It’s been a financial thriller so far in 2008. When most of the world’s largest and most sophisticated financial institutions came to the terrifying realization that their innovative ways had loaded their balance sheets with virtually worthless credit detritus, their fears overcame them and they panicked. Their direct knowledge of their own credit ineptitude made them highly suspicious of the credit quality of their peers and they stopped lending to each other. Ben Bernanke and his colleagues at the Federal Reserve recognized the signs of an incipient banking crisis and they moved quickly to head it off.
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Canso May 2008 Market Observer
