By Larry Elliott: Guardian London

A trader at the New York stock exchange. The last four years have seen five key stages of the global financial crisis, with more likely to come.

From sub-prime to downgrade, there have been five stages of the most serious crisis to hit the global economy since the Great Depression.

Phase one on August 9, 2007 began with the seizure in the banking system precipitated by BNP Paribas announcing that it was ceasing activity in three hedge funds that specialised in US mortgage debt.

This was the moment it became clear that there were tens of trillions of dollars worth of dodgy derivatives swilling round which were worth a lot less than the bankers had previously imagined. Nobody knew how big the losses were or how great the exposure of individual banks actually was, so trust evaporated overnight and banks stopped doing business with each other.

It took a year for the financial crisis to come to a head but it did so on Sept 15, 2008 when the US government allowed the investment bank Lehman Brothers to go bankrupt. Up to that point, it had been assumed that governments would always step in to bail out any bank that got into serious trouble: the US had done so by finding a buyer for Bear Stearns while the UK had nationalised Northern Rock.

When Lehman Brothers went down, the notion that all banks were ‘too big to fail’ no longer held true, with the result that every bank was deemed to be risky. Within a month,