It is striking how similar the behavior of all the world's stockmarkets has been in the past two years. (Data from MarketWatch.)
The West. US (top left), UK (top right), France (bottom left), Germany (bottom right):
Germany and especially France show a somewhat smoother decline than the US and the UK (which are almost indistinguishable), but the peaks were roughly simultaneous, and the ratio of peak to trough (if we've hit the trough yet) is about the same in each of the four countries.
Developed Asia. Japan (top left), Korea (top right), Hong Kong (bottom left) and Singapore.
One point to note is that the stockmarkets of developed Asia seem to have sunk more than those of the West. US stocks fell from about 14,000 to about 8,500, a drop of about 40%. Germany's drop was closer to 45%, France's to 50%. But Korea dropped more than 50%, Japan, Hong Kong and Singapore more than 60%.
Another point to note is that the shapes of the various Asian stockmarkets differ a bit from one another. Thus, Hong Kong hit its peak when Japan had already started declining. Still, the most striking pattern is that all the stockmarkets fell steeply, just as the Western stockmarkets were doing the same thing.
Developing countries. China-Shanghai (top left), India (top right), Egypt (middle left), Mexico (middle right), Russia (bottom left), and South Africa (bottom right).
If any of these six countries breaks the pattern, it's China, which began sinking well before the rest of the world, and didn't seem to sink much more when the rest of the world was hit by the financial crisis. The Chinese stockmarket lost over 70% of its value from peak to trough. India and Egypt lost about 60%. Mexico lost just under 50%. Russia lost about 70%, which of course was partly because they invaded Georgia. South Africa fared the best of these, losing just under 45%.
Overall, there are two very strange facts to note here. First, even though the financial crisis seems to have originated in the US, it seems as if just about every other stockmarket in the world lost more value than ours did. Second, the behavior of all the stockmarkets was, during the crash, highly coordinated-- more so than before the crash, when some markets seemed to move a good deal faster than others.
It would be easier to explain the opposite set of facts. If a financial crisis in the US caused Asian stockmarkets to rise, I might say: "Naturally: Asian economies are consumers of raw materials, so a slowdown in the US should boost Asian economies. Stock investors anticipate that and buy Asian stocks." Or I might say: "Capital has to go somewhere, and when people sell stocks in the US, they buy stocks in Asia." If world stockmarkets sank in response to the US crisis, but sank less than the US did, I would say: "When markets see bad news in the US, they get more pessimistic about other markets too, both because they think the problems that they didn't anticipate in the US might be lurking elsewhere, and because US demand helps keep other economies moving. But of course, other economies probably either won't encounter the same problems as the US, or not as severely, and US demand is only one factor in the performance of China or Mexico or whatever, so other stockmarkets shouldn't be hit as hard."
It's harder to give explanations why the US-originated financial crisis should not only affect the whole world, but should hit other countries harder than the US. One hypothesis is that the US is the world's most transparent market, so the problems get spotted first here; elsewhere, investors can't see things as clearly, so they get even more spooked. Another is that the US is the world's most stable country, so in turbulent times the political and policy risks here are perceived to be lowest. Such arguments are a sort of hand-waving.
I think the conclusion many are drawing is that America has been oversold, ideologically as well as in the market sense, and that its democratic-capitalist model is a failure. But if that's the right conclusion, why is everyone else faring even worse?