At the end of 2007, global capital markets were reasonably upbeat. Despite a few wobbles, most equity markets were in positive territory for the year and many investment banks had, for what seemed like the umpteenth time, enjoyed record quarterly revenues. Nevertheless, there was a sense of foreboding that something nasty was lurking in the woodshed.

Many of the trends that would come to dominate 2008 were in evidence at the end of last year, including the scarcity of liquidity, a reduction in leverage and a rise in equity market volatility. Some banks had already started making writedowns. It was not hard for Financial News to predict that these issues were shaping the outlook for global capital markets in 2008. What we could not foresee was the scale of their impact.