Key Points:

As the world economy threatens meltdown, Alan Greenspan - who had presided over its fortunes for many years - has expressed himself as being taken aback by what he described as a once-in-a-century crisis.

We were all invited, by implication, to join in his bewilderment at the disaster that has suddenly struck. If even Greenspan, the chairman of the US Federal Reserve from 1987 to 2006, had not seen it coming we could all be excused for a similar failing, couldn't we?

Well, no. This is a crisis that has been 30 years in the making. Only those who did not want to see (and that includes almost all the so-called expert commentators and actors in the drama) could have failed to register the warning signs.

The first little alarm bell might have rung when, at the end of the 1970s and early in the 1980s, much of the world - following the lead provided by Margaret Thatcher and Ronald Reagan - removed exchange controls and allowed capital to move freely around the globe. The result was a huge increase in capital flows as multinational investors roamed the globe, looking for the most favourable investment opportunities.

In one bound, the controllers of that capital had decisively changed the balance of power between capital and governments, whether elected or otherwise. It was now the capitalists who could face down governments, threatening to move their investment elsewhere if they did not get their way.

The capital flows they controlled were sufficient to dwarf the resources of all but the biggest national authorities. The political agenda had been transformed; the democratic process, which was supposed to protect ordinary people from the predations of capitalism, had been disabled.

This is not, of course, how it was portrayed at the time. On the contrary, it was represented as a dismantling of damaging controls. The way was now clear to establish a single global market which, by definition, excluded governments.

As the external environment changed, so too did domestic conditions. The fashion was now for monetarism - the mechanistic application of supposedly simple rules for controlling the money supply and therefore inflation. A process which could safely be entrusted to officials and technocrats and removed from the unreliable attentions of democratically elected politicians.

Again, these developments were almost universally applauded as an overdue expression of the "free" market, not least by those who - it might have been thought - would most resist them. Yet, even then, they were not satisfied that they had done enough to shunt off democratic processes and governments to the margins.

They determined to ensure governments were excluded from economic policy by proclaiming that there was only one goal of that policy - the control of inflation - and that that task should be handed over to an unaccountable central bank. New Zealand led the way in this "reform". The main decisions in economic policy were virtually insulated against public debate and discussion.

This, too, was greeted enthusiastically as an inspired piece of Solomon-like wisdom. And, as the inevitable consequences began to take shape - as those who now controlled huge financial assets worldwide and could manipulate them without any fear of interference began to cream off a higher and higher share and to pay themselves more and more outrageous salaries, bonuses, commissions, and "perks" of all kinds, while at the same time making decisions not only exclusively in their own interests but without regard for the consequences for millions of people around the world whose lives and livelihoods no longer mattered - the politicians of the day joined the celebrations.

And, as the banks and financial institutions focused on making as much money as possible through irresponsible lending, they could relax in the knowledge that the central bank was not only too busy with the task it had been given of shaping economic policy to bother about prudential regulation, but also that it would be too solicitous of the interests of its fellow banks to do anything about it anyway.

So, the whole international money-go-round whirled ever faster, the music played louder, the champagne flowed faster, and the world economy lurched from one crisis to another. But there was always another tranche of credit, or another mega-merger, to keep the bubble floating.

And then, in slow motion, the bubble began to burst. As always, it is the victims of the excesses who now have to pay the biggest price for correcting them. It is all those who will lose their homes and their jobs and their living standards and their sense of self-worth who will bear the heaviest burden.

In the meantime, poor Alan Greenspan! He couldn't see it coming. Nor could all those bankers, politicians, commentators, financial experts and multinational potentates who so enthusiastically drove it all forward. But some of us saw it coming. You bet we did.
* Bryan Gould is a former member of the House of Commons and vice-chancellor of Waikato University.