An excellent examination of last week's Wall Street miasma:

[W]hat sparked last week’s turmoil – and the dramatic intervention by central banks – was a pernicious chain of events. As it became apparent this summer that the US subprime problems were worsening and infecting a broader range of structured products, some investors in the ABCP (“asset-backed commercial paper," or short-term borrowings backed by financial assets that are deemed to have stable cash flow) market started to worry about whether SIVs [structured investment vehicles - bank-run programs de­signed to profit from the difference between short-term borrowing rates and longer-term invesment returns] were also sitting on losses.

The rush to sell structured products by hedge funds facing redemptions and other investors meant those market values that could be ascertained were being marked down heavily. As a result, by mid-July some investors decided to stop buying ABCP paper from SIVs suspected of subprime exposure...

The problem could be thrown into relief when billions of dollars of ABCP mature today and on Wednesday, with great un­certainty as to whether this can be refinanced.

Everything in this market depends on investors in the ABCP market maintaining their faith in the programmes and the assets they hold. With the current rush for the exits in many structured credit markets, this faith has been evaporating wholesale. No investors are sure exactly what assets SIVs and conduits are holding, or how damaged those holdings might be.

It's easy to forget - in the face of all the free-market cheerleading we're deluged with almost every day - that Wall Street wizards are just as clueless as the rest of us.