A former Sydney investment banker, now living in London with considerable liquidity, was walking down a street in the British capital late last week and happened to see the name plate of a hedge fund.

He found the offices, and walked in. Full of high tech computer screens and TVs and all the other accoutrements of a modern dealing room, it was empty.

Chuckling to himself he went home and told his wife and friends of his discovery and said: “Don’t buy any more art or furniture, it is going to get cheaper.” As will London property, boats, birthday parties and vintage wine.

His summation of last week’s trading was “it’s going to get worse, a lot worse”. He sees more problems for hedge funds ahead.

His visit to the London office came as central banks injected more than $380 billion into money markets around the world last week.

Well, it’s still going on.

Overnight the European Central Bank injected $A73 billion in cash into the euro-area money market for a third trading day; that was after a $US5 billion injection by the Bank of Japan. Later in the day the Fed added $US2 billion and issued a statement. That took the total intervention in the past three trading days to within sight of half a trillion Australian dollars.

And our Reserve Bank was dismissive. I wonder why. Meanwhile, if they felt it wasn’t really dangerous, why did they add $2.5 billion to our local market on Friday to help liquidity?

There has been a lot of reaction and a lot of comparisons made to past problems, but no-one has pointed to the one unique point of the intervention this time: it was designed to inject liquidity into the heart of the financial systems of Europe and the US, the interbank markets where only banks and other highly rated financial institutions deal directly with each other and with the central banks. Hedge funds and others are excluded.

It is the ultimate club in any economy. What the capital injections mean is that no-one in that club trusted any of the other members, except at usurious prices, and even then they were not fair dinkum offers to deal.

Why, because no-one knows what is happening and that’s what makes the intervention in world financial markets by the most conservative people in finance, central bankers, all the more amazing.