"The United States is so broke, its people at every level -- from the Federal Reserve on down -- don't know whether to shit or go blind," wrote James Howard Kunstler an American author and social critic - in one of his blogs.
But what unprecedented events led to this great financial catastrophe? As an op-ed in The Wall Street Journal puts it, "With the benefit of hindsight, everyone can see that the US economy built up an enormous credit bubble that has now popped. . . this bubble was created principally by a Federal Reserve that kept real interest rates too low for too long. In doing so the Fed created a subsidy for debt and a commodity price spike."
The Fed's 'cheap money' policy created artificial demand for housing which drove prices to unsustainable levels. As greed took over, dubious sub-prime liabilities were sold to hedge funds, insurance companies and foreign banks. And then the American financial markets were hit by a severe liquidity and credit crunch. High oil tags, lower spending by the corporate sector, rising unemployment, etc added to the woes of not just the Americans, but the entire world.
"Fastening your seat belts may not be enough for this ride. Better superglue yourselves to the floorboards and pray for God's mercy," concludes Kunstler. So when did the fall really begin? Click here to find out. . .
Image: A sign outside a home for sale n North Las Vegas, Nevada | Photograph: Ethan Miller/Getty Images
Also read: Seven days that shook the financial world