A key factor that contributed to the US financial crisis is the excess liquidity in its economy brought about by both domestic and external sources. This prompted US banks and other financial institutions to pursue a liberal loan policy including the provision of unsecured loans like the subprime in the housing sector. With this, the boom and bust cycle hit the housing sector; this is what initially triggered and intensified the crisis. The crisis was also attributed by experts to the increase in derivative investments including credit default swaps. What has not been prominently discussed and what this paper attempts to address is the role of global financial imbalances in engendering the financial crisis. Given its impact, the paper underscores the need to find alternative avenues to mitigate the effects of the financial crisis in the Philippines and the East Asian region. After exploring in detail the relationship between global financial imbalances and the prevailing financial crisis, the paper concludes that one needs to look at history to find the causal relation. The huge external debt caused by the abundance of petrodollars in the 1970s and the Asian financial crisis of the 1990s comes to mind. The present crisis can be a consequence of the global financial imbalances where huge surpluses in the region were channeled to the US and financed the consumption of its citizens who had little savings. The bust in the housing market affected many financial institutions, including those outside the US. The paper concludes that narrowing the huge global financial imbalances and mitigating the impact of the crisis on the individual and at the regional level are needed. Individual countries must ensure greater exchange rate flexibility and stimulate the domestic economy. Meanwhile, countries in the region must act in concert toward greater policy coordination, capital market development, treatment of financial stability as a regional public good, addressing issues of valuation and financing, and promoting regional over national interest.