Those wiseacres who say there is no such thing as systemic risk have been proved right again. Look, no global meltdown, no market chaos of Herstatt or even Black Monday proportions.
Is this because the guardian angels of the financial system swooped in fast and fixed it? Or because in today's markets nothing is too big to clear? Take a trillion dollar swap book belonging to a small outfit in Connecticut, alert a handful of players to the dread consequences of a default, and hey presto, they ensure it never gets marked to market again. Somehow the thing is digested, with only a small burp in UK gilts.
Armed with this knowledge, financial institutions after a period of contrition are likely to grow as reckless as before. There's nothing in the Anglo-Saxon model designed to stop them. Banks are rewarded for return on equity quarter-by-quarter, or year-on-year. Bank A which has spent wisely on updating its IT, the millennium problem, risk control, training and development may be the best positioned of its generation, but it will probably be punished by analysts for "lacklustre" returns. Meanwhile Bank B, which has hired a teenage chief executive and a spivvy PR firm, sold off it best assets up-front and buried the toxic waste, gets the investors' and the rating agencies' vote.