The shadow banking beast is barely into week three. This newborn has finished off the last of the standalone investment banks in under 2 weeks.
As Roubini likes to explains until he turns blue in the face, it is because the broker-dealer business model was borrowing short on money markets to lend long to the economy. This structural weakness exposes them to systemic runs on their illiquid assets as their rolling liabilities could not be met.
The money market is the mother of all markets, overnight, short term, long term, repo, the ability to lend money on short terms is what drove these business models. And seized the money markets have.
The money market squeeze started with the spotting of one of the largest money market funds facing so many redemptions that the money came out at 97% of par. There has been a tremendous 'flight to safety' which defined safety as Treasuries and that's it.
Chronicles of the Beast.