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Let’s get this clear. This is not going to be the last of the crashes in global economy. Despite the titanic scale of the present disaster, there is just no way the next one can be anything more than ten or at best twelve years off. Booms and busts are not peculiar to the capital markets, only more spectacular. No one at this point would care to remember the bust in the commodity cycle that happened in 1997, which almost wrote the epitaph of most of India’s steel companies.

But having got that out of the way, the most impressive spectacle of the present crisis is the way the central banks of major economies are shaping up to tackle them. This is by far the biggest change in the way the present crisis has been handled in the US and EU, the two zones where the impact has been the most severe. This is not the same as the lock the door and hope the fire does not travel this way approach that characterised the response to the 1997 East Asian crisis. Sure, in that case, the trouble did not occur on Wall Street or Canary Wharf but the difference in response by the central banks this time is far different qualitatively.

The most expressive demonstration of this is the international calibration that the central banks demonstrated on Monday, when the bottom literally dropped out of the financial markets.

The US Federal Reserve added $70 billion in reserves to the banking system through repurchase operations (repo) to ensure a run against liquidity. The European Central Bank, the Bank of England and the Swiss Central Bank duplicated the effort. On Tuesday, the Bank of Japan added 2.5 trillion yen or about $24 billion to the hat, while the People’s Bank of China cut its benchmark one year lending rates for the first time in six years to 7.20% from 7.47%. The Reserve Bank of Australia has also injected $1.5 billion to the pool.

Further on, the Bank of Korea (South Korea) has already assured investors it would provide foreign currency liquidity through the swap market. And for the first time, nearer home, there are reports that RBI may cut rates despite inflationary concerns to ensure that growth concerns are not damaged severely.