Second, asset prices were high and, in some cases, in bubble territory. China is perhaps the best example of this. In a similar way to how the US pursued home ownership as a social objective a decade ago, Chinese officials encouraged broad-based participation in the stock market as part of the country's journey towards a market-based system. And, again like the US with housing, the phenomenon resulted in a price bubble that is challenging to deflate in an orderly fashion.
Third, two markets, unhinged by structural earthquakes, transmit periodic bouts of financial instability to others. Emerging market currencies struggle to regain their footing in the face of multiple shocks — from China's surprise change to its foreign exchange regime to the detrimental impact of lower global growth, massive capital outflows and, for some, sharply lower commodity export earnings. Oil is facing a similar phenomenon on account of disruptions to its supply, demand and swing producer dynamics.
Read More Tom Lee: Stocks best days may be ahead
Fourth, there is less confidence in policymakers' ability to respond quickly and effectively. Part of this is due to prolonged over-reliance on central banks as the only policy game in town; and part to the migration of major global challenges away from the direct reach of the US Federal Reserve and the ECB, the two most powerful central banks. This outcome of this weekend's G20 deliberations in Turkey will do little to counter the erosion of markets' confidence.
Fifth, the clear and present danger of another "right policy at the wrong time", this time out of the Fed. America's central bankers have good internal economic reasons to hike interest rates when they meet next week, supported by Friday's jobs report. But, just like China's move to a more flexible currency system last month, this right domestic measure risks adding to global financial instability at this particular juncture.
Finally, recent market developments have reinforced concerns about disruptive pockets of illiquidity and product malfunction. Part of this is due to the regulatory and market-driven structural shrinkage of the broker-dealer intermediation role relative to end-user demand, especially when a change in consensus views leads to a broad-based desire for portfolio repositioning; and part reflects the proliferation of products, particularly in exchange traded and risk parity funds, whose promises of performance and liquidity are undermined in periods of market illiquidity.
The influence of these six factors is unlikely to dissipate soon. Moreover, they contribute to a more fundamental phenomenon — that is, the shift in the markets' operating regime, away from central bank repressed financial asset prices and towards a process of repricing that better reflects the cyclical, structural and secular fluidity of the global system.