Iceland, with a population smaller than Canberra, is suffering a banking collapse that is affecting local councils in England. Australia's Reserve Bank lowered interest rates a full percentage point (rather than the usual one quarter). The UK government invested 50 billion pounds in its major banks - characterised as a 'partial nationalisation'. Central banks in Europe and America simultaneously lowered interest rates half a percentage point.
What could it be but a global financial crisis?
Malcolm Turnbull, as the new Opposition Leader, took the populist line: that Treasurer Wayne Swan should have "put in a good word for borrowers" to get the banks to pass on the full interest rate cut. And when the Commonwealth Bank bought BankWest for a "bargain" price, he complained about reduced competition.
Yes, it did reduce competition, but for governments of the moment, that is not the point: the key issue is stability. Capitalist production is dependent on financial markets are inherently unstable, rising and falling on sentiment - that is, each person's perception of how the other person is feeling. For most commodities in a market, value lies purely in what someone else is willing to pay, and if there are few buyers, value vanishes in the ether. Governments around the world are desperate to restore confidence.
Periodic downturn is normal, but this one is different. Of course, the origins of the current crisis lie in the under-regulated US market, when the mass of bad housing loans was bundled up in poorly-understood securities, then onsold globally like a toxic virus. Lending slows, capital circulation slows, and the resultant liquidity crisis leads to financial institutions faltering.
The extraordinary actions of governments recently show lessons had been learnt from the 1929 crash. A similar pattern of liquidity and financial instability emerged then, but governments didn't intervene, banks collapsed and history ran its inevitable course.
So this time around, governments took action. Thus far, each action has been insufficient to turn confidence around, so governments around the world keep raising the stakes. These actions are counter to current orthodoxy, proving governments are acting on advice from people who have studied history, and yield ideology to practicality when pushed hard enough.
The perception has been that Australia is in better shape than most to weather the storm, due to three factors: one of the world's highest collective credit ranking of its banks; the financial "reforms" conducted in the 80s and 90s, and an extended resources boom due to China's productive forces. But immunity does not exist, and today Chinese purchasers of iron ore are talking of scaling back demand, due to expected dampening of markets. Swan didn't put in a good word for borrowers because bank stability is his crisis priority.
It will be interesting to see how far governments are prepared to go if further challenged - because surely there is more to come.
In the flurry, a major narrative could be missed: governments around the world have demonstrated their ability to respond to crisis remarkably quickly - and collaboratively. And intervention, nationalisation, and re-regulation [talk] shows they can drop ideology for pragmatism in an instant. The rapid reaction (bar the US Congress), and willingness to collaborate and intervene, should be a portent of the possibilities where global action is required. Unfortunately, global warming has engendered the opposite reaction - inaction. We have elected governments that only understand financial crisis, and not environmental crisis - which however less immediate is vastly deeper and longer-lasting. This demonstrates that we are poor at responding to longer-term issues, and that we have subverted too much of what we value as humans to the purely financial. In this capitalist world, environment is just one of many factors that has by default been treated as an ignorable 'externality'.