Is it fair to assume we have now crossed the rubicon and things are more tune with steady progress now and for another decade or more to come? While AIG and GM seem to need more help in the USA, banks have been building new markets. European banks of course seem to be hit because of the lack of viable collateral and fast closing avenues of fresh equity. Also maybe the use of Contingent Capital is not fair and Europe is actually headed for more trouble within banking?
Your assumption that banks have resiliently adapted might be a bit optimistic. There is still a lot of work to do and not all banks have managed to consistently pass their stress tests. Check out the FRB CCAR page for details. The issue with advancing new credit in any market is the balance between threshold return levels and risk of default -- or other loss factor. Clear property rights, shorter tenor credit advances, and good quality collateral that is not positively correlated to the direction of risk are essential.
Also don't forget that with the internet, reputation is key to growing new market capaclty. So look to issues of cyber threats, intellectual and other property rights and corruption as reasons to not enter markets.
I think that optimism is key to the business cycle's harbinger for banks to the starting block and they are already lending in the consumer markets at a heavy clip even without considering normally borderline not so creditworthy borrowers, so with whatever guidelines you want to issue to the loan teams and underwriting / buying traders in Treasury, you are advancing all loan portfolios at a double digit pace and much more including the retail bank portfolios?
Perhaps, the look out is for business cycles rather than industry momentum.
Running maybe some risk models could help related to collateral usage in in these markets.
The attraction to these markets is their big returns, much higher than elsewhere, but collateral is not always the issue.
Locking political ( central bank and government) security seems one of the major keys.
I agree it could be treated as an ephemeral(temporary)/cyclical problem in Europe but for there seems to be no part of the cycle with positive fractions of growth. Similarily in the US how would one peg a cyclical recession into a largely event driven fault in 2008?
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