But down on the trading floors and in the treasury departments of financial services groups, a subtle psychological shift is under way: as the shock of the summer’s events starts to fade, traders, investors and issuers are starting to adapt to the idea that the cost of borrowing has changed. As a result, activity in debt markets is picking up again. Or as Ben Bennett, an analyst at Lehman Brothers, says: “The credit machine is slowly restarting.”

Although some banks, such as UBS and Credit Suisse, have already revealed losses, there are widespread suspicions that other large and small banks and asset management groups are still concealing problems – not least because it remains hard to value complex credit securities while markets remain paralysed.

Citigroup estimates that back in January a hedge fund that owned an AA rated debt instrument could typically post that as collateral with an investment bank and borrow 10 times that value of funds. Now it can typically borrow only five times the value of this collateral, or less for riskier assets. “From one asset class to another, everyone is strapped for cash,” says Matt King, analyst at Citigroup.

Financial history suggests that whenever funding costs have risen in previous cycles, it has typically taken several months for the full impact on companies or consumers to show up. Indeed, behind the scenes, banks are preparing to cut their lending. A survey of loan officers in the US by the Federal Reserve, for example, suggests that banks are imposing the tightest lending criteria in their mortgage business for 16 years.