European stock markets fell sharply again last week as investor confidence in the United States financial system was eroded even furtherThe near implosion of America mortgage giants Fannie Mae and Freddie Mac is the latest chapter of a serial economic chiller that debuted with last year's US sub-prime mortgage meltdown, continued through the credit crunch, and may yet unveil its most dreaded chapters in the months ahead.

Action by the Federal Reserve may have staved off the demise of Fannie and Freddie, but with predictions that hundreds more US banks could soon follow California-based IndyMac (the second-largest US financial institution ever to fold) in going belly-up, clearly America's current economic malaise isn't over.

Given Fannie Mae and Freddie Mac's role in underpinning a whopping $5 trillion in mortgages — almost half of the country's total — were their woes the most ominous harbinger yet of more cataclysmic times ahead?

And, in light of the axiom that whenever America sneezes, the world catches a cold, what will all this mean for Northern Ireland?

“I think that people who try to predict the economy and the Stock Market make weather forecasters look good,” joked Mark Kaufler, a portfolio manager at Clover Capital Management in Rochester, New York, a firm that manages $2.7bn in investments, during an interview with the Belfast Telegraph.

He added: “That being said, it does appear to me that we are going to be in a period of slower economic activity that is going to be longer than we've grown accustomed to during previous such slow downs.”

Kaufler added that, if he were viewing the gathering economic storm from the vantage point of businesses seeking inward investment in Northern Ireland, he would “be very aggressive in telling my story to whoever you're trying to attract”.

He said that, given the slowdown in the US, some investors may look abroad for opportunities.

“So, I would be talking to those people because this is an opportune time I think to have those kinds of conversations.”

However, Robert Pollin, an economics professor at the University of Massachusetts at Amherst, wasn't so sure that Northern Ireland can gain ground in the current economic atmosphere.

“It's not that the US is an unsafe place to invest,” Pollin told the Telegraph, “it's that the financial markets — in the US, but spreading out throughout the world — are themselves unsafe. So the availability and the cost of credit are going to be higher in the US and elsewhere.”

Pollin also thinks it's too early to tell how serious the current slowdown will be, but he believes the most likely scenario will be “a general withdrawal, a general tightening of credit, and a general pull-back and that will effect Ireland as well as the rest of the OECD, and the US.”

He said that the Fannie Mea-Freddie Mac debacle has exposed a huge contradiction in the stance taken by free market advocates.

“All of a sudden we have socialism for the rich, for Wall Street when they want it. And they want free markets for everybody else,” said Pollin

“We're bailing them out. But that means that they get to keep playing by their same rules. The things that brought them to the brink of collapse are still going to happen unless we change the rules.

“The things that contribute to financial speculation need to be circumscribed, need to be regulated, as they had been following the 1930s and the Great Depression,” insisted Pollin.