Stock market crashes and hurricane-force winds have a history of travelling in tandem. The largest daily drops in FTSE 100 share prices came in October 1987, at the same time as record-breaking high winds lashed the South of England. Yesterday, as the tornado of financial market turbulence continued to sweep across the world’s timezones, Hurricane Dean, the first of the 2007 North Atlantic season, was gathering strength off North America’s eastern seaboard.

It must be sincerely hoped that Hurricane Dean does not strike as hard as yesterday’s comments from “Hurricane” Hank Paulson, the US Treasury Secretary. Abandoning the understatement normally used by men and women in his sort of elevated position, Mr Paulson said that financial market chaos will “extract a penalty” on the US economy. To date, it had been thought that the problems triggered by the US high-risk mortgage crisis would be contained within narrow professional and financial circles. It was hoped that the difficulties would not impinge on the real economy and threaten ordinary workers’ jobs and bank balances. Some people, notably some low-income homeowners in the United States, and a few unwise City whiz-kids, have felt genuine financial pain. But, until now, the economic damage looked to be limited. To be clear, Mr Paulson also said yesterday that he thought the US economy was strong enough to withstand a buffeting. But if he is to be believed, Wall Street’s troubles will be felt on the high street and, since Mr Paulson is one of the most experienced and powerful figures in world finance, he should be believed.

The depression is spreading ever further through the financial markets, too. What started out as a little local difficulty in the US has spilt over as responsibility for the bad debts passed up and around the financial system. Other investors, concerned that they may get drawn into the mêlée, then stopped lending to individuals and companies. Share prices then caught the jitters and started falling sharply. Now the world currency markets are being infected. Japanese savers have, until recently, kept their nest eggs in British, US and other overseas banks because they got much higher rates of interest than at home.

Now these Japanese savers are running scared of market turmoil, caring less about the higher interest rates than the comfort of having their cash close at hand. In taking the cash home they sell pounds and buy yen on a scale that is creating hard-to-predict swings in foreign exchange rates. While this makes it more expensive for Brits to holiday in Japan, it creates enormous, and more worrying problems, for trade. It also raises fears that other distress will emerge.

Where will it all end? Nobody knows – and that is the biggest problem. Markets hate uncertainty above all, because ambiguity makes it harder to ascribe value to assets, be they shares in Marks & Spencer or Argentine pesos. But storms have battered financial markets almost as long as hurricanes have whipped the Caribbean coast. They have also all blown themselves out eventually and will do so again. Since some damage will be done, no one could be blamed for holding on to what is theirs more tightly, or for avoiding venturing too far from familiar territory. But those who succumb to panic will have the most clearing-up to do when calm returns.