At some point, investors who are currently on the side lines will need to summon enough confidence to take up the opportunities for profitable exposure to risk. It is impossible to say when this will occur, but we can perhaps outline what the pre conditions are.
Investors will want a reasonable level of confidence that the bulk of the losses in the most important institutions have been accounted for and disclosed, that remaining “excess” leverage has been essentially sorted out, and that any remaining downside risks to asset quality stemming from slowing growth in the major countries are manageable and within the set of normal parameter variation that their portfolios can cope with.