In spite of being super power, America is no longer considered to be fully protected from credit crunch. Though America is proud of having the largest economy in the world as per GDP report, the American economic infrastructure is not immune to financial crisis.  In this connection it can be said that America first experienced the caustic brunt of great depression during the period between 1929-40 which was energized by the American stock market crunch in the year of 1929.

This type of severe financial depression in the American history forced the then hon’ble American president  Franklin D. Roosevelt to take drastic steps to introduce New Deal in the American economy. New Deal is a series of emergency economic procedures which were designed and programmed to retaliate the steady progression of unemployment, dejobbing, hunger and homelessness which occurred owing to the sudden occurrence of the financial slump. It was thought to be vital factor to strengthen the chance of widespread of fascism in countries like Nazi Germany which enhanced the outbreak of second world war. In July 1944, just before the occurrence of the second world war, the UN monetary and financial conferences were held at Bretton Woods in New Hampshire. In this connection, the General Agreement on Tariffsand Trade of GATT and the IMF came into picture.

There is another historical anecdote to strengthen the possibility of the sudden decline of dollar value with the decision of American government to prevent the convertibility of the American dollars to the value of an ounce of gold. This type of dollar crisis minimized the value of the American currency which boosted up the huge increase in the cost of oil as the Organization of Petroleum Exporting Countries or OPEC made readjustment of the prices to get the clear reflection of the dollar’s depreciation.

Notwithstanding holding the supremacy over the global economy, America is now facing the severe shortcoming of credit crunch or crisis due to wrong economic policies and misunderstanding. A short analytical over view can be drawn to ventilate the true picture of the American credit crunch history. In August 2007, the Federal Reserve decided to make the reduction of its discount rating on loans to banking sectors by a half percentage with the steady nosedive from 6.25. 5.75 percent.

The European Central Bank or ECB pumped 95 billion pound or in the form of US$1.00=0.7311 euros as at Aug. 10, 2007 into the EU banking sector to offer additional liquidity.  Again in October 2006, Jeffrey Skilling, the then chief executive of Enron Corp., was awarded 24 year and four month life imprisonment in the wake of his conviction and wrong doing in May due to the commitment of fraudulence, insider trading and subversion. Again in the year of 2005 in the March, Bernie Ebbers, the previous chief executive of the telecommunication company namely WorldCom Inc. was also accused of orchestrating and forging an US$11 billion which snowballed into severest insolvency in American history. According to the UN report published in January, 2005 under the headline World Economic Situation and Prospects 2005 claims that due to anomalies and imbalance in the international economic infrastructure there will be the higher possibility of the palpable threat to the stability of the economy.

Therefore the American government should take drastic steps to lower the government expenditure and at the same time augment the savings percentage to rescue the country from the doldrums of the credit crunch. In August 2002, according to the revised reports by American department of commerce, the American economy made inroad into the state of recession for the first three quarters of 2001.