This paper argues that the credit crunch is the result of a particular problem in the world financial system, that is, of the phenomenon of "liquidity illusion". At the heart of this still poorly under-stood phenomenon lies the spiral of financial innovation and its effects on systemic...

This paper argues that the credit crunch is the result of a particular problem in the world financial system, that is, of the phenomenon of 'liquidity illusion.' At the heart of this still poorly under-stood phenomenon lies the spiral of financial innovation and its effects on systemic...