The recent ructions in financial markets and the collapse of Northern Rock have a familiar ring.
Whether it is the crash of 1987, the housing slumps of 1989-90, Asia in 1997, the hedge fund LTCM in 1998 or dotcom meltdown in 2001, the world economy has been grappling with a succession of financial crises.
And yet, each time the global financial apparatus has withstood the onslaught and, it appears, come back stronger and more robust than before. Encouraged, the major actors in this evolution of unfettered markets - financial institutions and their shareholders - have taken on bigger, bolder and more aggressive bets.
But we have reached a watershed, and not just because of Northern Rock's spectacular demise. The US housing market has been spiralling downwards since the summer of 2005. The "subprime" crisis in February this year, when a large swathe of lenders were forced to close, accelerated the decline in US property prices. And then the collapse of two hedge funds, at US bank Bear Stearns, saw the US housing market go into freefall from the end of June.
A staggering 244,000 homeowners received a foreclosure notice from banks in August alone. The Centre for Responsible Lending forecast last December that 2.2 million families could be made homeless. It estimated that losses from subprime borrowers defaulting would eventually reach $164 billion. It is now clear that the real loss will reach many multiples of that, with some suggesting more than 3 million properties will be repossessed and sold at knockdown prices.
We should not forget perhaps the single most important lesson from Japan's disastrous and forlorn battle against debt deflation. Distressed selling on this scale has the potential to inflict grievous damage on real estate values, destroying consumer confidence and bringing down many more financial institutions.
Investors are running scared. It is not just a lack of transparency that bedevils a financial system serving only the interests of the elite. The losses are potentially the biggest for any financial crisis in modern times and these will be spread far and wide. US investors balked at funding the surge in mortgage lending during the early stages of the housing bubble.
Instead US investment banks sought out gullible overseas investors. The bonds were repackaged to make them more attractive, given a top credit rating and flogged aboard. But the losses are now sowing fear in financial markets. And Britain's financial sector is now at the epicentre of this global credit squeeze, which brought down Northern Rock.
The blame game has begun, with New Labour supporters on the Treasury Select Committee targeting the Bank of England and the Financial Services Authority (FSA) to deflect any criticism from the real architects of today's debt crisis - Gordon Brown and Ed Balls.
The regulatory authorities may have committed tactical mistakes during their handling of Northern Rock's collapse. It had certainly been no secret in the City that the Newcastle-based lender was out of control, so leveraged that it was operating more like a hedge fund, far removed from its building society roots. Lengthy reports were circling in early April that Northern Rock was an accident waiting to happen. The FSA certainly did not do its job, calling the bank's reckless board to account.
But that line lets New Labour off the hook. Gordon Brown designed a monetary policy that helped to drive the very debt crisis that now threatens to send Britain into recession. At no point in its mandate was the Bank of England allowed to consider runaway lending when setting interest rates. It just had to focus on inflation.
And inflation would be kept under control by a de facto wages policy for those outside the charmed circle of banking and finance. For many, real wages have gone down over the past year.
In this respect, the surge in personal sector debt was not just an unintended side-effect of such a narrow policy remit. It was a necessary component of Brown's growth strategy. Personal sector debt rose from 101.6 percent of disposable income to 164.8 percent under his ten-year tenure. Without that increase the economy would have stumbled from one recession to another.
"No more boom-bust" was the New Labour battle cry during its historic election campaign of 1997. But we are now more in debt than ever before. And the price will be paid by those saddled with the biggest burdens of all - the ordinary workers.
A feast for the vultures
As queues of worried savers wrapped around Northern Rock branches last month there was cause for cheer from some investors. Hedge funds and traders in the City of London celebrated the near collapse of the bank, having bet on its plummeting share price months previously, making a mint in the process - up to £1 billion in total.
The hedge funds had borrowed shares, for a fee, from Northern Rock, which they then sold at a high price to investors. After a specified time - carefully gambling on when the share price would fall - they bought the shares back off the investors and returned them to Northern Rock. The difference between the price they sold them at, and the price them bought them back at, is pure profit.
It seems the only queuing these particular investors did was for bottles of champagne at the upmarket wine bars of Mayfair.
Should we really be so surprised that the government was so soft on the Northern Rock managers?
The chair of the bank's Audit and Risk committee, which spectacularly failed to notice any sort of risk in its recent behaviour, is Derek Wanless. Knighted in 2005 for his business savvy, Sir Wanless has so enamoured Gordon Brown that he commissioned the Northern Rock director to write a report on the future of the NHS in 2002.
Among his proposals were increasing the influence of the private sector over the health service, ring fencing spending, and performance related investment. Perhaps unsurprisingly, the prime minister is still devoted to the concept of private sector infiltration of the NHS, as recommended by the Wanless report.
What could go wrong?