The second way to look at things is that we are not in a panic, but in the painful process of deflating a credit bubble. Bank assets are not trading at pretend prices that we can just dismiss as a collective case of the vapors, but at prices near their actual value. The markets are frozen because price discovery would force banks to apply the cold, wet hand of reality to their balance sheets, and many of them would be bust. As long as you don’t open up your vault and look inside, you can continue to believe it’s filled with gold ingots.
—Shell Game