With the time advancement and through the vicissitude of the formation and modification of the American economic infrastructure, the fear of credit crisis and financial loss is very much evident due to some wrong judgment in the matter of taking wrong economic policies. Credit shortcomings in the broader market enhance the rapidity of the financial decline. The sub-prime sarcoma is very much palpable in all loan divisions and these are also sieved into the banking systems. This is compelling the banking sectors to garner reserves to hoodwink their potential losses.

It is also seen that credit worthy persons are being shifted to new mortgages. Simultaneously, nearly half of the borrowers having adjustable rate mortgages were not competent enough to approach for refinancing their loans. It is a vital concern for those policy makers because an estimated 2.5 million mortgages supplied to borrowers having weak and poor credit will proceed for resetting at higher rates by the end of the coming year. However it is also seen that people with good credit rating are also relinquished because of the tendency of the banks to hoard the capital. This can indicate at the hidden tendency of the banking sectors to harbor their losses which they can’t reveal publicly. Therefore one can find lot of difficulty to get a mortgage which will accelerate the possibility of the housing crash.

There is no certainty of saving economy and financial markets from downfall in spite of the new monetary policy being taken by the Federal government. The Fed offered the liquidity to banking sectors but it can’t offer direct liquidity to hedge funds, investment banks with the inclusion of other high graded leveraged institutions inclusive of parts of the credit markets like asset backed commercial paper which there is the much palpability of the severity of the crisis.

European and Asian stock markets are in the doldrums due to the severe recession and index downfall for the prolonged period of time. Stock prices of the largest European financial and industrial sectors have been facing the severe downfall. In addition the banking sectors including oil-and-gas sectors have experienced  the heavy loss. The reason for the steady downfall in the international stock market is owing to the uninterrupted economy recession.

Furthermore there is the higher possibility of financial crisis caused by the sub-prime mortgage lending possibility and credit card crisis. The existing Chairman of the Board of the Governors of the US Federal Reserve System, Ben Bernanke has admitted that the country’s economic infrastructure is now heading towards the recession which will snowball into severe crunch in the coming years. Furthermore the excessive saturation on the American housing market snowballed into the performance of the unlimited mortgage lending when a new house has become available to a person who has very poor and weak credit history with low credit rating. When consumers show inability to make repayment of their house and then their credit cards, the biggest credit lenders began wasting millions in revenues and shares in the stock market. A good many credit card holders are seen groping for survival in the labyrinth of debt and bankruptcy and they are now struggling to earn their livelihoods as they having mortgages yet to pay off.

As they are bound to give most of their income to pay off mortgage and utilizing credit cards to pay basic things, lot of people faced defaulting on their credit lines. All these factors having synergistic impact on the enhancement of the credit crisis with the strong possibility of having the detrimental impact on the American economy. European investors ventilate their opinions and views regarding the economy recession.