The Global Financial Crisis of 2008, what was initially called the US Financial Crisis, began in 2007 with investors losing confidence in the American housing market but quickly moved on to have effect on national economies worldwide. Although the US housing collapse is often blamed for causing the US financial crisis, and even the global economic crisis, the global financial system was already vulnerable because of the abundance of complex and highly leveraged financial contracts and operations.
Starting with the collapse of major US financial institutions on September 16, the global economic crisis is said to have entered its acute phase. Investors began fleeing with panic as headlines proclaimed the global onset of "Financial Crisis 2008" and the global economy was on the brink of collapse. Many governments including the UK and other European governments had to execute painfully costly bail out plans to keep their respective economies from going down with the ship, or at least to keep them afloat in anticipation of market recovery.
Several economic commentators have suggested that if the global economic crisis continues, it could cause an extended recession or even worse. The continuing expansion of the US financial crisis as well as the global financial crisis is likely to lead to the biggest banking shakeout since the savings-and-loan meltdown. On October 6th the chairman of the Investment bank UBS stated that a global recession is clearly in the cards for 2009 with recovery unlikely for at least two years. To deal with the global economic crisis many central banks have started cutting interest rates, however analysts warn that although this may help alleviate financial crisis 2008, in economic terms the worst is yet to come.