What Matters: Credit crisis essays curated by McKinsey & Company

The world stopped in 2008—and it was a full stop for the era of excess. Belatedly, the authorities have been extraordinarily aggressive in coming to the rescue of a system in crisis. But as in the case of Humpty Dumpty, they will not be able to put all the pieces back together again. The next era will be very different from the one we have just left behind.

It’s the leverage, stupid

By Horace Wood Brock

23 February 2009

The fundamental conceit of efficient-market theory—that markets can perfectly assess and thus price, slice, and dice risk—has collapsed like Edgar Allen Poe’s House of Usher.

The networked market

By Richard N. Foster and Juan M. Ocampo

23 February 2009

Lying at the heart of the most common market theory—the efficient-market hypothesis—is the assumption that financial returns, including stock prices, are independent of one another. We now know without any doubt that this assumption is wrong.

A bigger tent for financial reform

By Robert D. Hormats

23 February 2009

The financial crisis of 2008—and the breathtaking rapidity with which it has spread—has brought home how truly interconnected world economies and markets have become. It has also underscored the need for the world’s economic policy makers to establish better ways of working together across borders.

Transparency’s dark side

By Sebastian Mallaby

23 February 2009

As Wall Street has turned upside down, calls for more transparency, not surprisingly, have become increasingly intense. Markets thrive on information, the argument goes, and more information is better, right? Well, up to a point. When it comes to hedge funds and proprietary trading desks, transparency is not always a good thing. In fact, it can be dangerous.

The right way to regulate

By Carl J. Schramm and Dane Stangler

23 February 2009

One of the primary misconceptions about the 2007–08 financial crisis is that it resulted from, and has thus ended, a monotonic march of deregulation over the last three decades of the 20th century.

The heart of risk

By Peter L. Bernstein

23 February 2009

What is risk management all about anyway? We use the words as though everybody understands what we are talking about. But life is not that simple.

Five truths from Asia

By Tommy Koh

23 February 2009

Some of my American and European friends were unsympathetic during the Asian financial crisis. A few even gloated over Asia’s misfortunes, displaying some of the West’s worst prejudices toward Asia. A decade later, fortunes have been reversed.

How the world has already changed

By Diana Farrell

23 February 2009

Many policy makers and business executives continue to assume that it’s just a matter of time until we go back to where we were before the crisis began. They are probably mistaken.

Send an e-mail to let us know how we can make our site better.

Should social entrepreneurs adopt the language and practices of business?

Comment on the debate

A better way to fix the banks
McKinsey directors Lowell Bryan and Toos Daruvala present a plan that could solve the toxic-asset pricing problem voluntarily—without requiring Uncle Sam to nationalize the whole industry—and make (pretty much) everyone a winner. (The McKinsey Quarterly)
Lessons of the Financial Crisis
CFR Senior Fellow and Director of International Economics Benn Steil has provided an incisive explanation of the global financial crisis and its causes and a set of practical reforms to prevent its recurrence.
McKinsey on the new role of government
McKinsey's Lenny Mendonca discusses on Big Think, a global online forum, the challenges and opportunities emerging within a new global regulatory environment.