A day before the 12-month anniversary of the collapse of Lehman Brothers and it seems no credible pundit is denying the need for the massive reforms described a week ago by Paul Krugman in the New York Times, a piece that has re-defined the terms of serious economic debate.

The desperation of the deluded, who use every positive market move to hastily patch up their shattered internal world, reflects an pointless attempt to recapture the neo-liberal purity that, as Krugman pointed out, was the root cause of Wall Street’s capitulation.

Now, with the global financial landscape fundamentally altered, are we about to blow another bubble? Or will the industrialised world embrace a more chastened form of free markets and a new humility in economic relations?

The prospects don’t look good, says Theo Francis and Peter Coy in BusinessWeek. The G20 meeting at Pittsburgh will likely produce “a package of worthy but lukewarm reforms that leave the global financial system — and taxpayers — exposed to another costly bust some years down the road.”

The real problem, say Peter Boone and Simon Johnson on The Baseline Scenario, “is that our economic and political system work together to encourage excessive risk, and this risk in turn leads to cycles of prosperity and collapse”. The solution? Much greater capital requirements and an assurance that “regulators are not captured by the banks”. Just don’t hold your breath.

Daniel Gross on Slate reckons Lehman’s collapse “marked a beginning rather than an end” as the “direct cause of serious problems in a way that these other events weren’t.”

On Business Spectator, Alan Kohler says Lehman represented the “beginnings of the most important economic debate of our time”. Macro-economists would do well to heed Krugman’s warnings and regroup, factoring in “the madness of crowds” (some would say that Wall Street’s allies in corporate America have been manipulating that madness to sustain the credit binge that led to the crisis).

But what about the human toll? The Sunday New York Times (cover price $US5), tracks the fall-out among former Lehman employees, whose post-spiv lives have ranged from flying jets to running petrol stations, to depression and stasis.

Also in The Times, Robert Frank says the real problem was short-termism, literally the inability of market participants to make informed middle-term bets.

Don’t forget the fallout on Main Street, says Niall Ferguson at Newsweek. While the gilded class at firms such as JP Morgan have gone back to paying bonuses funded by the Fed’s bailout, ordinary Americans are facing foreclosure, bankruptcy and worse. The scarcely-believable idea that “bonuses are back” (as early as May, pink-shirted Tories were seen milling about the City quaffing boutique pints) has fed into a deep-seated psychological need to blot out the economic uncertainty shows no signs of abating. Instead, the “animal spirits” of M&A activity continue to rage, says the Financial Times.

In truth, London is still struggling says The Economist. “Clearing this up will take years”, its anniversary edition thunders.

Even in Australia, seemingly inured by its quarries, the re-introduction of salary guarantees among investment bankers (where bonuses are written into contracts, sometimes for years), shows it’s more than just the the fond memories of the boom compelling the rainmakers to keep fronting up to work each day.

But perhaps the last word should go to Krugman’s Nobel Prize-winning buddy Joseph Stiglitz, who says the era of growth fetishism is well and truly over. Better get used to a more chastened future, built around a revamped theoretical framework that no one seems to have articulated yet.