Just two days after allowing a large investment bank to fail as a stern statement of free market discipline, Ben Bernanke, chairman of the Federal Reserve Board, and Hank Paulson, Treasury secretary, in effect nationalised American International Group, the insurance giant. There was no alternative, but these dramatic steps show how finance will never be the same again.

By allowing Lehman Brothers to fall, the authorities demonstrated their reluctance to save financial institutions with public money. Banks – even big, famous ones – would be allowed to fail if it were felt the system could handle it.