The fall of the Berlin Wall in 1989 was conceived by some as the end of history. Capitalistic democracies would forever prevail and the free market had proved superior to the state-controlled economies of the former Soviet republics and their allies.

This paradigm lasted exactly 19 years. As 2008 is drawing to a close, the idea is finished.

The Western G-7 nations apply socialistic financial and economic policies at a pace that was never thought possible. Turbo Capitalism, as the Anglo-American, unfettered and unchecked capitalism is also referred to, has reached its final days. The concept of easy money, easy credit and wealth generation in absence of a large manufacturing sector is faltering.

Whether we will go through a major recession, long and deep, or even a depression, what might emerge is the realization that our society is much poorer than we had realized. The housing bubble, credit crunch and stock market crash have wiped out trillions of dollars and this will not go unnoticed.

This is truly the first global crisis of the 21st century. It is not climate change. It is not pollution. It is not a fresh water crisis. It is not a food crisis, notwithstanding current food security issues in several countries. It is not an energy crisis, although energy prices might have played a major role in bursting the U.S. housing bubble. It is an economic crisis of epic proportions that questions the very economic system we chose to build. The house of cards called Wall Street and banking sector has tumbled. The Ponzi scheme has been revealed.

The response of our political leaders so far has been the nationalization of banks, insurance and mortgage companies, lowering of interest rates (i.e. more easy money) and seizure of bad credit portfolios, to name a few. The scale is truly mind boggling, reaching into trillions of dollars in liabilities. For example, the liabilities that the U.S. taxpayer was forced to assume easily equals the market capitalization of the 10 largest U.S. corporations. All nationalized.

It seems that capitalism works great until the day it collapses and socialism does not look so bad after all. These are strange and dangerous times. The world economy and financial sector are changing for good. Our young generation will grow up and deal with a new order. And future crises are already looming. If we manage to recover from the current disorder, will we be able to navigate through the global oil production peak?

What is really at stake these days is the North American and, in some ways, European model of sprawling individuals, locked up in the most inefficient and least resilient living arrangement possible. Suburbia. Do our cardboard homes really represent true wealth, or do we need to go back to domestic value-adding manufacturing and food production in order to create wealth? Will the future lie in a mix of capitalism and socialism, a sort of free-market system with strong government intervention and guidance when crises loom, and with major economic assets in public hand? Time will tell and the next generation will have to answer that call.