The extractive sector was so profitable that it captured a large share of new investment, and its export volume was large enough to alter the trade balance and boost the currency, further rendering other activities less attractive.

Today, we can observe a similar phenomenon on a large scale around the financial industry, whose high profitability for many years has also caused weakness for other sectors of the economy. As this has developed around the money centers in New York and, in an even more concentrated way, London, I would propose to label this the "Anglo Disease."

While the Dutch managed to avoid the "oil curse" that has struck many oil exporting countries, I will also argue that the Anglo Disease carries its own curse, whose early symptoms are reflected in the current financial crisis.

Financiers, with their ability to monetize today future revenue streams, are able to generate instant profits which can be captured by them and, to a lesser extent, their clients and employers. That capacity to create apparent wealth out of thin air cannot be matched by any other sector in the economy, and sucks in talent, resources and money. Meanwhile, the investors that have made those immediate profits possible will want to ensure that the future flows that underpin them do materialise, and will impose their rules and discipline on the underlying economic activity.

Thus the financial world imposes its unrelenting focus on profits and shareholder value on all economic activities; the domination of "return on capital" criteria ensures that many activities outside finance are in decline, as they struggle to reach the required returns on potential investments. Financial analysis sees labor as a cost, reducing profits, and pushes for its reduction, either via outsourcing, offsorisation or wage stagnation. Similarly, government regulations are seen as restrictions on profit to be fought and eliminated, as, naturally, taxes.

To boost domestic demand in the face of flat incomes, debt has been pushed on households as the way to keep on increasing their spending, to the further benefit of the industry that provides the loans. The combination of expansionist monetary policies in the West and mercantilist policies in China has made it possible to find the holy grail of no inflation and rapid asset price increases, thus generating massive (and increasingly less taxed) corporate profits. The reality was, of course, that of huge global imbalances and a massive bubble, but for the longest time it looked like perfect growth, further validating the policies that underpinned it.

The model of financial capitalism is thus all-encompassing, not only grabbing an increasing share of the economic pie, but also dominating all politicial and economic discourse.

The reality, unfortunately, is that a massive inequality, declining or stagnant living standards for the majority, which spend more than they earn, and, as a consequence, a massive bill pushed out into the future. Well, that future is now, and the imbalances will only be unwound if incomes match spending, which can happen via lower spending or via higher incomes.

In the financial capitalism model, incomes are a cost and should not increase; if that logic prevails - if the Anglo Disease is not cured from our body politic - spending will crash and a recession is not only inevitable but likely to be very painful, as the real economy slows down brutally, and the financial bets that ride it suddenly look highly unreasonable, and turn into losses (as is happening already in the subprime sector).

If, to the contrary, policies are focused on propping incomes for the poor and the middle classes rather than profits, on investing in the real economy rather than in monetising its existing activities (for instance via plans to boost energy efficiency in the household sector and renewable energies), on taxing today's wealthy rather than tomorrow's citizens, then there is a chance to limit the crash.

Just like the Dutch disease was caused by a new sector providing temporary windfalls, the Anglo disease was made possible by the combination of technological progress in the financial world, the long bond bull market created by Volcker's successful fight against inflation and the successful promotion of the ideology of greed by the right (with the timely fall of the Berlin Wall providing an additional boost by discrediting the other extreme of the ideological spectrum). The great middle classes created by the keynesian policies of the New Deal have now been exploited for the past 30 years, and they are depleted. The economy will need to find another, more real, way to grow and prosper.