Why are there continued jitters on the world markets?
1) Uncertainty over who will lose how much from mispriced CDOs/CLOs has led to unwillingness by banks to lend cash they may need to solve their own problems as a result of the credit crisis.
2) Lack of trust after credit rating agencies mispriced the risk of the CDOs/CLOs has led to a lack of trust in ones still being sold.
So, as with the last crisis from similar uncertainty and lack of trust — the crisis of faith in corporate results and their auditing after the Enron and Worldcom collapses — the key is renewal of transparency which can lead to renewed trust.
Markets can only be efficient if they’re truly transparent and trusting.
And efficient markets are good for us all as they’re the building block of economic growth.
