Smaller companies copped it in the neck more than big companies this morning as the global market shake-down caused a flight to quality.

The broader market was down by about 2.7% for most of the morning, but I managed to pick $500 worth of shares in the following stocks at prices more than 5% below the previous close – Technology One, Geodynamics, Reverse Corp, Sally Malay Mining, Allegiance Mining, Henderson Group and JB Hi-Fi.

Stocks which have really ridden the consumption and asset price bubble – such as financials, retailers and second tier mining plays – were dumped the most heavily in morning trade.

In today’s Crikey Glenn Dyer covers the staggering intervention by the European Central Bank overnight, but in morning trade we’ve also seen the Bank of Japan inject $US8.5 billion of liquidity into the system to stop the sudden blow out in debt yields.

Ever since the Asian economic crisis of 1997, our northern neighbours have been massively stockpiling foreign reserves to ensure they’ve got the strength to withstand another credit crunch or a run on their currencies.

Whilst Australia found itself lending countries such as South Korea and Indonesia $1 billion when they ran out of foreign reserves, most of these countries now have vastly greater foreign reserves than our own Reserve Bank despite the remarkable commodities boom of the past four years.

Indeed, China has amassed $US1.3 trillion in foreign reserves and with a $US100 billion exposure to US mortgage bonds, it has presumably taken a far bigger bath than BNP, Bear Stearns and the various other players that have confessed so far. Sadly though, China is not a transparent democracy, so we’ll probably never be told.

The bottom line is that someone has dropped about $US100 billion on dodgy US housing loans and Australia has been left relatively unscathed, save for the likes of Basic Capital and Absolute.

Macquarie Fortress Notes only fell 1c to 62.5c this morning but Macquarie Bank was disproportionately clobbered again, losing $5 to $72.53 as the market worries about the $120 billion-plus debt spread across its colossal empire.

If debt is about to get a whole lot more expensive, this will indeed hurt the likes of Macquarie as well as the state governments as they embark on a major borrowing binge to fund infrastructure projects over the next five years.

Let’s hope we don’t end up regretting not putting more cash in the bank during the recent boom – and that especially applies to Australian governments and households because our corporates, led by the banking cartel and mining giants, remain incredibly strong.