Last year, after the Russian and LTCM incidents, risk premia on loans to all but the best credits increased sharply. Even in the United States, lesser corporates found sharply higher borrowing 6 7  See Fisher and Kent (1999). In the early 1990s recession, final demand in Victoria fell by 6.5 per cent compared with 1.5 per cent for the rest of Australia.
There was a similar disparity in employment. See Macfarlane (1992). 7  BIS Review 86/1999  costs, while in emerging markets even large stable companies could not roll over maturing debt at interest rates which would keep them solvent. Fortunately, this situation did not prevail for long, but action by the US Federal Reserve was required to end it.