What Is Going On?

As a somewhat compulsive watcher of the stock market I recently became very intrigued with something I saw in the New York Times. Last Friday was the day that the stock market took a dive significant enough to make me throw up a little bit in my mouth. But the interesting thing I saw was a summary of world markets that NYT had on their homepage. There was a chart for the Dow, Nadsaq, and S&P 500, but then they also showed the charts from the markets in Japan, France, Hong Kong, South Korea and a few other big players in the world economy. Every market chart that I saw looked very similar to ours, a total dive. I've heard a few people question why the entire world is so effected by our stock markets, so I thought I'd take the chance to offer some kind of explanation.
One of the major reasons is that our USA accounts for roughly 25 percent of the world's GDP (the total value of goods and services within a year), which goes to show that Americans are talented consumers (put in a nice way). To give you another illustration, American consumers spend about $9 trillion a year, and the Chinese consumers spend about $1 trillion a year, that's quite the leap between first and second place.
In a nutshell, here's why the world is effected by our financial irresponsibility. If Americans (#1 consumer) lose faith in their own market and hesitate to buy things they don't necessarily need the next time they are at the store, then who is going to buy those goods from China (#1 exporter)? Of late, China has become more and more reliable on their neighboring Asian countries as well, outsourcing the production of components and parts to South Korea and Taiwan, assembling them in China, and finally exporting them back to America. You want it simpler? ...if U.S. imports fall, then Chinese exports to the United States would fall. If Chinese exports fall, then Chinese demand for component parts from the rest of Asia would fall,...
Okay then, what about Europe? The weakening American dollar (the explanation of why this happens calls for another post, but we know it happens). A weak dollar means a stronger Euro (in the comparative perspective), the exports from Japan and Germany would cost us more, and the production would end up costing them more as well. And with Americans less likely to spend money, the added expense of European goods in our stores doesn't help our newly developed sense of smart spending and saving.
I could go on about the bursting of housing bubbles, the faltering of financial confidence, and a few other things. But this just gives you an idea as to WHY so many other people are so effected by what we're doing in America. Basically what it comes down to is that more and more we are living in a global community where we are becoming more and more dependent upon each other as nations. This has been helpful when economies have been healthier, but we can't reap the benefits from the good times without also falling victim when times aren't that great.
If you think I've pulled this all out of my own head, I'm flattered. But when you're a political science major with plenty of International Relations classes you're destined to discuss these things over and over again. You can also read the article that's given me most of what you've read here in the March/April issue of Foreign Policy, the article is called The Coming Financial Pandemic: Why America's Economic Crisis Will Infect The World, written by Nouriel Roubini (Professor of Economics at NYU's Stern School of Business)