KEY POINTS:
A colleague with a longer recollection of financial crises than mine says that, when he first came into financial journalism, there used to be something known as "the 40-year rule".
This had it that really serious banking crises only happened once every 40 years, because that was roughly the career lifespan of most bankers - in at 20, out at 60.
It therefore required a full 40 years to wipe out all institutional or salutary knowledge of the previous calamity, thereby creating the next one.
When you think about it, in rough terms the rule actually works.
The last big banking crisis was in the early to mid-1970s.
Prior to that, you have to go back to the Great Depression.
Further back in history, there was another really bad one in the late 19th century, and so on.
Certainly the current crisis is outside most people's experience.
Few of those who work in the City and on Wall Street even properly remember the downturn of the early 1990s, let alone the banking crisis of the 1970s.
George Soros, the billionaire speculator and philanthropist, has described it as the worst financial firestorm since the Great Depression, and we've every reason to believe him.
Yet that doesn't mean it is necessarily going to end in an equal economic implosion.
After another shocking day in stock markets yesterday, partially reversed on Wall Street later on as a result of a sudden fall in the oil price, Kevin Gardiner, equity strategist at HSBC, observed that there is no point in arguing with the market in this mood.
Despite corporate and economic fundamentals that are actually not that bad, if confidence in the financial system continues to erode at the present stomach-churning rate it will eventually bring the economy with it.
Markets are in danger of creating a self-fulfilling prophecy.
So far, the policy action taken in the US and elsewhere has failed to underpin confidence in our financial institutions in the manner intended.
Rumour, fear and hearsay continue to rule the roost.
For central bankers, it has been like spitting against the wind.
There are two ways it can go.
Either things will settle after a short and relatively mild downturn, and we'll eventually look back at what's occurred as just another of those temporary, and in some respects necessary, workouts that must always follow a period of excess.
Or it will turn into one of the really bad 40-year events with potentially catastrophic economic and political consequences lasting many years.
To believe the latter, you have to think of the global liquidity boom of the last 10 to 15 years as some kind of giant aberration, an unsustainable fool's paradise, or Ponzi-style merry-go-round, in which the Chinese and oil- producing nations of the Middle East bought duff debt from the Americans in exchange for the Americans buying duff products and hydrocarbons from them.
There may be some underlying truth in this assessment.
It has been a strange upside-down sort of world in which some of the poorest countries have in effect been financing the consumption of some of the richest, but it is also very probably mistaken.
Too many people have a vested interest in economic progress and development now to let it fail.
Obviously, this is a bad and scary banking crisis, made infinitely worse by the effect on consumption and economic growth of a soaring oil price, but, providing regulators and policymakers can get on top of it, it doesn't have to end in calamity.
The stock market seems to be approaching some kind of denouement. What happens in the next few weeks might be critical.
One thing seems clear - the rumour-mongering has to stop.
Christopher Cox, the chairman of the Securities and Exchange Commission, is absolutely right to announce a crackdown on short- selling of bank stocks and the spreading of false information.
For the sake of a big fat profit, the speculators threaten to bring the West's financial system to its knees.
If it tips over, it won't be them that suffer.
Economic pain is always felt most acutely by the poorest.
- INDEPENDENT
