While global leaders disagree about what to do, the world economy tumbles at accelerating speed. Last week’s news of the virtual collapse of the German manufacturing sector is the clearest sign yet that Europe is heading into a depression. Japan is going the same way, as are other Asian countries.

The fall of the German and Japanese economies is also interesting because of what it tells us about the nature of this crisis. Global trade has become one of the main shock transmission mechanisms. Global factors are the main drivers of the downturn. This is not the same as saying that everyone is affected. It means that if you want to stop the rot, relying purely on domestic instruments will no longer to do the trick.