From a position where the balance of expert opinion was that the West would avoid recession, talk of a second Great Depression is everywhere.

This column, as it often reminds readers, was amongst the first to suggest that the UK economy was built on a river of dodgy money and that the danger of recession, and a rather deep one , was always far, far more important than worrying about inflation. It has been criticised by the region's Great and Good for such heresy.

But we are where we are. The Muppets who just months ago were ridiculing the idea of a house price crash and a recession now appear to be dominating the headlines with a frenzy of predictions about the end of capitalism as we know it.

In the newsrooms of the Guardian and BBC they are toasting each other with lentil soup and waiting for the new socialism to take shape. Even Ken Livingstone was dragged out of forced retirement to comment that it was the end of the western world's "dominance" of global finance. That was, of course, before Asia joined in the general panic.

Stockmarket pyrotechnics aside, what we are seeing is the gradual realisation that capitalism is predicated on booms and busts. Feast, must be followed by famine.

In the UK the victims will be numerous and their stories heartbreaking. People will lose their jobs and their homes and companies will go to the wall. But in many cases they were in jobs that should not have existed, had homes that, on any measure, they could not afford; and many companies will have grown fat on cheap money and poor management.

There have been numerous bubbles in the last growth period: housing, commodities and stocks.

We are now seeing them all corrected at once. It has happened before and will no doubt happen again.

It is not a rerun of the Great Depression – where readers should be reminded that personal wealth was wiped out by bank collapses and GDP sank by some 65 per cent over the period – but it will be a pretty tough recession.

The problem with economic planning is very simple. People forget the patterns of behaviour which caused the problems the last time around. In a sense this very human condition of forgetfulness in the face of greed and need is necessary for the functioning of a market economy.

Before the Guardianistas celebrate too much they should contemplate the extraordinary improvements in living standards that this flawed system has delivered over the past 100 years.

We have had the boom, we now face the bust. For those affected it will be tragic. On balance, though, it is a price worth paying.

DON’T PLACE BETS
In passing, it is amusing to see that the decimation wrought on the stock market over the past month bears the same signs of irrationality that lead to the problems in the first place.

It is a given that the FTSE will fall significantly over the next year, not withstanding its recent bounce back, but some of the valuations attributed to many of our blue chips even at the current rate appeared to have factored in both a recession and the explosion of Sun and hence the end of life as we know it.

Although this column does not do share recommendations, for that you must speak to your stockbroker – a man who in Woody Allen's great phrase: "invests your money until it is all gone"– it does note when it believes the markets have overreacted on a huge scale.

At the time of writing many of our blue-chips are trading at prices little more than the cost of a packet of mints. They have become penny shares. There might be good reasons for such valuations, fears over pension liabilities or debt, but it is difficult to escape the feeling that the same morons who bought shares too high are now dumping them too low. The stock market is turning into a casino and regulation must follow.

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