Is there a ten-year cycle?

19th July will mark ten years since the onset of the East Asian Financial Crisis. My most vivid memory of that crisis was attending the IMF's annual meeting in Hong Kong in late September, 1997. I watched incredulously as a proposal by arrogant IMF officials to ignore democratic mandates, and economic common sense, and force open capital markets in countries that were resisting, was ignominously swept aside by the financial storm. A very instructive, if painfully destructive, year.

Then this coming 19th October will mark twenty years since the onset of the biggest stock market crash in history - the 1987 crisis - a day that remains memorable for me because I slept through the alarm clock during one of the worst storms in Britain's history. While I did so, some $500 billion was wiped off the value of the world's stock markets.

As we end another decade, are we due another financial crisis? Henry C K Liu, a New York analyst certainly thinks so.

The Federal Reserve-sponsored credit bubble that has financed consumption as well as stock market, property and other asset bubbles in the US over this last decade, is finally deflating. The sub-prime lending 'carnage' of bankruptcies and home evictions is toughening credit conditions in the US, and hurting those that bought into the sector. But those most damaged by this carnage are the poor and marginalised. The few who have gained most from this huge credit bubble - the mighty rich and arrogant - are still riding high. According to Liu 'labor's share of US GDP growth amounted to negative 2.6%, after adjusting for inflation, while capital's share was positive 2.5%.' This is the real achievement of the administrations of Ronald Reagan and the Bush's Snr and Jnr - and their servants at the Federal Reserve.

Many of today's gamblers, speculators and carry-traders admire Alan Greenspan and his fellow 'guardians of national finances' - the central bank governors and politicians that have unleashed the magic broomstick of de-regulated finance and credit. But on the whole hedge-fund managers and their peers believe that their accumulation of wealth can be put down to innate intelligence, foresight, hard work and brilliant deal-making.

Wait for the turning of the credit bubble tide. Such intelligence, foresight, hard work and brilliant deal-making will be exposed for all its vanity. Scandals will erupt and be greeted by shocked headlines. As credit flows out and dries up, so the flotsam and jetsam of the international financial system will be exposed - and it will not be a pretty sight.

Liu quotes William Rhodes, chairman, president and CEO of Citibank North America and of Citicorp Holdings Inc...who wrote in March:

"The primary worry of many who make or regulate the market is not inflation or growth or interest rates, but instead the coming adjustment and the possible destabilising effect these new players could have on the functioning of international markets as liquidity recedes........"

If he is worried, so should we be.