Michael Spence American economist and Nobel prizewinner 'People didn't understand the risk'

Michael Spence remembers precisely where he was when the credit markets ground to a halt, triggering the latest bout of financial turmoil. By Edmund Conway, in Washington Michael Spence: the Nobel Prize-winning economist predicts a high premium on financial stability Photo: BLOOMBERG NEWS Up in leafy Connecticut, he heard the news after he had been giving a talk: almost every major form of trading – everything from the interbank markets to, most worrying of all, the commercial paper markets – had frozen. “I remember saying I didn’t think there would be a systemic solution to this – and that all we can do is case-by-case emergency management. This friend, who’s much more involved in financial markets than me, said: 'We don’t have time – the credit markets are closing down one-by-one right now. As we speak.’ And indeed they... [read full story]