The economies of the world have their periods of rising and falling. No economy can experience total stability over a period of time, there must be some forms of rise or fall in the stability of the economy. Today, practically every country in the world is affected by what happens in other countries (A.Freedman 2013). Some of these effects are a result of political events, such as the overthrow of one government in favor of another. But a great deal of the interdependence among nations is economic in nature, based on the production and trading of goods and services (A.Freedman 2013). The interdependence among nations is attributed to the world economy. Hence, Global economy can be said to be the interdependent economies of the world's nations, regarded as a single economic system.

             As a result of the interdependence between economies of the world, there now is a cause and effect between what happens in one country and the state of other countries. The global financial crisis really started to show its effects in the middle of 2007 and into 2008. The unusual low interest rates resulted in a large rise in mortgage credit to households; particularly low credit quality households, the greed of investors forever higher returns coupled with very minimal down payments, along with the dependence on major global rating agencies, allowed complex investments products to be sold to an extremely wide range of investors. Around the world stock markets fell, large financial institutions collapsed or were bought out, and governments in even the wealthiest nations had to come up with rescue packages to bail out their financial systems. "There was a whopping increase of 116% in the number of enterprises closing shop at 25,000 in 2008; up from 11,044 in 2006. Another 7000 have gone for bankruptcy, up from the 3500 two years ago. These figures give ample idea of the financial trauma in the United States.