It may be hard to believe, but there may be places that are in a deeper financial and economic crisis than the United States-the rest of the world, for instance.

International investments, which just two years ago were adored by U.S. investors, have fallen off a cliff over the past year as the shock wave of the credit implosion has reverberated across the globe. The events of late 2007 and 2008 stopped a four-year run-up in international equity values dead in its tracks and put both U.S. and international stocks on a parallel downward spiral.

"When there's panic like this, investors aren't trying to decide between the U.S. and Japan. They're saying, let's get the hell out of the market," says Uri Landesman, head of global growth strategies for ING Investment Management.

There's a lot about international investing right now that could send the most seasoned investors running for the hills. Losses over the last year alone have put the EAFE index in negative territory in terms of ten-year performance, with an annualized average loss of 4.08% as of March 5. Year to date, the index was down 25.62%, and for the prior 12 months it was down 57.62%.

To make matters worse, from an international investing perspective, the value of the dollar has been increasing as investors abandon Europe, Asia and the emerging markets for the "safety" of U.S. Treasurys. A rising dollar is typically bad news for international holdings because it means there's less money for financing non-U.S. companies.

The global crisis has also nullified a key reason for including international holdings in a portfolio: diversity. The current crisis, according to international managers, could be aptly described as a sea of sinking ships and very few lifeboats.

David Whittall, a principal and portfolio manager for Security Global Investors' global team, which manages the Security Global Fund, notes that out of the 5,200 U.S. and international stocks tracked by his firm, only 1,477-or 28%-have positive share prices year to date. In the North American, European and Japanese markets, indexes were all down between 22% and 25% for the year, he adds.

The state of the global economy is evident when looking past the numbers. Indeed, veteran international investors say they've witnessed signs of distress they didn't think were possible.

In a recent discussion with executives of one of the world's largest shipping container companies, for example, Whittall learned that for the first time in history, a weekly shipping run out of Oakland, Calif., to China, was canceled for a lack of cargo. Meanwhile, on the other side of the Pacific, conditions are no better. Whittall recently received an aerial photo of a harbor in Singapore. It showed all but one of the cargo ships resting peacefully at anchor.

"It's disequilibria on a global scale," he says. "The recovery is going to take much longer than people expect. The magnitude is much larger than in previous recessions."