Part 7/14:
Moreover, the commercial paper markets and repo markets—crucial sources of short-term financing—suddenly seized up. European banks and US securities firms found themselves unable to roll over short-term debt, leading to a forced deleveraging spiral. Assets that were once liquid and easily financed became illiquid overnight.
This breakdown was systemic; it was not confined to any one country or asset class. It was a monetary failure—the fundamental plumbing of the entire system was clogged, and the consequences were global.