Quote of the day

September 15, 2008 § 1 Comment

As the unknown unknowns have turned into known unknowns, the [financial] system has been experiencing postmodern bank runs. These don’t look like the old-fashioned version: with few exceptions, we’re not talking about mobs of distraught depositors pounding on closed bank doors. Instead, we’re talking about frantic phone calls and mouse clicks, as financial players pull credit lines and try to unwind counterparty risk. But the economic effects — a freezing up of credit, a downward spiral in asset values — are the same as those of the great bank runs of the 1930s.

–Paul Krugman, “Financial Russian Roulette

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