Is a Collapse in the Cards?

Illustration for TIME by SELĈUK DEMIREL

As I write this, stocks around the world are falling, the U.S. Federal Reserve is madly cutting interest rates to try to head off a recession, and everyone is worried about a global economic slowdown. All this uncertainty was spawned by plunging U.S. home prices and the crash of the subprime debt market, which has blown up into an international credit crisis. What caused this fiasco, who is to blame and what it means for investors has been the subject of much debate. Here are the myths and realities:

Myth: The crisis...

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