David Smith, the distinguished economics editor of The Sunday Times, completed this overview of the financial crisis – The Age of Instability – at the end of 2009. This means he can't give his verdict on the lasting effects of the crisis. But then neither can we, in late 2010, as fears of a double dip recession ebb and flow and every so often signs of strain erupt somewhere or other in the global financial system. What's more, it means the book does cover the most dramatic of the events in the markets, including the run on Northern Rock, the rescue of Bear Stearns, the collapse of Lehman Brothers. To read it is to be reminded what an extraordinary period we lived through in mid-2007 to late 2008.

Smith does a great job of providing the context for these events, starting with the monetary framework set up after the 1987 stockmarket crash, the Asian financial crisis of 1997-98, the 'New Economy' hype and dot com crash in 2000-2001. He gives us enough of the historical policy context to understand that the Great Crisis gained its scale from pent up pressures accumulated over more than a decade. For example, the 'glut' of Asian savings which funded American credit and spending before 2007 had its roots in the determination of the Chinese and other Asian governments never again to be caught short of reserves and humiliated by the IMF, as they had been in the late 90s.

Perhaps I'm frivolous, but the parts of the book I most enjoyed were those which took us into the policy debates and personalities in the eye of the storm. The book is better on the UK than the US, nor surprising given its author's terrific access to the key players. We await still a detailed memoir of how the crisis played out at the heart of the Treasury and Bank of England but there's a flavour of it here.

Smith is somewhat critical of Bank of England Governor Mervyn King, portraying him as too concerned with the 'academic' preoccupation about moral hazard and therefore too slow to rescue Northern Rock. I don't share this assessment. Post-mega-bailouts, moral hazard remains a huge problem swept under the rug by policymakers. What's more, my admiration for Mervyn King is increased by reading here that he once told George Soros that his book would “add nothing to the world's stock of intellectual knowledge.” Most people are too much in awe of Mr Soros's wealth to tell him his writings are banal.

The most gobsmacking detail in the book for me was reading that the Financial Services Authority had been worried about Northern Rock's viability from as early as 2004 and had been directly warned about it in 2006 by the Bank of England, but had taken no action. It wasn't until July 2007 that it wrote formally to the lender to ask how it would cope with adverse circumstances. Indeed, the FSA had even allowed Northern Rock a waiver from adhering to the international capital standards. Extraordinary.

All in all, The Age of Instability is a terrific compact overview of the events of that wholly extraordinary year. It sets them in longer-term context and provides some analysis without plunging one way or another in some of the bitter debates about the implications of the crisis for economic policy, so is great for the open-minded and non-expert reader. It's a lively read too, with enough of the personal detail to give a flavour of the combined terror and excitement that must have characterised the inner policy circles as events unfolded.

It also highlights the scary reality that nothing has really changed. Being reminded about what happened and why makes it all too plain that policymakers and regulators have hardly started to tackle the behaviours and structures that took the world financial system literally to the edge of collapse. The new Basel standards are a start (as the BBC's Robert Peston argues in his blog), but with a new bonus season looming, it's all too clear that bankers (and other fat cats) have reverted to business as usual. And that's why I'm with Mervyn King on the moral hazard problem.