Editorial: Cloudy prospects

Meanwhile, the global financial sector went from weakness to weakness as more and more institutions revealed the impact that the sub-prime crisis had had on their balance sheets. This strangulated financial flows because nobody was sure who the next victim would be. Even as things seemed to be limping back to some degree of normalcy, another shock jolted the system last week, when the two largest US mortgage guarantee companies, Fannie Mae and Freddie Mac, declared themselves seriously ill. In hindsight, this should not have come as a surprise, since both their portfolios essentially comprise home loans, which are obviously not the best assets to have these days. However, coming a year after the beginning of the crisis, the news was certainly discomfiting to those who had begun to believe that the worst was over. To cap it all, the UK and US governments, staunch believers in the incentives and the discipline of market forces, stepped in to rescue vulnerable financial institutions