It's the US economy, stupid!

And the world thought nothing could possibly go wrong with the US economy, not even when the subprime market tumbled last year. Economic brains on Wall Street then insisted not much was wrong, and we suspended disbelief, till Sept 7, that is.

That was when the financial world's "humpty dumpties" began their great fall. And all the empire's bourses and brains couldn't put them together again. But try they did. The US Treasury was generous enough to take on the $5.3 trillion exposure of mortgage giants Fannie Mae and Freddie Mac. Just over a week later, Lehman Brothers went belly up. Merrill Lynch had already fallen in Bank of America's kitty. Lest we forget, Bear Stearns had gone bust a few months ago. And Morgan Stanley and Goldman Sachs changed their investment bank garb to cushion their fall. Despite all this, how could the Federal Reserve not try bailing out AIG with a $85-billion parachute?

But more was still to come. In what many experts believe is a turning point in US history, the Bush administration took over the reins of the "savior chariot", proposing a $700-billion package to Congress to bail out banks and financial firms. How? By buying their non-performing housing loans and other worthless assets. And where would the money come from? Taxpayers, of course.