You haven't seen anything yet

Floyd Norris, of the NY Times, seems to think we've only just begun to see the meltdown of the financial system. The next big debacle may be loans to corporations, and the institutions that insure them.

As 2007 ends, it seems that the financial world shakes every time a company reveals some new exposure to the disastrous world of subprime mortgage lending.

But just how different was subprime lending from other lending in the days of easy money that prevailed until this summer? The smug confidence that nothing could go wrong, and that credit quality did not matter, could be seen in the many other markets as well.

That was particularly true in the corporate loan market. Loans were cheap, and anyone worried about losses could buy insurance for almost nothing. It was not an environment that encouraged careful lending.

Look out below...