Last summer, central banks injected hundreds of billions of dollars into the financial system, desperate to restore liquidity to battered markets. But by then the credit crunch was on—and after 12 months, it shows no signs of abating. The Financial Times looks at how risky US mortgages set off the worst economic crisis in 70 years.
"There was this huge trust in the intellectual capital of Wall Street," one CEO said. But complex securities invented in recent years were far riskier than ratings agencies suggested. Investors thought risk was spread widely enough that markets would avoid a Japan-style meltdown. Instead, a chain reaction has led to massive writedowns, nationalized banks, and dried-up markets, from which it may take years to recover.