The global economy is in a “dangerous new phase,” said Christine Lagarde, the IMF managing director, speaking at a conference of top central bankers and economists. The world is endangered by “a growing sense that policymakers do not have the conviction, or simply are not willing, to take the decisions that are needed.”

Unlike in the first wave of global crisis in 2008, governments have fewer tools to address the simmering problems, Lagarde acknowledged.

But there remain solutions, including addressing long-term debt problems in the United States and Europe while moving cautiously in the near term; addressing problems in the U.S. housing market that are making it hard for Americans to get out from under their debts; and recapitalizing European banks.