There is a run taking place in the credit markets. Traders are betting that the banks will default.
Simon Johnson, from Baseline Scenario:
“The view being taken by people who trade credit in the United States is that we’re definitely not out of the woods. And I would say, in fact, there’s something of a run taking place in the credit market. Not a traditional bank run, but a speculative attack on some of the biggest financial players ….”
The way Geithner managed the perceptions of Wall Street today was certainly masterful, but this is not about perception or confidence. This is about solvency.