American Economy strike of world recession

Now these days every body talking about the recession in American economy. The reason of recession in american economy is sub prime mortgage. due to sub prime mortgage banks and financial institutions has already lost his billions of dollers in 2007 and now last week the europes largest bank and worlds largest wealth management bank has declare he will write off 14 billion dollers due to sub prime mortgage, and many more banks are trying to gain courage to do same. Now question raise what would be the result of all this, there will be a great financial crunch in near future and it will spread over to globe. If the big economies of the world are facing this problem then what will happen for the small economies.

Last week almost all the major stock market of the world saw a great fall from south east asia to america, as a measuring step federal bank has to cut interest rate 75bp the biggest rate cut of the history, after few days another rate cut of 50bp. what would be the effect of rate cut on economy means more money will be available to market. and there would not be any shortage, another side companies are cutting there jobs, last week in almost 17000 jobs has been cut in industrial and trade sector as well as in agriculture sector due to lower of production. Now slowly it has been seen that recession is spreading out in other sectors of economy. if the companies will cut their job recession will spread because people would not have money to spend. what would be the effect on world economy if america continuing facing recession in his economy, because most of the world economy is depending on american economy. In my view some how recession is good for American economy because since last 10-12 years world is heating in every sector of economy, specially oil, gold and construction sector. in this sector most of the world economy has shown sustain growth that was amazing and some across intentionally created. due to this and higher demand of commodities inflation has raised and the price of basic need commodities had also raised and they were out of reach to common people, and life was more difficult to common people, to control this some of central bank of major economies had raised their interest rate. but they could control the inflation to some extend. this problem does not persist not only in european economy but also in asian economy like china and india. Since last 10-12 years two asian economy china and india has also shown tremendous growth in economy. they attain 9-11% annual growth in economy, in spite of poor economy earlier. specially china shown a immense growth due to higher exports of cheap goods and attract worlds dollar currency, through this created the world biggest foreign currency reserve, stepping down the japans and other nations and shown itself as a dominant economy of the world who can control the worlds economy to some extent. By the huge reserve of foreign currency now china is funding to poor countries, those cannot be funded by the world bank and International monetary fund due to any reason weather political instability, war or not able to maintain the standards of financial institution. by funding to these countries china getting some rights like exploration of mineral and ore, making big construction project like road, dam, harbour, railways track, electric power houses etc. by getting this rights china has access to the mineral or ore of that country and the same has imported by the china their country for consumption, meet out his production demand. by getting contracts of construction work china exporting his production to that country and using his excess labour to finish up work. The biggest example of this is Africa, in almost all the country of africa, China has funded them and getting mineral and ore rights for exploration and big construction contracts, as well as appoing their labour to finish up these contracts, this can be easily seen in most of the african countries, there chines labour is working on the roads, railways projects, dam etc. and through all of this china gaining more and more foreign currency. Now it has been also heard that china is creating billions dollar fund for investing in financial sector of Europe and America, and every body knows that chinas every step is in the interest of china itself not in the favor of rest of world. But with the biggest foreign currency reserve has one adverse line for the china economy, due to heavy inflow of foreign currency, inflation has raised in china also and the effects of the raising inflation is being shown in chines economy. most of the export of china and india is to america and europe. Now what will happen when recession continue in american economy and this recession spread out to europe and it has already. export of this two country will go down, this already happend the growth of IT industry in india is not as much as it was earlier, due to depreciation in dollar because It is totally depend on the america, this is an example. when the depreciation of dollar has so much impact, then what would be the impact of real recession in american economy.