KEY POINTS:
The ability to mythologise the worst of its cultural excesses has always been America's saving grace.
So when the Hollywood script writers turn their pens to the credit crisis of 2008 let's hope the events of this past week are the dramatic peak.
As much as we remember
the financial turmoil of the late 1980s for the economic pain it caused in this country, it is the images of cocaine chic, power dressing and yuppie style that endure.
Movies like Wall Street - with Michael Douglas' charming, subversive Gordon Gekko declaring "greed is good" - and the Tom Wolfe novel Bonfire of the Vanities still define the era.
History is never so scary at a distance and the American media machine has the ability to turn real life to melodrama with ever-increasing speed.
This wild ride is far from over. The fallout from Lehman, AIG and the rest still has to flow fully through the economies of the world. All bets are off on where, what or when the next casualty will be.
But fingers crossed this was the big one. The shock that defined the crisis. The tremors have been coming regularly for a year. But this may be the jolt that goes down in history. The one that joins the Wall St canon of disasters: October 1929, October 1987 - September 2008.
Through the past year the awareness that there was something rotten in the system has been tempered with hope that the normal service can still resume.
That much changed this week. Normal service will not resume. A line has been crossed and the rules of the game will now be changed.
Time and time again Wall St proves that greed is very bad indeed. It provides a powerful incentive to drive business and with it economic growth and prosperity.
But left unchecked - as it was in the 1920s, the 1980s and for most of this decade - it blinds people to the common sense rules of commerce.
How is it that so many investment bankers - the so called elite of the financial world - have paid so many billions for so many worthless pieces of paper?
At what point did these now infamous debt products and their arcane derivatives shift from being risk free "must have" components of an investment portfolio to the untouchable creator of risk itself.
Markets will keep moving and these will become questions for the history writers, the policy makers and the movie men.
In New Zealand, unlike 1987, our banking sector has stayed clear of the worst excesses.
While property investors, finance companies and many ordinary mortgage holders have been caught out by the rapidly rising cost of credit, our listed companies, fund managers and investment bankers have had few direct losses to declare.
The risk to our already fragile market is that it is abandoned by offshore investors as they slash and burn through their way out of the nightmare. Now, more than ever, New Zealand must look to Australia and Asia and trust they will stay strong.
The Yankee traders will be back. America will never fully extinguish the flames of greed which have made it great but for now Wall St is crippled. Reduced to begging for taxpayer support, it has been truly humbled.
Liam Dann is the Herald's business editor.
