In sum, a web of mispriced risks, with the price set at zero, between the “normal” banking system and the shadow banking system was created through the unseen links between mortgage bonds and CDSs that amplified the grossly underestimated existing correlation between assets. A problem that began in the repo market in 2007 was no longer confined there. The crisis spread globally as investors sought the protection of liquidity but failed to find it. Just as one country’s exports depends upon another country’s imports, so one bank’s liquidity depends upon another bank’s willingness to be illiquid. And at that moment, no one wanted to be illiquid.

Mark Blyth, Austerity, loc. 98