Banking has had the fat years. Is this the start of the lean? The answer concerns us all. For while it's true that what's good for the nation's economic health is usually good for banks, the same holds in reverse. As suppliers - and, just as crucially, withholders - of credit, banks have a gearing effect on economic growth. In good times, they relax their lending criteria, enabling new businesses to flourish and established ones to expand. In their general eagerness to keep up with the competition, they do not always lend wisely. Even so, their open-handedness lubricates and enhances growth.
Then, when things turn sour, they go sharply into reverse. Lending decisions that once seemed reasonable now look lunatic, and they call in loans all over the shop - sometimes unnecessarily. Small businesses fail and big ones cancel the new factory. As banking's enthusiasm once helped to exaggerate growth, its alarm now accelerates recession. Overexcited boom turns to suicidal bust. And then the cycle starts all over again.
Banks say that they have learnt the lessons of past lending excesses - to the developing world and the property sector, among others. This time around, they are heavily exposed to the telecommunications sector, which was madly attractive during the technology binge, but now looks less so in the light of day. In the wake of 11 September, cracks have been exposed in other industries, such as the airlines. It may be true that banks are managing their loan books more judiciously, but an oncoming world recession - if that's what it is - promises to batter their profitability anyway.
Perversely, the industry may even be looking forward to the pain. At least this would substantiate its plaintive argument to a mistrustful government that it does actually suffer lean years in the course of the banking cycle. The attack on the World Trade Center may leave its mark on banking in other ways. Wholesale banking is as susceptible to boom and bust as retail and corporate banking, and this side of the industry was in trouble even before last month as the big deals dried up.
None of the large investment banks is British any more, but all of them have a substantial presence in London. And there may be some risks for the City in a post-WTC era. Thousands of banking staff have already been sacked around the world and many more will follow. As the US banks lay off staff, they may be tempted to wield the axe disproportionately savagely in London. Any move towards increased American isolationism would leave the City a lonelier place.
There is another, altogether more generic threat. London has successfully defended its position as Europe's most important financial centre and the world's most international. But in New York, there is now unease about working in vulnerable downtown high-rise buildings. If it spreads, could we see the end of "the financial centre" as such? We have the technology to work from wherever we like. Could this be what some are already calling "the end of geography"?