Read The Economist Where Credit Risk is going from August, 2003. It’s subscription, of course. But now the global economy is going to hell, you may – bizarrely – feel more inclined to pay for a decent analysis of how it all went pear-shaped. Here’s a bit of it:

[R]isk does not neatly disappear into thin air. In a weak economy, bad debts increase and banks traditionally take a big hit. If they are not taking the hit in this economic slowdown, then somebody else is. Credit risk is like air in a squishy balloon. You can squeeze the balloon into any shape you like, but the air does not disappear…

The risk, and the losses that inevitably flow from it, may be being redistributed to entities that are less well capitalised and less expert in analysing borrowers than banks. Moreover, they may be feeding through to places where they could eventually be socially and politically painful – for example, to pension funds, mutual funds, or life-insurance policies.