After the latest intervention by the Federal Reserve, investors who have never worried about the value of collateralised debt obligations or lost sleep about rollovers of commercial paper must be getting concerned. But for an average investor with a mortgage, pension, and a bit of money in the stock market, inactivity is probably the best advice.

The crisis in the markets started with US subprime mortgages but no longer has much to do with them. Two things have happened. First, because nobody knows which banks and funds have lost money on subprime, lenders are reluctant to lend to anybody. Second, because of a loss of confidence in asset-backed securities – a few of which are based on subprime mortgages – it is hard to sell or even to value them.