The credit crunch is entering a new phase, spreading to previously resilient areas of the financial system in what some observers say may be a necessary – but savagely painful – prelude to any eventual recovery. Financial Times
The immediate casualties of this new chapter include hedge funds and other leveraged investors such as Carlyle Capital Corporation, the listed credit fund sponsored by Carlyle Group, the private equity firm.
But there are also fresh concerns about larger financial institutions, with Bear Stearns, the US investment bank, the subject of stubborn rumours about its financial position in spite of its strenuous denials that it is in any difficulty.
The turmoil has already triggered a dramatic response from the world’s central banks, which this week revealed a support package for brokers worth $236bn.