Credit Contagion: A Reality Check

Subprime is actually a relatively small slice of the global debt market. Meanwhile, economic fundamentals remain solid

Problems surrounding potential contagion from the U.S. subprime market translated to a liquidity squeeze last week, prompting central banks around the world to inject liquidity to calm nerves in the financial markets. The central bankers were fulfilling their role as lenders of last resort when heightened private fears threaten the normal flow of financing.

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