Freeze!(The Talk of the Town)(credit markets)

At ten o'clock Wednesday night, the banker lingered in his office. He was a top-ranking executive at a major global financial institution (he did not want to be identified, because, well, he did not want to be identified), and he had been at work for sixteen hours, monitoring the collapse of the world's financial system. The credit markets were frozen, the equity markets in free fall. The term of the hour was "nuclear winter"--nothing moves or grows--a doomsday scenario that a series of government interventions had so far failed to preclude, owing to a pernicious convergence of intractability and incompetence. He spoke quietly and without affect, a skyscraper general surveying his Verdun: "We're pretty creditworthy, and we can't borrow. There is nothing to borrow. Long-term lenders are not lending. There is no bond issuance. No asset-backed. No unsecured. Nothing. Nobody trusts anybody."

Interbank lending is the photosynthesis of finance. In its absence, the money dries up, and the viability of everything--institutions, assets, jobs, budgets, plans, dreams--wilts. Hoarding is panic's quiet twin. In Germany, frightened investors, with Weimar on the brain, couldn't even find gold to buy. Last week, the global economy, struggling to agree on a price for its components, in an environment without leverage or liquidity, found pretty much everything (except gold bars and Phillies tickets) to be worth a lot less than everyone thought. Your house, your billfold, your portfolio, your clout, your talent: market to market, these will, apparently, fetch a fraction of what you'd expected or depended upon. As haircuts go, this is a scalping.

In order to have something to hoard, people had to find things to sell. So they sold stocks. The Dow--to pick on one bloody indicator--gave up twenty-one per cent in seven days, and forty per cent in a year. As for the American equity market in general--$8.4 trillion gone in the past year. In some respects, though, the stock-market collapse is a sideshow. The credit crunch is the main event.

Another thing not being hoarded, besides stocks, was blame. The volume on that exchange was at an ...