It was Churchill who said that you shouldn’t kick a man when he is down. But if you are going to do it, that is the moment to do so.

Global financial markets are best compared with live shark tanks.

Whenever something starts weakening, or gives the impression of no longer being as strong, predators start circling, wondering whether an opportunity has arrived for some easy feeding.

In lower Manhattan these baser instincts have been honed to a fine art. Keep the powder dry, and pounce when something juicy swims into view.

In 1998, LTCM went technically bankrupt and a feeding frenzy was about to erupt, potentially a costly one, for failing LTCM could have weakened many other institutions in turn. That could have set in motion something approaching systemic collapse.

Modern regulators try to prevent such conditions from arising, but if it happens anyway they try to prevent the wider fallout by arranging shotgun marriages for the failing institutions with stronger financial parties.

In the current global banking crisis that started in mid-2007, we have so far had two major banking failures.

Northern Rock failed in the UK and had to be effectively nationalized, because the UK government and the BoE weren’t able to arrange a quick wedding.

In the US they are more used to these kinds of things. When Bear Sterns started tottering in March, and predators closed in for the kill, the Bear management was basically given one weekend to agree to a shotgun takeover by JP Morgan. At about the same time a few large mortgage originators also failed and were absorbed, Bank of America for instance taking Countrywide.

You may think these are the exceptions, even in trying times. But the present global banking imbroglio has become bigger and more complex to a point where business conditions simply don’t want to improve, distrust rules supreme, and many US financial institutions find their condition steadily deteriorating.

As a consequence there is heightened sensitivity and awareness among investors and depositors, and a growing willingness to reduce exposure to anyone experiencing a weakening in condition, while simultaneously some are trying to exploit such weakness by ganging up.

With global markets populated with many investors, there are potentially many prepared to act to their own advantage, but also potentially putting systemic stability at risk.

This is the stuff of nightmares for regulators, especially US Secretary of the Treasury Hank Paulson, an ex-CEO of Goldman Sachs, and Fed Chairperson Ben Bernanke.

Because these two gentlemen are considered to be of the highest calibre, financial markets are assuming they will keep pulling rabbits out of the hat under all and sundry circumstances.

And thus we see both gentlemen being pushed from one corporate drama to the next playing firemen with huge hoses, for ultimately they have recourse to the US government’s cheque book. Something bigger doesn’t exist.

In recent months there has been increased questioning about two big US financial institutions, Fannie Mae and Freddie Mac. Things have now finally come to a head where Paulson has announced the US government willingness to give support, and where the Fed has provided direct access to its borrowing window.

Whatever is next?

The rumour mills continue to hint that there may remain other financial institutions under pressure. Distrust remains high within markets, investors keep walking away from at least certain institutions, while other investors are actively shorting those institutions seen to be fatally slipping and sliding.

Names are dropped daily about who might be next.

Names are dropped daily about who is having trouble, who is losing balance sheet strength, who might be next.

This suggests that shotgun marriages aren’t yet at an end. A few big ones, too big to fail, but threatening to do just that as feeding frenzies develop, could confront regulators with difficult choices, were they to happen.

So far only a few institutions have failed and have been gobbled up by others without too much market disruption. In the case of Fanny and Freddie, the US government has now effectively done a Northern Rock, asking Congress for authority to buy unlimited stakes in and lend to the two companies, aiming to stem a collapse in confidence.

But what is still to come?

Many of the larger, healthier US institutions are somewhat sated after the last round of shotgun weddings. But what if one of the big US banks themselves were to become roadkill? Who would absorb them? Some healthy minnow swallowing a financial whale? In good times, perhaps, but in uncertain ones like today this might lead to market speculation about likely failure of such a deal, ere long pre-empting it by knocking out the minnow, too.

With the US housing, credit and banking messes apparently far from over and financial markets remaining preoccupied with seeking out weak institutions, readying them for the butcher’s knife, there is quite an endgame in progress.

The US financial industry is being consolidated with a vengeance. Can US regulators remain on top of their game? Or will a really big one sink them?

Imagine the US government having to nationalize a really big bank because nobody else could take it, yet its failure couldn’t be allowed to destabilize the wider financial system? It isn’t to be contemplated, at least by some people. But with markets in such a distrustful, predatory mood anything may turn out to be still possible in coming months before we see the final shape of this major financial industry adjustment currently in progress.

Cees Bruggemans is chief economist of First National Bank.