Bobby Kaltenbach

From the United States to Greece to Iceland, more countries are dealing with increasing financial insecurity, and some experts fear that the world is on its way to a global economic collapse.

In late 2008, the stock market plummeted drastically, driving much of the world into an economic trough unseen since the Great Depression of the 1930s. Though most markets have recovered substantially since the collapse, the events of recent weeks have threatened to undo the progress made in the last three years and send many countries into a recession. While debate continues as to the exact cause of the instability, one fact seems to be becoming increasingly clear: the strength of the world economy is inextricably tied to the strength of the United States economy.

Take the recent credit downgrade as an example. What implications might this have on the economies of foreign nations? As Sunil Kewalramani of The Economic Times puts it, "we will quickly have a renewed credit crunch on our hands. The new market mantra would be 'if U.S. can be downgraded, anyone else can be.'"

Additionally, as a major holder of U.S. treasuries, the credit downgrade is almost certain to have adverse effects on the economy of the world's most populous country, China, with Kewalramani claiming that the Asian nation will be the "biggest loser" in light of the downgrade.

All of this turmoil has put pressure on economists to find the underlying cause of the crisis, and some believe that the global trend toward deregulation is the culprit. Iceland, which started the process of deregulation in 2006, had until that point one of the most prosperous economies in Europe. However, soon after certain key financial safeguards were stripped, banks began to commit fraud in an attempt to make profits, causing the small nation to have to endure what The Economist calls the biggest banking collapse "relative to the size of an economy, that any country has ever suffered."

The situation is similar in Greece, where without strict regulations, the government was able to lie to the European Union and continue with enormous spending despite its being in clear economic danger.

What, then, is being done to fix the problem? Economic leaders from across the globe are requesting for governments to have a greater degree of control over business practices. Additionally, the International Monetary Fund is being called upon to keep a more watchful eye on nations suspected of being in economic trouble.

Whatever the solution, it is agreed that fast action is important as a worldwide economic collapse looms ominously in the distance.