KIPLING would not have approved of the one group of people who really do treat triumph and disaster just the same. They are the speculators and short-term traders who now dominate financial markets in New York, London and Tokyo. What they cannot stand is nothing much happening. That may be why the City air is thick with talk of one or other impending disaster.

In 2004, many hedge funds had a poor year because of an unexpected lack of volatility on most stock markets. But it was not all bad for the action-addicts. Oil prices went up 80 per cent and after that the dollar tumbled 10 per cent.

Unfortunately, cash from pension funds, and from disillusioned investors, has drawn in more hedge fund managers looking for drama, just at the moment when there is not so much. China’s economic boom seems to be under control. The soft patch in America’s expansion has turned out to be not that soft. Britain has not yet seen house prices crash and the UK economy is slowing, not plunging into recession.

When duller funds finally fell for the dot-com boom, they tended to pile into stocks such as Marconi, claiming that they were less risky. There is now a similarly desperate search for new trading ideas.

Disaster can strike from what appears to be “clear blue sky”, as in the stock market crash of October 1987, as well as more literally on September 11, 2001. On closer examination, at the time and since, the 1987 episode stemmed from imbalances in the world economy that led to a sharp fall in the dollar, which in turn triggered the crash.

Comparable international imbalances exist today. America’s unusually large budget and trade deficits need a flow of funds from Japan and China that can be turned off rapidly. But the expectations reflected in share ratings worldwide are much lower than in 1987.

Derivatives and hedge funds are more credible agents of a self-feeding crash. In a speech on financial-disaster planning this week, Sir Andrew Large, Deputy Governor of the Bank of England, noted that credit derivatives have spread so fast that no one is quite sure where concentrations of risk now lie. Financial assets based on derivatives also make credit markets more vulnerable.

As Sir Andrew admitted, no disaster planner was likely to have foreseen that Russia’s loan default of 1998 would quickly lead to the system-threatening failure of the huge LTCM hedge fund in New York. LTCM was not heavily into Russian debt, but it had laid bets elsewhere on interest rates converging.

Not many could have foreseen that General Motors shares would enjoy their biggest one-day rise in 40 years, thanks to the intervention of Kirk Kerkorian, the renowned speculator, just 24 hours before GM bonds were relegated to junk status. A trading strategy of being long on the bonds and short on the shares would not have been clever.

Last weekend, rumours circulated of several highly leveraged funds in trouble or suffering embarrassing withdrawals by worried investors. Few yet suggest that hedge funds will suffer damage on the scale of LTCM. It could happen, but it is worth remembering the wider consequences in 1998.

The US Federal Reserve provided cash for whoever needed it and quickly arranged for LTCM to be recapitalised by banks. Four months after the Russian default hit world stock markets, share prices had recovered in London and New York. The 9/11 effect lasted far shorter.

The authorities cannot do much about recession, or big changes in economic trends, but shocks are now less likely to bring lasting cataclysms.