The Global economic crisis which has shaken most economies throughout the world has been the one of the largest meltdowns which has sucked money the countries. The origin is undoubtedly U.S. and the basic reason behind this crisis is over leveraging which had been done by most financial institutions throughout the world.

In a developing economy, the calculations go right most of the times, but when some real problem occurs, losses emerge which need funds to support the system. Most institutions have gone bankrupt owing to their leveraging issues and the non capability in facing redemptions. The Government of U.S. needed a change since long as the current calculation of work and money distribution is really not apt.

How badly is India & Asia hit?

India and neighboring countries have been severely hit which were the biggest target of the global crisis in their development stage. This was the time, these countries required sufficient funds and investments as they were offering some great opportunities which are nowhere to be seen in any developed nation. Asia is badly hit by redemptions from U.S. and U.K. funds that were investing in these markets since the last 6 years and had huge equity positions with money involved in the securities and real estate. India is a great nation and has always strived to deliver excellent growth opportunities which are why these investors came to India as FII (Foreign Institutional Investors). Asia was also flooded with funds from U.S. and U.K. as these had invested in most growth opportunities in India and Asia and were forced to go back owing to their economic crisis.

What is the source of the economic crisis?

Sub prime in U.S. is till date the largest housing crisis which has even hit any economy. The sub prime crisis which happened due to the over leveraging positions in housing industry by major banks and financial institutions has forced the institutions to withdraw all money from the growing Asian markets and keep reserves for redemption which if not provided shall result in bankruptcy by most companies.

Lehman Brothers, Merrill Lynch, Bear Stearns and Countrywide are some huge examples of what the effect is all about which clarifies from these institutions going bankrupt. This year Fanny Mae and AIG also went bankrupt which was another shock to the U.S. government. The government had no option but to takeover these companies. Though this shall solve the problem for a while, the crisis still remains which is the unstoppable property prices decline and sale in U.S. and this has forced most owners and banks to get rid of their real estate in U.S. and move out of the country.

President Bush has done enough damage by allowing Phil Graham (advisor) to play with all the money by means of over leveraging. The crisis is the result of those wrong calculations which these people did. This shall take a long time and will require faith to be instilled in the general public which the Bush or McCain government cannot do as McCain again has Phil Graham in his party and wants him to be the treasury head.

The only solution which can come by way of Obama entering the economy and interfering with the funds flow shall be to levy huge taxes and take money out of the system to protect the future growth.

India has faced the pinch by not keeping check on the inflows and outflows by FII’s which gave a blistering kick by taking out huge chinks in this year and were responsible for the biggest crash in the history of Indian Stock markets. The Indian Stock market has gone below the levels of 2002 and most securities have breached their all time lows which are no less than a crisis for these companies and the investors as value is badly hit.

This decrease in the value has shaken the complete infrastructure and the money flow has squeezed the markets to such an extent where faith and trust have eroded out of the Indian stock markets which were supposedly the largest market till last year.

India has some great systems and these have saved the country from falling apart in this scenario where most of the investment was taken out immediately. The country still has a lot of growth potential for the basic reason that India is a developing economy. Other economies in Asia have faced similar pressures and their markets have also tested lows which was a result of the pullout from funds and institutions from U.S. and U.K.

What is being done about it?

India and most Asian market shall remain the best investment opportunities for the coming years as there is growth potential and infrastructure development in these countries which shall offer lucrative margins for these investors. The U.S. market and the economic crisis in U.S. will take a long time to recover as the slashed property prices have ruined most real estate markets and subprime mortgages are on their lifetime high which has affected most banks liquidity issues. Obama is considered as a new ray of hope in the U.S. who shall bring some change and get things better. This is not a situation which can be treated easily and shall require time to rectify. The banks can start investing again once they are settled with their redemption pressures and the best markets will be Asian Countries which shall allow huge inflow with excellent systems to welcome these companies. The crisis has to be fought back and the best way is to face it and start working on improving the things immediately which should be done by the governments from all countries. U.S. is expected to come up with reasonable plans to convert some parts of the finance sector into public from private and taking control of the situation. The Asian governments can also work in stabilizing their markets which can be done by pursuing the Home institutions to put money in the system and their markets which shall also give a cushion to this effect.