" Credit risk always seems to come out of nowhere. But usually it comes out of somewhere…like the dirty, little recesses of a bank’s balance sheet – the places where bankers hide all their unrecognized losses."
People should write that quote down and tape it to their bathroom mirror, so they can be reminded every morning of the truth of the situation for the next five to seven years.
The things that will cause more panics and extravagently stupid policy responses will be the financial equivalents of a pop-up anti-personnel land mine. There you are, walking through what appears to be an open field on a nice day, when out of nowhere this ordnance pops up and shreds your nuts off. Same kind of blow ups are happening in finance - as the easy liquidity drains out of the world’s banking system, a whole host of really ugly landmines are coming into view.
It is going to take a long time to clean up this mess the way we’re going about it. What we need is a financial EOD team.
What we have instead are a bunch of academics that make the Three Stooges look suave by comparison.