The focus of many market participants is reform of the financial system. But this is like discussing lifestyle changes for a patient in full cardiac arrest. What is needed are the defibrillator paddles.

The global financial system must deleverage but immediate steps need to be taken to restore the functioning of banks and the supply of credit. The first step is to establish accurately the values of all risky assets held by financial institutions. Without certainty about what is held by whom and their values, restoring confidence in financial markets is difficult.