In 1997, some observers feared an impending global recession as a result of the headwinds stemming from the Asian financial crisis. However, within two years, those fears had dissipated and were replaced with new concerns of irrational exuberance.

In contrast, the U.S. economic downturn beginning in 2008 initially appeared to be relatively benign. Most observers believed that a moderation in U.S. economic growth was essential to prevent an over-heating of the global economy. It was further believed that the problems confronting the U.S. economy were of its own making and would have little effect on global economic growth.

To be sure, the U.S. economy is in the midst of a painful structural adjustment process. And, not surprisingly, the consumer is at the epicenter of the crisis. After years of excess consumption, overextended consumers will have to significantly reduce consumption and increase savings to restore their financial health. Moreover, since consumer spending constitutes 70% of GDP, many economists fear that this "deleveraging" process may plunge the U.S. economy into a deep and protracted recession.

There is, however, much speculation among economists as to precisely how sharp the pullback in consumer spending will be and when it will recover. Stephen Roach, Managing Director and Chief Economist, Morgan Stanley Asia believes that a global economic slump has just begun and that the U.S. is on a "recession trajectory". Mr. Roach further suggests that people are still in denial with regard to the severity of the problems confronting the U.S economy. Given this grim outlook, Morgan Stanley has lowered its S&P 500 2008 year-end target to 1300 from 1400.

Rising petroleum prices may plunge the world into a global recession. Here’s what to do about it.

In my view, financial speculators are largely responsible for the recent surge in the price of petroleum. Indeed, this is yet another case of “irrational exuberance”, similar to the previous technology and real estate bubbles. Of course, as in previous bubbles, financial speculators will provide many seemingly convincing arguments to rationalize their actions.

Will Infosys Technologies Inc. (NYSE: INFY) be pulled deeper into the vortex created by the implosion of the U.S. subprime industry, or will it manage to safely skim the surface? To be sure, the chief fear responsible for dampening investor enthusiasm for Infosys stems from the clouded outlook for outsourcing services given the turmoil within the U.S. financial services industry.

To what extent are these concerns justified? An in-depth look at the state of the offshore outsourcing and currency markets and the key risks surrounding Infosys are presented in the next section.