Party like it's 1929

All that government intervention into the economy is supposed to prevent a repeat of stuff like this:

It certainly looks like a bank run - the scenes in London today fulfilled the dictionary definition.

And heading north to Nottingham, and Middlesbrough, the same extraordinary scenes. savers forming long queues to drain their life savings from Northern Rock.

Banking -- an industry built on credibility, confidence and trust. But the Rock looks wrecked even in its home town of Newcastle.

Deposit guarantees should prevent this. But even after an extraordinary unlimited lending facility granted by the Bank of England and agreed by the Chancellor, customers preferred the sight of real cash.

What caused the loss of confidence? Overextended credit... the same copious amounts of credit Western governments have been aiding and abetting now for about two decades.

From its roots as a sleepy building society Northern Rock has emerged as a financial revolutionary aggressively innovating in its mortgage lending and borrowing.

In the good old days, savers deposited their money with banks and building societies who then lent it to customers in the form of loans or mortgages.

But only a tiny proportion of the money Northern Rock lends comes from its savers.

Instead it's turned to the money markets - borrowing from other banks and financial institutions at market rates.

For years this business model has allowed Northern Rock to borrow cheaply - and in turn offer cheap mortgages - expanding its share of the mortgage business to nearly 20 per cent.

But fears about US mortgage debt have paralysed the money markets ...

Man, when those dominoes start to fall, it can really make a mess...