The lethal combination of bankruptcies, bank failures, massive write downs and losses by financial institutions, takeovers (Merrill Lynch and Bear Stearns), government bailouts (American International Group, the car industry), the virtual shutdown of credit markets, and about $US30 trillion being wiped off equity markets worldwide, will generate enormous historical interest.
If all that isn't enough, they can ponder New Yorker Bernard Madoff capping off the year when he put his hand up for a $US50 billion swindle. What began as the US sub-prime crisis in early 2007 became a global financial conflagration by the end of last year.
In my opinion, it could take years for the system to recover - and I just don't mean the financial losses.
For what happened in the last four months of 2008, in particular, has been a complete breakdown in trust - at all levels - in the financial system. Investors, superannuants, financial institutions, hedge funds, investment banks; no one has been immune.
Indeed, the breakdown in trust between institutions and between institutions and investors had become so dire that it was only concerted and coordinated government intervention that kept the system afloat. What we witnessed last year - and what all parties apparently welcomed - was the semi nationalisation of the financial system.
It's worth pondering that last comment. Up to the sub-prime crisis, no one in financial circles would have predicted - let alone encouraged - government intervention in the markets. The market was considered the most efficient mechanism for allocating resources.
Instead, what we have today is the government playing an overt role in determining what industries or companies will get financial resources (either via tax dollars or by "encouraging" financial institutions where to direct credit) or, in the case of the banking system, via government guarantees.
This government intervention is both global and unprecedented - the direct consequence of credit markets going on strike.
Governments will retreat from this role. But don't expect it to happen quickly, and as they do they will put in place different structures. Certainly we have seen - for the foreseeable future - the end of the freewheeling industry that was financial services over the past few decades.
But government attempts to fireproof the financial system can only achieve so much. What is more important is for a return of those fundamental human values such as trust, integrity, honesty, and moral courage, to underpin the system. A world in which $US1 million can be colloquially known in the industry as "a buck" is, quite frankly, obscene.
In this industry trust is critical; it's pivotal to a properly functioning financial system (as we discovered recently); relationships between people and institutions are central to the business. We need the industry to return to the motto adopted by the London Stock Exchange in 1801 - "dictum meum pactum" or, as it is better known, my word is my bond.
What does this mean in practice? At its core it lies with the individual, every participant in the system. Individuals must examine their belief systems, their biases, and their codes of behaviour. It's time for everyone to reinvigorate those old-fashioned notions - personal responsibility and integrity - whether they're directors, executives, sales people, journalists, regulators, or consumers. No one should think they're exempt; they, in fact, are us.
It's much more than this, of course. It means admitting mistakes, of acknowledging that you aren't the fount of all wisdom on all matters financial.
It also requires an industry to adopt a far more simplified approach to product design and how it communicates with the consumer; the industry has simply become too complex. In the aftermath of the sub-prime crisis, did clients - retail and wholesale - really understand the nature of the product they were buying? I suspect many didn't.
In terms of markets recovering, I'm in the half glass empty category. I think there is more pain to come, lower interest rates and government pump priming notwithstanding.
But if the end result of the industry's charge into the Valley of Death is one that's based on a far sounder set of fundamentals, individual and collective, then that can only be a good thing, not only for the industry but the broader community it serves.
