Fortune to determine whether Stevens emerges as a hero

Japan had the mother of share price hikes in the late 1980s. This was followed by the best part of two decades of economic stagnation as Japan's asset bust - that included big drops in real estate values as well as share prices - ended the run of the then "miracle economy". The fear-mongers see the US as the most likely candidate for a decade or more of stagnation. They argue that the "sub-prime ripples" have a lot of damage to do yet and that the US financial sector will remain shaky for years.

Then there is the Australian case. We missed the tech boom of the early noughties but fully shared in the resource boom of the mid-noughties. It is this share boom, and the accompanying credit and housing bubble that, the BIS says in retrospect, should have led to monetary policy being tightened faster and sooner.

We note in passing that Henry made this case, but failed even to be invited into the RBA for a cup of tea and a chat.

If the Reserve Bank has understood why it allowed goods and services inflation to get away from its target it is likely to cut rates sooner than now expected.

I expect a further period of waiting and watching, however. The speed of the economic slowdown overthrows any case for further rate hikes plus (we dare to suggest) the "flexible" application of inflation targeting in the face of powerful food, petrol and housing inflation. Further falls in asset prices will make the case for rate cuts, signalling as they would more economic pain to come.

"We like to watch" is, of course, a favourite positioning of the Rudd Government. The Reserve will be applauded for waiting and watching so long as the economy does not turn turtle or begins to generate new inflationary pressure.

And it will be fascinating to see what Peter Costello's book makes of the RBA's performance and "independence".

After all, it is his reputation that has been damaged by the RBA's failure to contain inflation.