Just over a year has passed since the world teetered on the edge of a financial abyss. Wall Street Investment bank Lehman Bros had collapsed, many US lenders faced bankruptcy and short term interest rate spiked to record levels as once confident institutions refused to accept each other's credit.

Despite many dire predictions (some, admittedly, made by me) about the likely follow on effects of what is now known as the Global Financial Crisis on the Australian economy, in late 2009 we of the 'Lucky Country' can look around and say that financially speaking, things aren't too bad. So how did we escape the carnage that engulfed so many of our overseas counterparts?

First, and probably most importantly, the relatively firm hand with which Australia's banking system has been regulated for over two decades now means that unlike the US and UK, we did not suffer from a confidence sapping collapse. Faith one's money is 'safe at the bank' underpins so much of our financial dealings that one could go a lifetime without being forced
to the economically horrible alternative.

When people decide their savings are no longer secure, they rush to withdraw them, thus reducing both short term liquidity and the volume of funds available to the global lending pool. This causes credit to freeze, asset prices to fall and more selling on markets. Not suffering a bank collapse is the major reason Australia has emerged from the GFC
in good shape.

To the credit of the Rudd Government, another reason economic activity hasn't slowed dramatically is that the two stimulus packages in late 2008 and early 2009 appear in hindsight to have been delivered with near perfect timing. While financial conservatives worry (correctly) how this state funded largesse will eventually be repaid, the extra consumer spending engendered by it nine months ago, appears to have boosted activity at a time the economy needed it most.

Although government and regulators appear to have taken all the credit thus far, the third saviour of the local economy was entirely private in nature. During past recessions, businesses needing to cut costs have usually sacked substantial numbers of staff, thus resulting in savage increases in the rate of unemployment. This time, however, possible fear of a future skills shortage caused employers to refrain from mass layoffs; to be sure, businesses have cut back on shifts and reduced individual hours, but overall job losses thankfully have been modest.

If Australia can continue to avoid the drastic increases in unemployment experienced in previous slowdowns, then our economy can be said to have moved well and truly into the 21st century. For although economists use many figures and equations to try and make sense of what's going on, anyone who's ever lost their job will agree that increased unemployment is the most feared statistic of all.