Click here for a special offer. Click here for our free newsletter. The fabric of the global financial system has begun to tear. Stock markets here and abroad have been tottering. Private investors, banks, and other financial institutions suffered huge losses after Russia defaulted on ruble bonds, and the outstanding obligations of a long list of emerging market governments and corporations have plunged in value.
Grave consequences loom.
A substantial slowing in economic activity is likely. More credit problems will come to light and with them a greater preference for liquidity by lenders and investors. A debt liquidation is now in process in the developing world and in some parts of the industrial world. A global recession may be difficult to avoid. Such disturbing events reflect a lack of leadership and vigilance at a variety of levels and in a large number of countries.