America is suffering the brunt of credit crisis in the international market to a great extent. It is the fact that there are a number of reasons behind such financial downfall in the country. The American economic infrastructure has experienced the signs of instability and insecurity which enhance the steady entry of the credit crisis in the country’s economy.

Gone are those gala days when building of the sub-prime ownership society with the inclusion of the supply of the funds for the upgradation of the defense and military and funding the markets were reliant on the backbone of the foreign creditors. The problems took place after the decision of Greenspan to drop interest rates to 1 percent in 2003 over a year to inject trillions of low interest credit into the economy. Though this enhanced the possibility of the prosperity, it also made the inflation of a huge equity bubble in the housing trading which has been brought on the verge of destruction and downfall. On the other hand the destruction in the real estate is almost too gigantic to guess. The mortgage bubble is approximately pegged at $5.5 trillion, however the prices have starting to fall. For this particular reason two millions homeowners will be rendered homeless.

There are a number o f hedge funds which are filled with billions of dollars in mortgage backed securities are trying to survive. In this connection the survey given by Professor Robert Schiller at Yale University establishes the fact that home prices can face the downfall as much as 50 percent in few hotter markets. There are other factors which have some roles to play in this context. A stock market crunch in unison with deflation period  forced the housing prices to descend 90 percent just like during the period between 1928 and 1933.