Over the past few months a modern day pyramid scheme of colossal proportions has begun to unwind. The sheer scale of it is clogging up the arteries of the financial system and has led to major disequilibrium within global credit markets.

Markets face a credit crunch that continues to manifest itself in the money markets and this can have pronounced effects on the real economy as the lending system becomes dysfunctional. This credit crunch could be alleviated by removing from the system the debt that created the problem in the firstplace.