Schadenfreud is a German word that, according to the Concise Oxford Dictionary, means “a malicious enjoyment of another's misfortune.” I must confess to a certain amount of this malice as I watch the pain bankers on Wall Street and elsewhere are feeling. True, their woes translate into a widening circle of financial turmoil spreading around the globe, but just for a moment, I would like to rub my hands in glee at the sight of some of the richest people on the planet begging governments for a bailout.

When I was studying economics at university, one of the first things we learned was that hardwired into the capitalist system was the business cycle in which a period of economic expansion was followed by a recession, as surely as night follows day. To put it in other words, what goes up must come down. However, from the mid-Nineties until recently, we were told by those beating the drum for capitalism that finally, the beast had been tamed, and we were witnessing the golden age of free markets where there was no downside.

Indeed, Gordon Brown, as Chancellor of the Exchequer, boasted that the cycle of boom and bust was now a thing of the past. This decade of prosperity was largely built on a steep rise in property prices that allowed owners to borrow money against their homes. These loans were used to finance holidays, new cars and all sorts of shiny toys. This spending supported armies of workers in the manufacturing and service sectors, and paid bankers their obscene salaries and bonuses.

On our way to the Promised Land, we were suddenly mugged by reality, and discovered the hard way that what goes up really does come down. The cosh used by the mugger came in the shape of sub-prime mortgages in the United States. These were loans practically forced down the throats of people who did not have enough income to pay off the mortgages they had been persuaded to take by grubby salesmen pretending to be bankers. Lenders passed on these toxic mortgages to other financial institutions until they were like ticking time bombs waiting to explode in financial markets around the world.

Once insolvent borrowers began defaulting, fear pushed financial institutions to dump these bad loans from their books, and the write-offs began mounting into the hundreds of billions. But another factor was at work complex financial instruments known as derivatives that included these sub-prime mortgages suddenly became bad news. As they fell in value, they pulled down giants like Lehman Brothers that had bought billions worth of these poorly-understood instruments. Bear Sterns had already been pulled down by market manipulators, and now the giant of the insurance world, AIG, is teetering at the brink. Merrill Lynch is another banking icon that is now history.

But let's be clear on one thing what has pushed the banking sector to the wall is not some unforeseen disaster, or an act of God. What has caused this collapse is plain, old-fashioned human greed. At the end of the day, this is at the heart of the capitalist system, and is what drives the markets. When

regulated, it can produce wealth not just for the individual capitalist, but for society as a whole. However, when given open licence, it can create havoc and great human suffering - as it is doing today.

In London alone, the collapse of Lehman Brothers has cost nearly 5,000 jobs. At least 20,000 more around the world are sure to follow. Trading partners of this giant American investment bank are bound to take a huge hit. Already, stock markets around the globe are reeling as small investors take a pounding.

Some of this financial agony is sure to translate into punishment for the politicians who are perceived to have stood by and watched ordinary people be wiped out by the greed of a handful of bankers. Gordon Brown, for one, was already in trouble with his own party before this latest disaster. Dissidents, dismayed at the Labour Party's headlong plunge in the opinion polls, are demanding a vote to decide the Prime Minister's political future.

There is a real threat of a Conservative landslide in the next general elections unless Labour's fortunes miraculously improve. This is unlikely to happen under Brown. The hapless PM is not endowed with the charisma Tony Blair had. Even when Brown announces a (rare) bit of good news, he comes across as somebody informing us that a close relative had just died. In the wake of Britain's imminent slide into recession, Labour's dormant left-wing is likely to lead the charge against Brown. Silenced earlier by New Labour's espousal of the free markets during a period of boom, a leadership challenge might well push the party back to its socialist roots.

Already, signs of economic distress are everywhere, with car sales and house prices plunging. Unemployment is beginning to bite with 70,000 people already thrown out of work due to companies downsizing and shutting down. Recession is defined as two successive quarters of negative growth, and the UK is projected to enter this unfamiliar zone later this year.

Indeed, an entire generation has grown up in an era of prosperity without knowing any serious deprivation. Teenagers are used to fly to distant destinations for holidays, and to European towns for the weekend. They have the latest iPods, go to clubs every other evening, and buy designer clothes whenever they go shopping. To have to adjust their lifestyle to meet changing realities is to enter into a world they have never known.

Their parents, accustomed to simply increasing the size of their mortgage to finance their and their children's expenses, are suddenly having to cope with uncertainty. The cost of sending one child to a good private boarding school (confusingly known as 'public schools') is around 30,000 pounds. And given the deep distrust many middle class families view state schools with, this is not a luxury but a necessity. Many people have gone deep into debt to give their kids a good private education, and are now struggling to repay their loans.

Unfortunately, the recession has yet to hit restaurants, and a recent survey shows that people are spending as much on eating out as they did a year ago. Thus, restaurants have not yet lowered their prices, as I had hoped they would.