The most tumultuous week in financial markets since 1929 has not done enough to halt what has become a sickening downward spiral. I warned a fortnight ago that we were at a tipping point, but even I didn’t suspect it would be a fall-off-the-cliff point.

Now no less a figure than George Soros, the hedge-fund billionaire, has said: “I’m afraid we’re not through the worst of it at all — in some ways we’re heading into the storm, rather than coming out of it.”

Like the rescue of the US mortgage giants Fannie Mae and Freddie Mac, the takeover of HBOS and the prop-up loan to the giant US insurer AIG were necessary to prevent widespread collapse. But, on their own, they are not enough to signal the bottom.

Friday's wild surge was more to do with the new ban on short selling than the latest US government plan to wave a magic wand over the crisis.

Despite this year’s bloodletting the FTSE 100 index has not been more than about 30% off its all-time peak of 6,930, struck nearly nine years ago. That does not take full account of the historic cataclysm we are witnessing.

Some say this is a financial crisis and the rest of the economy is okay. That is dangerously short-sighted. Given the growth of Britain’s financial sector in recent years, you cannot separate the two. Housing and retailing are already crumbling; unemployment is rising.

Consumer demand is fizzing like air out of a balloon. Companies will consequently find loans harder to renew, driving many to the wall.

This really is time to batten down the hatches. Stay clear of banks and pay off debt as fast as possible. Bank rate may fall, but high-street interest is becoming dearer. Though that should mean better deals for savers, banks will be giving away as little as they can.

You should have no more than £35,000 with any one financial group, however many operations it owns. Check websites for lists of trading names to see if yours overlap.

The end of independence for Halifax and Alliance & Leicester will cut competition for your pound. The watchwords will be safety and stability, not how to put the last penny on an interest rate. Safest of all is the government-owned Northern Rock.

Rules are changing. The huge market share of Lloyds HBOS is being overlooked as a competition issue in the national interest, and the Financial Service Authority’s Treating Customers Fairly campaign will take a back seat.

That campaign’s first pledge states: “Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture.”

Forget it. Instead, survival is going to have to be central to the corporate culture of financial firms for the next couple of years. Cut commitments, but don’t cancel long-term contracts such as pensions, life insurance or structured products — assuming they’ll let you. Check the small print: most have a clause locking in investors at critical times, but the crippled Lehman Brothers has two UK plans in the pipeline, which you may escape because they don’t close until next month.

Rather than pay steep exit penalties, consider making policies paid-up, so you don’t have to put any more in.

If you have spare cash, though, this could be the time to put a little into a wide spread of investments that you are convinced have suffered unjustifiably.

Bank shares have been tipped by some distinguished fund managers this year. While HBOS was thought a safe bet, it has had to be rescued before depositors started queuing in the streets to claim their money. HBOS was well managed, but its shares fell so far that they affected its credit rating and therefore its ability to do business.

So beware of what you don’t know. Go for shares in firms with big brands, simple businesses and low debt. Good and bad are being swept aside in the panic, so there are opportunities if you are willing to pick through the rubble. The financial world is changing for ever. For the next decade it will become dominated by a few behemoths, with thousands of tiddlers circling them. Regulation will have to be more heavy- handed: no prizes for letting another Northern Rock or HBOS slip through.

The net result for individuals is that saving and borrowing will be more stodgy, boring even. Bank managers are busily relearning their forefathers’ phrase book of 40 years ago, listing a hundred different ways of saying no.

“We don’t see the turmoil as temporary,” said HBOS chief executive Andy Hornby.

But the stock market will eventually pick itself up, dust itself down and again make money for the brave.

Black launch

Congratulations and commiserations to publisher IBMG for choosing last week of all weeks to launch Black Card, a monthly 80-page magazine targeting holders of the black credit cards that UK banks use to open the wallets of the fast-dwindling band of those with more money than sense.

Editorial content will cover what it calls “key aspects of a modern affluent lifestyle including profiles of inspirational people, travel and leisure, art and design, international property, food, drink and restaurant trends, as well as luxury shopping and fashion”.

If it can also tell us how to survive the current downturn, it deserves every reader it can lay its hands on.

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