Governments and central banks are once again the major players in deciding the direction of global financial markets. That's not a good sign for investors.

Markets' gyrations in recent days are eerily reminiscent of the volatility in late 2008 and early 2009, when Lehman Brothers went bankrupt, Congress adopted the Troubled Asset Relief Program and even a whiff of the direction of government policy could move the Dow by hundreds of points. It wasn't until the Dow hit 6547.05 and U.S. stress tests forced banks to own up to losses that a modicum of confidence and stability returned.

The crucial issue in understanding where markets are headed this time around, then, is how bad the turmoil must get to prompt decisive action from politicians. The problems are no less complex, with questions again growing about the solvency of European and U.S. banks, and -- worse -- about the governments that would have to rescue those banks. If anything, the political inertia is greater.

The European Central Bank's actions to prop up Italian and Spanish government bonds suggest policy makers recognize the gravity of the situation, but the Germans are still adamant in their opposition to the greater fiscal union that could fix the euro area's flaws. In the U.S., politicians have a long way to go toward a deal that would get the country's long-term finances in shape without threatening to kill the recovery in the short term.

Markets may have to fall a lot more before the political zeitgeist shifts. Let's hope the shift happens sooner rather than too late.