The subprime crisis has spread rapidly in unanticipated ways and is wreaking havoc at the core of the global financial system. As a result, the global expansion is losing momentum and fears are mounting about global recession.

Subprime mortgage defaults and resulting credit convulsions have accelerated America's weakening position in global markets. I think that you will have to somehow reconstruct the global architecture.

The collapse of the embattled and illiquid Bear Stearns, the fifth largest US investment bank, marks the moment when the global financial crisis went critical. It looks like that there is no end in sight to the havoc as the US Federal Reserve and the Treasury Department are no closer to solving the mess. Today, the global financial system is under increasing strain and risks to financial stability remain imminent. The global financial crisis clearly reflects a combination of three factors: weakening balance sheets of financial institutions, continuous fall in asset prices, and the weakening global growth.The crisis began eight months ago in the US high-risk, subprime home-loan market and has spread into a global credit squeeze, dragging down world growth. While the US remains the focal point, financial institutions in other countries have also been affected, reflecting the unreliable global financial conditions and weaknesses in risk management systems and prudential supervision.

The Analyst Magazine, Global Financial Crisis, Global Financial System, Subprime Crisis, Global Recession, Management systems, Risk Management, Jan Hatzius, Economist, Inflation Accounting, Financial Market, Global Economy, Economic System, Monetary Policy, Research and Information System, RIS, Joseph Stiglitz, World Bank.