The bulk of financial institutions most affected by the crisis have returned to profit, while estimates of the total losses to be absorbed from the whole episode have tended to decline somewhat lately (though they are still very large). Financial market dislocation has gradually eased, albeit with sporadic episodes of renewed doubts and instability. But what of the longer-run consequences of the crisis?
I want to offer some remarks under three headings, though with no claim this is an exhaustive list. These remarks are about the general international situation, not Australia in particular, unless otherwise noted. Fiscal issues The first lasting consequence is the fiscal burden taken on by countries at the centre of, or close to, the crisis. There are three components to this.