As the "GFC" (the acronym seems to be firming as the name of choice in business circles) rolls onwards, it seems that we've reached the end of the first act. This is the act in which governments have clear precedents on what to do.
Most of them have now nationalised (or pseudo-nationalised) the problematic financial companies, cut interest rates to cyclic minimums, and kicked off depression-era style spending programs.
Australia has been fairly lucky in that our banks were much more heavily regulated than normal, so there's not even a hint that any might fail. And the mineral boom had us at dangerous low unemployment (with the resulting problems of wage inflation starting to take off). So apart from maybe Norway with it's half a trillion or so in spare cash, we've been one of the best places to be during this time.
However, now that governments have thrown everything in the play book at the problem, things are going to get a bit more crazy.
The trigger for the US part of the recession is still a problem. The main bulk of the sub-prime mortgages come off their sweetheart payment plans between June 2007 and June 2009, and it takes about 3 months after that to be confident whether or not the loan will default. (You'll recall that the financial shocks started in September 2007)
The big American financial firms exposed to sub-prime, which are the main drivers of global confidence, will continue to hammered for another 6 months.
So with at least 6 months of the worst-of-times still left to run, and not much conventional ammunition left to use, now is the time when governments are going to start getting inventive.
The UK is the first to "go nuclear" by just outright printing money in bulk (to avoid going into deflation), but we can expect a bunch more actions of this sort.
I believe, instead of printing money, the Bank of England is effectively injecting money into the "current acounts" of the major banks. In the end it should have the same effect, they say. Good piece on this in the Economist, here: http://www.economist.com/world/britain/displaystory.cfm?story_id=13248177
