The drama of the past days – the collapse of Lehman Brothers, the rapid purchase of Merrill Lynch, the weakness of AIG, the threats to other institutions – all have no real historical precedent.

It is impossible to find parallels for the extent of this week’s banking crisis since the Great Depression. But the implosions of the weekend do not even look like the American experience of depression, in which the country was swept by wave after wave of panic that wreaked widespread havoc by hitting small institutions exposed to local market conditions. Today’s crisis, by contrast, is right at the heart of the financial system, and threatens a complex pattern of credit guarantees and insurance backstops that were touted as making the financial system failsafe.