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Power has tangibly shifted – away from the United States and the Western world generally, and towards the fast-growing giants of the East. That’s been happening for some years now.

But September 2008 marks the moment when the scale of our excesses, the extent of our debts and the moral bankruptcy of our financial regulatory system finally began to be truly exposed.

I say began to be exposed. Back in March, Standard and Poor’s, the US ratings agency, estimated some $285bn (£156bn) of mortgage-backed securities would eventually be written-off by the global banking sector. On Friday, almost unnoticed amid the panic, that forecast was upped to $378bn.

In reality, total credit losses will be much higher – at least $750bn in my view. But the extent of the 33 per cent one-off increase in S&P’s estimate speaks volumes. It reflects just how little anyone truly knows about either the ultimate size of the sub-prime losses or who ultimately holds the related securities.

But with one in ten US mortgages now “delinquent” or “in foreclosure”, and house prices still falling, such “toxic waste” is burning holes in balance sheets wherever it sits. That’s why this crisis is far from over.

It’s difficult to overstate the enormity of what happened last week. By any standard, the collapse of Lehman Brothers was a dramatic – and alarming event. One of the biggest names on Wall Street, the 158-year old bank was consumed by the scale of its losses and crippled by executive feuds. Deemed by the US Federal Reserve to be “sufficiently unconnected” to the rest of the global financial system, Lehman was allowed to fold.

In contrast, American International Group, the world’s largest insurer, was judged “too interconnected” to collapse. So the Fed effectively “nationalised” AIG – the biggest rescue of a private firm in human history. And it’s only a few weeks, of course, since the even more expensive bail-out of quasi-government lenders Fannie Mae and Freddie Mac – which, between them, account for a mind-boggling $5,300bn of mortgages, around half of America’s home loans.

On top of all that, US Treasury Secretary Hank Paulson sent an $800bn financial rescue plan to Congress. He wants to create a second “Resolution Trust Corporation” – or government-owned asset management company – to take on illiquid mortgage-related debts. The original RTC was established to rescue the US Savings and Loans Associations that went bust in the 1980s.

And by the way, the Fed has also just offered another $125bn of liquidity to banks outside the US that are desperate for dollars and can’t access America’s frozen credit markets – a move co-ordinated with central banks in Japan, the Eurozone, Switzerland, Canada and here in the UK.

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How much more can the US taxpayer take? It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the government itself could default. No?

Check out the chart showing the recent spikes in the US 10-year credit default swap. In other words, the market is now pricing-in the genuine possibility that the US will struggle to pay-back some of its long-term T-bills.