Spare a thought for bondholders. In the first phase of the crunch, credit markets were crushed mainly because of mark-to-market volatility – as illustrated by the rating agencies’ actions. Standard & Poor’s downgrades in the financial sector this year amount to $1.2 trillion – outweighing the number of upgrades by a factor of 20 to 1.
This financial crisis is also widely known as the sub-prime crisis but at the moment the real losses, of the kind that arise through a bond actually defaulting, have been relatively limited. The losses...
