8 The financial sector A third key weakness, which was identified early on,9 is that fast-growing financial sectors are very vulnerable, because they inevitably reflect lack of experience, by the commercial bankers, borrowers and prudential supervisors. Just as a rapidly-growing balance sheet is a warning sign for an individual financial institution, the same warning signs existed in these countries.
By mid-year there were also signs from a range of economic indicators in the United States and the Euro area that the recovery was likely to be weaker than formerly thought. These signs tended to become clearer as events progressed during the second half of the year.