Several shocks have recently buffeted the global financial system: unequivocal signs of a broader global economic slowdown; fresh market turbulence in the euro area; and the credit downgrade of the United States.
The global economy has entered a dangerous new phase. The recovery has weakened considerably, and downside risks have increased sharply. Strong policies are urgently needed to improve the outlook and reduce risks.
While Alan Greenspan has been busy denying any blame or foresight into the financial crisis, Paul Volcker has been working to dissociate the speculative risks of hedge funds from banking. But "The Volcker Rule," does not go far enough.