American banks have been rushing to issue home loans to borrowers with poor credit histories. But as interest rates went up, so did the number of defaulters. Financial markets are now so complex and work in such intricate ways that U.S. investment banks can turn a simple home loan into a dizzying array of financial assets. The problem is, when things go belly up, as is the case now, the risks are passed on throughout the whole financial system -- not only locally, but globally. Central banks across the globe are now scurrying to bail out banks that have made woolly decisions and to prevent a credit shortage in the money markets, with its specter of ballooning interest rates and falling loans.

The good thing is that the jitters may not be the apocalypse that they appear at first glance -- there is not a recession in the global economy, at least not yet. As onerous as it may sound, the latest crisis underlines the urgency for fund managers and bankers to be better regulated. In the case of really bad, risky and irresponsible investment decisions, central banks and governments invariably have to step in to save the day, as has been happening in this current crisis. Indeed, there is an overwhelming case for the U.S. Securities and Exchange Commission to be given additional regulatory powers to police irresponsible financial behavior -- behavior which in our interconnected world with the U.S. at its center has devastating consequences across the globe.

But the lesson is as much applicable to all other countries: beef up authorities regulating financial markets. Since the state and public financial institutions most often pick up the tab for reckless, irresponsible and risky decisions made by fund managers and bankers, and almost everyone shares the costs of the resultant market turmoil, tighter regulation to ameliorate investment decisions would be in the interest of us all.