The Economist just published a short history of Modern finance, putting the recent market gyrations in context:

[excerpt]

THE autumn of 2008 marks the end of an era. After a generation of
standing ever further back from the business of finance, governments
have been forced to step in to rescue banking systems and the markets.
In America, the bulwark of free enterprise, and in Britain, the pioneer
of privatisation, financial firms have had to accept rescue and
part-ownership by the state. As well as partial nationalisation, the
price will doubtless be stricter regulation of the financial industry.
To invert Karl Marx, investment bankers may have nothing to gain but
their chains.

The idea that the markets have ever been completely unregulated is a
myth: just ask any firm that has to deal with the Securities and
Exchange Commission (SEC) in America or its British equivalent, the
Financial Services Authority (FSA). And cheap money and Asian savings
also played a starring role in the credit boom. But the intellectual
tide of the past 30 years has unquestionably been in favour of the
primacy of markets and against regulation. Why was that so?

Each step on the long deregulatory road seemed wise at the time and
was usually the answer to some flaw in the system. The Anglo-Saxon
economies may have led the way but continental Europe and Japan
eventually followed (after a lot of grumbling) in their path.

Read the full article here.