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The current U.S. credit crisis is worse than the crisis of confidence experienced after the Long-Term Capital Collapse in 1998, said Jack Malvey, chief global fixed income strategist at Lehman Brothers. "This is the deepest correction we've ever seen in structured finance," Malvey said. "This is so dispersed, so interlocked… This is a painful lesson in financial engineering." Lehman now says there is a 30% chance the U.S. economy falls into recession in 2008, and Malvey added the risks may be growing. With the massive collapse of the Bear Stearns hedge fund and the writedowns banks are taking, the turmoil in the financial sector has the potential to bring down the broader markets.

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Source: Credit Crisis Now Worse Than Long-Term Capital –Lehman’s Jack Malvey