“So long as the music is playing, you’ve got to keep dancing. We’re still dancing.” Chuck Prince, former chairman and chief executive of Citigroup, was interviewed by this paper only a month before the music stopped. A few weeks later he was out of a job. With these comments, he got to the heart of the banking crisis.

Economists search for rational economic explanations of apparently irrational behaviour. They emphasise skewed incentives and asymmetric information. There is something in these descriptions. But there were financial panics long before there were Wall Street bonuses. There were financial panics long before the invention of limited liability.