Effects of the global financial crisis have already precipitated at each and every corner of the world. Alarm bells had already ranged, when Bush administration was considering taking ownership stakes in certain US banks by passing $700 billion bailout as an option to deal with a severe global credit crisis.

If we take a look as to- what exactly is the point of origin of this major crisis? Actually the fact is that, US banks gave heavy loans to the Lower income US-households with clearly no sources of return.

As these housing loans turned “bad,” therefore, the instruments that were based on these loans lost there values, slowly and steadily giving rise to the ultimate crisis. Gradual falling prices dented the banks and destroyed there capital.

The losses are really unpredictable, as, no one has any clue about how big these dents are and which banks lie in the list of the hardest hit. All these circumstances had lead RBI to take over Central Bank for the first time in five years, and also announce CRR cuts.

Although, the panic in the market can also be related to the busting of the strongest Lehman Brothers, which had survived every major upheaval since last 158 years. Speculations related to the finances of ICICI bank, also reached to a height on 10th October, as the bank plunged over 25%, but, as the top officials released their statements- assuring the safety of the depositor’s money, it generated little peace in the market.

The fears of a global recession mounted after- Dow fell 678 points to close at 8,579 on last Friday, its first close below 9,000 since June 2003. Therefore, the investors are dumping risky assets like shares and rushing to the safest avenue GOLD, as the currencies and stock markets across the world are falling steeply. This has lead to an upshot in the global investment community, which has now become extremely risky avenue.

If we look at the past records, the financial crisis come to an end as suddenly as it started, but, the wounds are sharp which always take a long time to heal up. If we cut the long story in short, then it’ll be enough to say that the sensex concluded the worst week in its history, scheduling almost 2,000 points, wiping out investor wealth worth Rs. 6.6 lakhs crore in just four trading sessions.

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