With the International Monetary Fund warning that the United States will slump into recession following the largest financial shock since the Great Depression, billionaire George Soros now warns it will get a lot worse before things pick up. "This is a man-made crisis and it's made by this false belief that markets correct their own excesses. It will take much longer for the full effect of the decline in the housing market to be felt,'' Soros told reporters, according to Bloomberg .

Let's take it further. It's more than just a false belief in the markets. It's very much about the way banks have managed risk and the big bonuses. What the banks have done, in their desperation to make more money, is set up a house of cards which is now tumbling down.

That's why the Institute of International Finance, which represents more than 375 of the world's biggest financial companies, has acknowledged there are weaknesses in such areas as risk management, liquidity management and conduit underwriting. Ratings agencies and compensation also needed addressing.

Of course, what the bankers are doing is trying to head the regulators off at the pass. By being so "up front", they are hoping to avoid more regulation as the market continues to implode.