Global Economy Shaking

The collapse in stock markets represents clouds piling up in the global economy’s sky. Firstly, the U.S. economy is stagnating and the huge cuts that are following the deal between the Democrats and Republicans in Congress to raise the debt ceiling threaten to strangle an already weak recovery.

"What was unthinkable six months ago, the U.S. running the risk of falling into recession in 2012, is a thought that more and more now consider. It is this insight that makes the entire ground shake," Businessweek wrote on 5 August.

Secondly, the debt crisis is deepening. The EU leaders had hoped that the crisis settlement in July - new loans to Greece, reduced interest rates on emergency loans and longer maturities, and some debt relief for Greece - would give some respite. But these measures have not calmed the financial markets.-US recovery strangled and European debt crisis deepening