The current financial crisis triggered by the subprime mortgage fiasco in the United States shows no signs of abating. Although the U.S. and other major economies have taken countermeasures, such as injecting capital into financial institutions, stock-price movements remain violently erratic. There are already signs that the financial crisis has damaged the real economy; worries about that, in turn, have come back to adversely affect the markets.

China's economic growth in the July-September quarter slowed to 9 percent, its first single-digit increase in quarterly growth since late 2005, showing that the world financial crisis has started to hurt it. The U.S. saw the number of the unemployed increase by more than 150,000 in September.

Although the Japanese economy has not been directly hit by the subprime mortgage problem, stock prices at the Tokyo Stock Exchange have fallen, impacting companies that have been performing fairly well. The Bank of Japan said earlier this month that the business sentiment of large manufacturers had fallen to its lowest level in more than five years. It also has downgraded its economic assessment of all nine regions from which it received reports, citing slowing exports and high costs for energy and other raw materials.

On Nov. 15, U.S. President George W. Bush will host an international summit of leaders from the Group of Eight and other nations, including China, India, South Korea and Brazil, to discuss ways to stabilize the global financial system. As Mr. Bush said, it is imperative that leaders "make the regulatory and institutional changes necessary to avoid a repeat of this crisis."

Leaders need to get to the roots of the crisis, which developed after U.S. financial institutions securitized housing loans to people whose creditworthiness was low, and then sold them around the world. The Bush administration failed to sufficiently oversee U.S. financial institutions. Leaders must discard the idea that markets are almighty and self-corrective. They need to develop a mechanism that ensures that financial institutions exercise proper restraint on their operations.