With deepening global financial turmoil spilling over to the real economy, it remains to be seen how world economies can work together to ride out the worst financial crisis since the Great Depression of the 1930s.
The financial turbulence, which drove the United States, the euro-zone and Japan into recession and placed the world economy under great stress, was triggered by the U.S. subprime crisis that hit in July 2007.
The United States enjoyed a prosperous housing market in 2001-05, leading financial institutions to loosen lending rules to lure risky and less credible borrowers, known as "subprime mortgage clients."
In 2006, the U.S. housing market began to cool dramatically with prices starting to plunge in many parts of the country.
Adding to the pressure on borrowers, the Federal Reserve raised its interest rate 17 consecutive times within two years by June 2006, going from 1 percent to 5.25 percent, in an effort to curb inflation.
As a result, large numbers of subprime mortgage clients found themselves insolvent and the number of foreclosures grew in the United States in late 2006, leading to a global financial crisis that blew full out in 2008.
Financial meltdown
Lehman Brothers, a 158-year-old investment bank, filed for bankruptcy protection on Sept. 15, 2008. Merrill Lynch was acquired by the Bank of America the same day.
With the demise of Bear Stearns, the fifth largest U.S. securities firm, in March, three of Wall Street's five major independent brokers had disappeared.
In order to avoid the domino effect rippling through the banking industry, the Fed agreed on Sept. 21 that Morgan Stanley and Goldman Sachs could transfer into traditional bank holding companies.
The dramatic shift of the Wall Street landscape sparked immense panic among investors the world over and triggered sharp plunges in financial markets in the United States, Europe and Japan.
Since the beginning of this year, NASDAQ, the Dow Jones industrial and the Standard & Poor's 500 indexes have dropped over34 percent.
Meanwhile, stock indexes in London, Paris and Frankfurt have declined more than 35 percent, while the Japanese stock index plummeted over 46 percent.
Although the financial crisis has severely dampened the confidence of investors and consumers, some analysts warned the worst may be yet to come.