Graph 10  4  This is discussed in detail in Black S, A Brassil and M Hack (2010), “The Impact of the Financial Crisis on the Bond Market”, RBA Bulletin, June. BIS Review 115/2010  7  The Australian non-government bond market had grown significantly over the decade prior to 2007, as unsecured issuance by financials and corporates expanded (Graph 10).
Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain. Moreover, the adverse impact of a default would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability.