It could be worse. Macquarie Bank, known as "the millionaires factory" for the exorbitant rewards its executives paid themselves, was savaged for years by scathing assessments by analysts aghast at the size and secrecy of its fee structure. Now the bill has come due, paid for by its shareholders. Macquarie Group's share price has plunged 71 per cent from a peak of $98.50 last year, to $28.75 on Friday.

Even more blood has been shed at its reckless imitator, Babcock & Brown, whose market value has been destroyed since it peaked last year at $33.90. It closed at $1.40 on Friday, having lost 96 per cent of its market value and 100 per cent of its reputation.

How many little people have the big boys taken down with them? It was so easy to turn comfort into excess. At the height of the good times, the Howard-Costello government made the generous offer of allowing people to put as much as $1 million into their superannuation by June 30 last year, thus avoiding lump-sum taxes before the super rules were changed.

I was advised by a very wealthy friend to borrow the full $1 million and put it into super. The cost of servicing the debt, he said, would be covered by tax-free dividend payments, and the rising value of the super would be free money. He made it sound so simple, and inevitable, perhaps because he had done so well for so long by borrowing to the hilt.

That was 18 months ago. Since then his company has collapsed. He has sold his waterfront mansion. He has left the country, with no plans to return for the foreseeable future. I did not take his advice. I borrowed nothing. Rather than leverage up, I de-leveraged down. I have no debt, no mortgage, not even a car. What I wanted was the ultimate luxury good, something invisible but palpable - peace of mind.

Peace of mind only goes so far when you are watching the unravelling of the greatest run of gambling and speculation in human history. Like James Packer's towering ambition in Las Vegas, this gigantic global casino, in which investors bet on property, companies, commodities, currencies and derivatives, all the time, all over the world, is in the process of being wound back (perhaps to be replaced with a state-run bingo hall).

In September we were agog at giant financial houses falling like dominos. That is old news. Now it's economies, not companies, that are freezing up. The entire euro zone, the currency union of 15 advanced economies, is about to go into recession. So is the US, and Japan, our biggest export market, and Korea.

At the International Monetary Fund, countries are lining up for rescue packages, including Austria, Hungary, Ukraine, Belarus, Kazakhstan, Serbia and Pakistan. In Argentina, the Government is raiding the pension funds to find cash. The fall of the Aussie dollar has been accompanied by even more violent raids on every currency propped up by excessive foreign debt, with the conspicuous exception of the US dollar. What was supposed to stabilise the world was the "BRIC", the boom economies of Brazil, Russia, India and China, but the boom is over in Brazil, Russia is in serious trouble, India's rupee has plunged and China has gone into stress.

Amid all this, the Rudd Government, which overreacted when it committed to splurge half the budget surplus on a $10 billion stimulation package, has lowered its growth forecast for 2009 from 4 per cent to 2 per cent. That already looks optimistic. The big freeze could send growth down to zero.

Source: The Sydney Morning Herald