managed economy? Let me quote rather lengthily from Krugman’s recent article on New York Times:

“Mexico. Brazil. Argentina. Mexico, again. Thailand. Indonesia. Argentina, again.

And now, the United States.

The story has played itself out time and time again over the past 30 years. Global investors, disappointed with the returns they’re getting, search for alternatives. They think they’ve found what they’re looking for in some country or other, and money rushes in.

But eventually it becomes clear that the investment opportunity wasn’t all it seemed to be, and the money rushes out again, with nasty consequences for the former financial favorite. That’s the story of multiple financial crises in Latin America and Asia. And it’s also the story of the U.S. combined housing and credit bubble. These days, we’re playing the role usually assigned to third-world economies.”

America, you are next!

P.S.

Stiglitz propose a series o policy to stop the downturn here