Last November, I spent several days in the skyscrapers of Canary Wharf, in banks' headquarters in the City and in the pale wood and glass of a hedge fund's St James's office trying to understand the credit crisis that had erupted over the previous four months. I became intrigued by an oddity that I came to think of as the end-of-the-world trade. The trade is the purchase of insurance against what would in effect be the failure of the modern capitalist system. It would take a cataclysm - around a third of the leading investment-grade corporations in Europe or half those in North America going bankrupt and defaulting on their debt - for the insurance to be paid out.

LRB 8 May 2008 | PDF Download