It all started from the USA sub- prime (housing loan )

crisis.The USA banks n financial institutions went on

lending for housing construction n buying without looking

to the re paying capacity of the borrowers.As the

properties were mortgaged with them,they thought to re

possess the house in case of default n sell them in the

market as there was huge demand.The demand started

falling .There was default n re possession.The properties

could not be sold as there was no demand.The banks which

invested huge amount on properties,felt the pinch.Many of

them went bankrupt.The whole financial system of USA was in

turmoil.

Because of the financial turmoil,the financial institutions

could not provide the required loan to the industrial

sector.Want of finance forced industries to cut production

n jobs.The economy in general was affected ,due to falling

production,employment n purchasing power of the people.The

USA was in economic recession.

The USA is the richest economy of the world.Many countries

of the world,depend on it for business.As USA was under the

grips of recession ,it could not do the volume of

business,it used to do with other countries.This adversely

affected,the business of other countries of the world

including India.

USA made the huge investment ,in other countries of the

world including India.To meet its domestic demand it

started withdrawing funds from other countries ,where it

made investment.The partially complete projects with USA

assistance remain incomplete due to want of funds.

These developments adversely affected the industrial sector

of the entire world including India.The industries started

cutting production n jobs.Thus,the entire world came under

the grips of economic recession.

So,the small fire which started in USA started taking the

form of a huge fire n captured the entire world n the

result is global recession n financial turmoil.