KEY POINTS:
It's been said recently and often that New Zealanders don't quite understand how significant the credit crisis and ensuing economic fallout is and will be.
Initially the thought of a bunch of Gordon Gekko types in New York and London getting their comeuppance probably generated some amount of schadenfreude and little else.
But abstract and far away as the problems first appeared, they may prove to be the first signs of a big and relatively fast change in the way our world works and who calls the shots.
Credit - the ability to borrow money to fund homes, businesses and vital infrastructure such as roads and electricity networks - is the fuel that drives the global economy. If the supply of credit slows, so too will economies. If it ground to a complete halt, as it reportedly came perilously close to doing in September last year, who knows what would happen.
The world's financial system is a complex merry-go-round which sees the amount of actual money it contains support many times its face value in loans enabling a level of economic activity simply not possible if everyone was forced to pay for everything in hard cash.
The current crisis has called this system into question. Indeed, even before the crisis, there were those who regarded it with suspicion if not paranoia and outright fear.
What does seem likely, though, is that an international consensus will be needed on how it can be reconfigured to prevent the near collapse we have seen from occurring again.
That is likely to see most banks forced to operate in a less adventurous, more conventional and even boring fashion, much as they did a decade or two ago before low interest rates combined with complex financial engineering created the vast problems Governments and regulators are now desperately working to unravel and clean up.
For the big Australasian banks which control more than 90 per cent of New Zealand's banking assets this won't be such a difficult adjustment. Whether by good judgment, luck or the discipline imposed by the Australian Prudential Regulatory Authority and the Reserve Bank of New Zealand, they never indulged in the riskier practices of their US and European counterparts.
In fact, the widely anticipated regulatory shakeup of the global banking industry will probably see banks around the world forced to operate as boringly as those in Australasia.
Some may remember Australian ice-skater Steven Bradbury winning a gold medal in the 2002 Winter Olympics simply by staying on his feet while his more favoured rivals took one another out of contention as they jostled for glory. Right now it looks as though Australia's banks, by dint of their conservatism, have "done a Bradbury" themselves. They've suffered a few bumps and bruises but have come through the crisis relatively unscathed while a significant number of their larger overseas rivals have not.
The banks that successfully negotiate the crisis and its economic aftermath are likely to find there are some golden business opportunities going begging due to the retreat of weaker players.
What's more, some commentators say Asian, particularly Chinese, banks which have more certain financial backing will probably be eyeing many of the same opportunities. They are also likely to follow their home market clients who are increasingly seeking to buy Western assets at knock-down prices. The recent Chinese foray into Australia's resources sector and New Zealand infrastructure may be a taste of things to come.
