Like the rest of the World, I've been trying to wrap my head around just exactly how we have gotten ourselves into this credit situation that we now find ourselves. I keep wondering about what history will say about these times. Assuming you don't believe that the end of the world is nigh, I personally can't remember a time when more opportunity existed. Hedge funds have an estimated $400 billion in cash out of somewhere around $1.5 to $2 trillion under management. The Fed is pumping cash via fire hose into financial institutions, and in many cases it's just sitting there waiting for asset prices to stabilize, which they will. So at some point or another, this cash is going to get put to work. The smart money is putting it to work now.

But how did we get here? The temptation is to over simply and throw out catchalls: housing bubble,  Fannie, Freddie, and so on.  But chances are it's not that simple. However in my own attempt to oversimplify, I've come up with the following 10 events as my conclusion on how economic history will tell this tale. In the following order they are:

1. The government legislatively encourages mortgage lenders to loosen standards in the late 90s.

2. World-wide commodity prices begin to rise, namely oil and subsequently food (driven by a number of factors).

3. The average consumer suddenly finds themselves making the same real wages with increased food and gas prices.

4. The average consumer has easy access to credit and uses it (see No. 1 above) - mortgages, home equity lines, etc.

5. There is an explosion in the credit markets that's driven by consumer need more than greed (see No. 3 above).

6. FAS 157 (Fair Value Accounting) is enacted in November 2007, and the write downs begin.

7. The credit markets freeze from the decay of trust between financial institutions, which is the direct result of shocking write downs.

8. The combination of the freezing of markets and FAS 157 sends write downs spiraling out of control.

9. The total freeze in the credit markets crashes the housing market and negatively impacts GDP.

10. You are here.

No doubt, I missing various key points above, but that is my take on it from everything I have read and observed.  Due to the current market conditions, there is a push to suspend FAS 157, or at least amend it. In fact the Emergency Economic Stabilization Act of 2008 specifically authorizes the SEC to suspend FAS 157 (section 132 of the Act) per a review of FAS 157.  Furthermore, the Emergency Economic Stabilization Act requires the SEC, the Fed and the Treasury to conduct a review of the effects of FAS 157 and report back to Congress within 90 days. The study began on Oct. 7, 2008. So, as I see it, somewhere around January to February, FAS 157 will get amended or suspended, the write down pain will subside, the credit markets will begin to thaw in earnest and the rebuilding process will begin. Again, an oversimplification.

 Nic Perkin is co-founder and President of The Receivables Exchange. The Exchange is the world's first online marketplace for real-time trading of accounts receivable.