Financial crises come in all shapes and sizes. Yet looking back over the past 100 years from the vantage point of today’s credit squeeze, the big financial dislocations appear to follow the same pattern.

The backcloth has invariably been a shift in global power whereby the growth of an immature creditor country wedded to protectionist trade policy has contributed to imbalances of savings and investment. Attempts to manage the currency volatility arising from imbalances have derailed monetary policy and created bubbles in asset markets, leading to crashes and financial distress.