This opacity means that no one knows who is holding what,which saps confidence. When the repricing of risk finally occurredin September, investors panicked causing a liquidity run and acredit strike.

For example, the market for United States municipal bonds became disrupted owing to concerns about the bond insurance industry; in addition, since market participants realized that they had underestimated the risks involved with mortgage-backed assets they reappraised the riskiness of all assets, which generally resulted in an upward repricing of almost all risks.