Here is my take on how to view the current financial mess:

Co-incident defaults are a classic case of non-linear impact amplification. Most mean variance risk scenarios and models rarely model co-incident event thresholds being crossed. These co-incident triggers or phase changes in behaviour are the crux of systemic inflections in economics. They are next to impossible to model and yet most risk systems focus on them all the same. Low debt recovery and high debt defaults get triggered past a certain threshold in a market when sentiment changes.

In other words...we are shit out of luck.