No figure commands more respect within the world’s financial community than Paul Volcker, the former Fed chairman. That is why his recent declaration – “the bright new financial system had failed the test of the marketplace” – was such a profound rebuke. It implied that the behaviour of market participants, rating agencies and regulators during the recent credit bubble was unsound to the point that markets had now rejected it. Mr Volcker is right and most people know it.

Unfortunately, such behaviour is characteristic of bubbles: the laws of finance are ignored amid a euphoric belief that they no longer apply. They are ignored, however, only up to the point when they invariably reassert themselves, as they did, beginning nine months ago, at great cost to the financial system. The period of revisionist finance has come to an end – again.