Every era of financial or irrational exuberance ends with the shutters coming down. Tulip mania, the South Sea bubble, the panic of 1825 and the first internet bust were all part of the same ebb and flow. We should not expect it to be different now, but that does not make it any easier to accept the cyclical nature of economies.
In good times, collective human psychology and self-reinforcing experience convince us that we are living in a new era, where the old oscillations of boom and bust have been banished. Then comes catastrophe and bankruptcy, and a fresh consensus emerges from the debris of the last great party. That new orthodoxy says that Anglo-Saxon liberal market economics is dead and globalisation discredited. Even capitalism itself, it seems, is on life support under the watchful eye of the prison hospital staff. The former giants of finance are pariahs. Right now it would probably be more acceptable to confess at a dinner party to having stolen Christmas presents, than admit you dabble in investment banking.
This too shall pass and things will change. There will be a recovery of sorts, not this year but perhaps next – just by dint of the scale of fiscal stimulus in the US, UK and elsewhere and even by the atmosphere surrounding Gordon Brown's seemingly triumphant Group of 20 nations summit.