Actually, I am overwhelmed. From an economist's point of view, recent developments in international financial markets are not only exciting, they are a logical consequence of past economic outcomes, international policy and re-pricing of security risks on the part of financial market participants.
In the last two days, developments are pilling up. Yetserday and a few hours ago, major central banks injected massive liquidity which was much more in volume compared to the finanical aid in the aftermath of 9/11. Into the bargain, international top banks heavily invested in asset-backd securities (CDO, credit derivatives etc.) were forced shutting off withdrawals from their mortgage-investment funds. More and more positions were sold to raise liquid money in order to repay contracted debts, non-performing loans and security losses. In addition, the U.S. security comission (SEC) is concerned that some corporate books (especially banks) might obviously try to hide risk exposures. In my view, these events look like the precusor of a potential credit crunch which really could do harm to the economcy! H.P. Minsky onced remarked that it is not the question that it (i.e. credit crunch) will emerge again, but when. Well, we could already have passed the starting point!
