According to data from the Bank for International Settlements, gross capital flows around the world plunged by 90 percent between 20.
As capital flows dried up, the crisis soon morphed into a crushing recession in the real economy.
While the United States' emphasis on reviving banks and public spending are both important, neither addresses directly the main source of deflation, which is that the global imbalances are no longer being recycled effectively.
The basic problem is not the imbalances per se, but the unsustainable way financial deregulation and neoliberal global order absorbed and recycled them.
Many had already collapsed, and many others would before long.
The Great Depression of the 1930s is remembered as the worst economic disaster in modern history—one that resulted in large part from inept policy responses—but it was far less synchronized than the crash in 2008.
Deregulation, which relies on private market discipline does not prevent or contain such epidemics.
On the contrary, it fosters a climate that encourages them.
In particular, it describes the mechanism by which sub-prime mortgages and securitisation products helped to exacerbate the problem.
In contrast to many other descriptions, it employs no advanced mathematical techniques, allowing non-specialists to appreciate the important dynamic processes at work.