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NEXT week marks the first anniversary of the shocking demise of United States investment bank Lehman Brothers - a calamitous event which dragged the global financial system to the brink of collapse.
Not surprisingly, the financial media all over the world has been working itself into a frenzy to commemorate the anniversary with verbose write-ups.
But take one glance at the buoyant stock market, and one would scarcely believe that this earthquake of a financial event had taken place at all.
Of course, for the first six months after Lehman's collapse, there was gloom and doom, as central bankers threw all the weapons in their arsenals to prevent a massive financial meltdown.
Banks everywhere were seized by fears that their borrowers might fail, hence placing them in great peril.
Since March, however, there has been an astounding recovery, with financial markets dancing like it is 1999 again - a momentous year which marked the long road to recovery for regional economies, after the similarly traumatic Asian financial crisis a decade ago.
And believe it or not, bankers are again awarding themselves with huge bonuses, as they put the worst of the global financial crisis behind them.
Investment bank Goldman Sachs, for example, said in July that it would hand out an eye-popping US$11 billion (S$15 billion) in bonuses to its deserving employees.
That bankers should be so richly rewarded so soon after almost bringing the world to its knees has been treated widely with revulsion.
Questions have been raised on whether this is turning out to be a heads- you-win-tails-I-lose situation.
These bankers get rewarded for taking dangerous risks, while individual investors are left licking wounds inflicted by failed investments such as Lehman Minibonds and horrendous stock losses.
Would the top Citigroup energy trader still be getting his US$100 million bonus payout from his bank if the US government had not come to the rescue of the beleaguered banking giant?
Would he not have to stand in line, together with all other creditors, to get his money back, some will argue.
US Federal Reserve chairman Ben Bernanke told the US Congress in March that he was so angry over the US$180 billion bailout of giant insurer AIG - which almost went belly-up the day after Lehman failed - that he 'slammed the phone more than a few times in discussing AIG'.
'It is absolutely unfair that US taxpayer dollars are going to prop up a company that made these terrible bets,' he said.
The same month, there was widespread dismay in Britain over news that Sir Fred Goodwin, the disgraced former boss of the Royal Bank of Scotland, would get a pension of £693,000 (S$1.6 million) a year, despite running the British lender into the ground with his reckless global expansion strategy.
At one point, the British government was reported to be considering legal action to force him to give back the money. The idea was later dropped.
Mr Goodwin does have the right to expect a contract to be honoured - no matter how bad a taste that contract may leave in the mouth.
That is, after all, the cornerstone of the global financial system. Repudiating it would invite consequences too horrendous to contemplate.
But what happens if a financial titan like China, backed by US$2 trillion in foreign reserves, departs from accepted practice and threatens to tear up contracts which it considers to be unfair?
Last week, financial markets were treated to a foretaste of such an eventuality, after the influential Caijing magazine reported that Beijing might allow mainland companies to 'unilaterally terminate commodities contracts to cut losses from financial derivatives'.
Six unidentified foreign lenders were apparently told that these firms 'reserve the right to default on the commodities contracts' signed with them.
Whether there was any truth in the report or not, fears over the possible contractual U-turns caused pandemonium on the global commodities market, where China is now a major player. Crude oil prices fell 6.6 per cent between last Monday and Wednesday.
The Caijing report was also blamed in some quarters for triggering a 6.8 per cent plunge on the Shanghai stock market last Monday, as it spread unease among foreign fund managers.
It also sent a chill down the collective spines of investment banks, helping to explain why they were among the weakest performers on Wall Street last week, despite the slew of positive US economic data that was released.
Of course, there are those who believe that China may be implementing its version of 'fair play', given the many complaints that foreign banks failed to disclose to their mainland clients all the risks involved in trading highly risky derivative products.
One case in our own backyard was China Aviation Oil (CAO), which lost US$550 million in oil derivatives trading five years ago.
CAO had claimed at the time that it was led down the slippery road of destruction when J. Aron, a Goldman Sachs unit, allegedly gave it bad advice on the restructuring of its various oil trading positions.
But the potential fallout from any tussle between China and global investment banks is too great to be ignored.
The wild price swings in Shanghai now affect the performance of regional stock markets, while gyrations in oil prices and other commodities have a direct impact on our cost of living.
The flexing of muscle by China may be a sign that the rules of the game in the huge derivatives markets - which had survived largely unscathed despite every crisis that had erupted in the past two years - may be about to be rewritten.
Unlike helpless Lehman Minibond victims, big players like China are no pushovers, as they demand better protection to make sure they are not short-changed before laying their bets on fiendishly complicated contracts.
Welcome to the brave new world of global finance, post-Lehman.
Cai Jin runs every Monday and covers financial matters and corporate governance issues that can affect investors. The two Chinese characters marry wealth with good fortune - the two crucial factors that any investor needs to prosper.
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