Financial crisis on the global level

The frontpage of the Wall Street Journal today opened with an ominous statement: the American financial system was shaken to its core on Sunday. Greenspan called this a once-in-a-century type event and said stabilization is far from certain. No one knows yet how many Americans will lose their homes and what that’ll mean for the American economy. President Bush weighed in with a firm message of confidence. What Mr. Bush called adjustment really amount to a tectonic shift says this analyst. He explains the shift: three of the five big American investment houses helped blaze a new trail in global capitalism by taking huge risks especially in the housing market and then creating complicated debt systems that they sold all over the world. Those three banks are toast now and the analyst says the survivors in the market are going to change their ways and be more conservative. The roots of the problem lie again in the U.S. housing markets troubles and the credit crunch that resulted. The analyst says there’s still a snowball effect going on. With that in mind the message from the Treasury Secretary was that the American people can be confident about their bank accounts.