[ It couldn’t happen to a nicer buncha guys ]
Despite yesterday’s blowout $6 billion or so profit from ANZ,
it turns out all is not entirely well in Australia’s financial services industry.
For the last five years,
the pattern in the markets has been the same.
A crisis starts at the margin,
with a peripheral player,
and then moves its way up the food chain.
That’s what happened when non-bank US lenders got in trouble
Then it was the mortgage lenders
Then it was the highly-leveraged investment banks (all of them)
And then it was the big money-centre banks in 2009.
The same pattern held in Europe,
with a few slight differences.
The marginal players were marginal for different reasons.
Iceland, Ireland, and Spain
had bubbles in the property market.
But in Greece,
the low interest rates created a bubble in government debt.
In all cases,
the debt crisis struck first at the ragged edge
and then moved inwards,
like a financial tapeworm.