Dear friend,

The inevitable always happens. That is why it is inevitable!

But it’s strange how what is inevitable often comes as a shock when it finally does happen.

Houses grow in value at 15% a year for 8 years until nobody can afford them, then they put on a final inexplicable spurt before crashin hard.

Why does it surprise us?

After all, none of us believed that houses were worth what they were selling for, but when prices finally start falling towards a more realistic level, we don’t like it.

Similarly, credit expands at breakneck speed for almost a decade, accelerated further by all sorts of questionable financial engineering. We enjoy the illusion of new-found wealth while this new money spreads throughout a world looking unsuccessfully for a profitable home.

But when no profitable use for the money can be found, leverage unwinds and the inevitable contraction comes, we howl in pain and plead for mercy.

Hilariously, we then make a logical flip and blame the fall of overpriced housing on the credit crunch.

And the next bit is even more perverse — we then plead with our elected representatives to find more and more ridiculous ways of making credit cheaper so that our young first-time buyers can afford the (still overpriced) houses and prop up the market for the rest of us.

It’s all a bit like offering a drunk one last drink to ease his hangover — sooner or later you’re going to either run out of booze or he’ll drop down dead from liver failure.

Neither end result is one that we would recommend.

‘Well’, we tell ourselves, ‘at least our industry is a less perverse no-nonsense sort of place to work.’

Or perhaps it is just perverse in slightly different ways? But that’s one for another day.

After a long period of pressure the inevitable has finally happened in our neck of the woods.

Falling margins in the reinsurance broking sector have lead to a savage round of blood-letting and cost-cutting. And there will probably be more pain to endure before this episode comes to an end. After all, pricing is not turning, the dollar is still weak and demand is still slack.

It may be a shock to the system, but no-one can escape falling margins.

So let’s not make an unedifying prospect of ourselves by making too big a deal about it. We’ve had a good run.

When they start nudging upwards, we can all come out to play again.

But until then I’m afraid it’s economy class — and keep your head down.

Look after yourself.