Several American banks had been offering low interest loans to people, who it turned out were not able to make the repayments.

Billion of dollars have had to be written off, several banks have folded, interest rates have been adjusted and many people have either lost their homes or are facing higher mortgages.

Already one Caribbean prime minister, St. Vincent's Ralph Gonsalves, has voiced concerns about the ripple effect this is likely to have on his country and in the region.

So what are the implications for the Caribbean?

Economist, Dr Terrence Farrell, is a former deputy governor of the Central Bank of Trinidad and Tobago. He also runs the economic research entity Business Insight.

Hear his interview with BBC Caribbean's Marie-Claire Williams.