The similarities only generally become apparent after the fact. Thus, as mentioned earlier, we actually do need some level of distrust, at least initially, for the financial system to function effectively. I shouldn’t take you completely at your word. I should do some background checking to make sure that what you are telling me is true.
I should check whether your circumstances have changed so I can be confident that you will still be able to repay me. So back to the breakdown of trust. Some time around 2007, it became clear to many in financial markets that there had been a major mis-assessment of risk in many parts of the financial system.