Credit crisis in American economy has become much prominent which one can’t neglect anymore. Under the full glare of the globalization and industrial revolution in the international scenario, there is the higher possibility of the decreasing of the value of dollar as the world’s reserve currency due to the entry of other countries like China and Japan in the global market.

In August, the foreign central banks and governmental sectors thrashed 3.8 percent of their holdings of American debts. The steady increase in the percentage of the unemployment and housing slump have enhanced the agony and fear of the steady decline in the face value of the American dollars in the world market. However as a part of stop gap arrangement for saving such downfall, there are few investors who prefer to purchase US government sponsored bonds which are thought to be much secured bet. However this type of initiative is not able to provide the necessary backup to check the decline of the face value of American dollar and the foreign support for American dollar is on fast decreasing. It is the fact that American bonds are no longer thought to be protected platform.  This type of steady attrition has had adverse impact on the credit crisis in America. The credit rating is becoming tighter and the stock market is floating flotsam jetsam.

Therefore there is higher possibility of the steady hike in the interest rate which will enhance the rise of unemployment. Dollars will face the downfall which can’t be disowned. Therefore American markets including consumer groups will be under compulsion to opt for less expensive foreign credit. The steady entry of foreign investment and same time the currency deregulation are positive factors to boost up the stock market which generates  the steady progression of cheap capital in American market.