Friday, July 3, 2009

The anatomy of the crisis

It's easy to get caught up in the "now" and miss the full picture of what we've gone through. Sometimes it helps to superimpose policy moves and historical data to get to the true anatomy of the crisis. Here is the investment grade corporate spread as it first reacted to the crisis and risk started getting priced in.



People often forget that the crisis first revealed itself in 2007, while 2008 was simply the full manifestation. In fact you can see the first blip in VIX in the spring of 07:



Here is a great timeline from the Fed with all the key events and policy responses of the financial crisis.