Is only greed, euphoria and cheap money to be blamed for the whole mess? What about the flaws of the originate and distribute model, which has enhanced systemic risks. What about skewed pay schemes, with their lack of ethics, which have stimulated reckless risk-taking. What about investment grade values assigned to trash? What about conflicts of interest? What about banks engaging in casino-type transactions? What about the “shadow” banking sector, with its extreme leveraging and speculative operations. Why have n´t policy makers learnt from other crises, though stern warnings they got? Just remember what Lamfalussy, Gramlich, Volcker, Buffett said years ago.

The argument that more, or new regulations would stifle financial innovation is ludicrous. Not all financial innovation is sound. Is a quasi-international Ponzi scheme, as it has been developing via toxic products during the past decade, to be tolerated? The issue at stake is the lack of proper regulation and supervision, a poor understanding of financial markets and of systemic risks. Free markets are not synonymous with deregulated markets. Correction is going to be painful, especially in the US, but Europe is not immune to economic downturn. Solutions should not be patchy and consider that markets are global. International coordination is needed in order to restore confidence.