This is the turning point for the global banking system. To say that does not mean there will not be further disruption ahead. This is certainly not the turning point for global house prices or the world economy, for 2009 will be tougher than 2008 for both. But during times of financial pressure there is usually some great event, typically the rescue of a large financial institution, that signals that the financial system will gradually be restored to health. That is the precondition for economic recovery, though the path to that will be uncertain and long.

Financial rescues do not come any bigger than this. By taking over the US home loan giants Fannie Mae and Freddie Mac the US has assumed liabilities equivalent to about 40 per cent of its GDP or 10 per cent of world GDP. Huge, utterly huge. Now that is only a notional liability, mercifully, and it is backed by the assets of the US housing stock and supported by the flow of interest paid on mortgages. The actual burden on the US taxpayer will be far smaller, for this debt is not like regular national debt, the interest on which has to come out of taxation.

Why did the US authorities do this? Because they had no option. There would have been a run on US assets, which would have threatened the entire banking system. The driver was very similar to that which propelled the UK government to rescue Northern Rock. But – and this is important – this is much bigger in every way than Northern Rock.

It is not just that the numbers are bigger both proportionately and of course absolutely. Northern Rock was a private company, whereas the twin US institutions, though technically in the private sector, carried an implicit Federal guarantee. As a result, much of their debt was held abroad by foreign governments and central banks. The US was forced to take the institutions over because it would otherwise have appeared to be reneging on its international debts. The consequences for the world economy of that do not bear thinking about.

So what happens next? This, like the guarantee given to Northern Rock depositors, is a short-term fix. The next administration will have to find a permanent solution, either by getting the twin institutions into shape (probably by breaking them up) so that they can be sold back to investors or by putting them under some more permanent government control. How much it costs the US taxpayer will depend partly on the pace at which the US housing market recovers (because that affects the scale of its bad debts) and partly on general market conditions.

This does, however, go far beyond the US taxpayer. The most powerful lesson for anyone interested in financial markets is that when the hamburger hits the fan, the only institution big enough to pick up the pieces is the Federal government. Financial markets have huge power and governments that follow policies the markets dislike are punished for their behaviour. The best recent example of that is the way in which Russia has been punished by the markets for its intervention in Georgia. There was a sharp deterioration in the price of its securities and it will find it more expensive to borrow internationally in the future. But when markets fail, and I think the scale of the US home loans boom does represent a market failure, then it is the government that has to take responsibility.

The next lesson is that not even governments are big enough to control the housing market, just as they cannot control foreign exchange rates or share prices. US house prices still have some way to fall and there is nothing this administration or the next one can do about it. People who urge the UK authorities to provide funds for UK mortgages need to ask whether taxpayers should have to take on liabilities that commercial lenders are not prepared to do. The answer may be yes, but you need to be clear about the risks involved.

What is quite obvious is that if governments have to take responsibility for something, they have not just the right but the duty to apply appropriate regulation. When the dust settles from the global housing boom and prices have returned to some sort of equilibrium, the world's monetary authorities will have to figure out how they allowed it to happen. We are too close to the disaster to be able to analyse clearly but we can start to see some lessons.

A part of the problem was that the banking system developed a model of parcelling up loans and selling them on that became corrupted. Part was that lenders were permitted to lend too high a proportion of the value of the properties on which the loans were secured. Part was that interest rates, particularly in the US, were too low in the 2003-7 period. (Note that rates down at 2 per cent, which is below inflation, have failed to rescue the US housing market now.)

Reorganising financial regulation will be a task for the next five years. It needs to be done slowly and thoughtfully because you don't want to create new problems for the next cycle. Part of the reason why banks sold on their loans to the market was because they were encouraged to do so by new capital requirements. In any case, you certainly don't want to do anything now to discourage banks from lending to credit-worthy customers.

So far, the US has been quite successful in preventing the travails of the home-loan market from undermining growth in the real economy. Here, well until a month or so ago we seemed to be coming through more or less OK, whereas continental Europe had negative growth in the second quarter. But the next 18 months will be very difficult for all major economies. There will be the drag from falling house prices and not a lot can be done about that until they bottom out. It would be even more troubling were the malaise to spread to banking more generally and sound commercial companies to find it impossible to roll over their debts. The events of the weekend signal that the most acute phase of the financial ills is past and that is a relief. But the long convalescence has not yet begun.