Back to Basics for the Market Value Pundits People Are Relying on Borrowing or a Rise in Their Asset Values to Sustain Demand

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IT WAS "phew!" time yesterday as bankers around the world began to contemplate what might have happened had the American authorities not cobbled together the deal to support John Meriwether's hedge fund last week.

We are not through the woods yet by any means, so expect a series of disturbing announcements from financial institutions about losses they have sustained.

Losses will stem not just from banks' loans to Long-Term Capital Management, but from the fact other banks were pursuing similar investment policies themselves. That is certainly what the plunge in bank share prices would lead us to expect.

It is impossible to say, but there may need to be …