This recent volatility in global financial markets could be regarded as laxity in risk evaluation in the continued benign global economic and financial environment being reversed by market forces of selfcorrection.
However, if the correction in the U.S. housing market intensifies or the effects of  2  BIS Review 126/2007  swings in financial markets become unexpectedly widespread, private consumption and business fixed investment may become weaker than expected due to the negative wealth effect, credit tightening, and deterioration in business and consumer sentiment, thereby leading to further deceleration in U.S. economic growth.