One of the enduring questions about the fallout from the bull market of the late 1990s is where all the losses ended up. Despite a string of high-profile bankruptcies in the telecom and airline industries and a rapid deterioration in the world's equity and debt markets, the downturn did not threaten the creditworthiness of any of the world's larger banks.

The answer appears to lie in the structured credit markets, which package up and distribute individual credit risks. When companies started to default in large numbers, the losses were dispersed throughout the financial system. Indeed, several regulators have praised the sophistication of global financial markets for being able to absorb such widespread losses without any risk to the stability of the overall system.