Bush refunds taxes and runs up huge fiscal deficits. The Fed prints more dollars to finance Bush's folly. The dollar should fall against other currencies but this is prevented by Central Banks buying up dollars to protect exports. This increased liquidity along with low interest rates leads to a huge asset price bubble, in turn leading to a lending frenzy. Excess leads to hangover, so inflation followed leading to rising interest rates, leading to tightening of liquidity, leading to collapse of the sub prime market. Now the share markets are getting jitters. Of course the pundits are saying the usual things such as ' the fundamentals are very strong ' and ' corrections are good for the market ' but we have heard all this when the dot com bubble collapsed. If this is only a ' good correction ' why did the European bank dole out 130 billion dollars into the system while the Fed injected 24 billion? Sounds like panic to me. What if the dollar keeps dropping in value? China is sitting on 1.3 trillion dollars, Japan on one trillion and India has 250 billion dollars. All Asian countries are sitting on huge dollar deposits and securities. How will they square their losses? What if China decides to diversify into Euros? Since the Yuan is tied to the dollar it will go down equally and will not affect Chinese exports. I hope and pray that the global economy is not so huge that it has developed its own momentum and is impossible to control or direct. I hope that our lot has some idea about what is going on.