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.