Former treasury secretary Hank Paulson has explained that many firms assumed they could raise cash in a pinch by selling assets.4 But during a crisis, every other firm needs cash, too, so all are trying to sell the same kinds of assets. It’s the risk management equivalent of saying, “I don’t need to stock up on water because if there is a natural disaster, I’ll just go to the supermarket and buy some.” Of course, after an asteroid hits your town, fifty thousand other people are also trying to buy water; by the time you get to the supermarket, the windows are broken and the shelves are empty.
