It's rare for Canadians to bask. When we inarguably do something better than anyone else — for instance, our banks are rated by the Organization for Economic Co-operation and Development as the safest in the world — we groan.

Banks? That's only because in the 1990s, the federal Liberals didn't let Canada join the worldwide bacchanalia of banks merging until they became too big to fail and began drinking, one and all, the absinthe of toxic derivatives.

Canada went to bed early, comparatively speaking. We had our hedge funds but they were never pruned into the shapes of dollar bills (yes, one Connecticut hedge funder shaped his shrubs just so).

But we didn't have thousands of them prancing down Bay Street, nobody flew to Muskoka in baby Boeings, and the breasts of Canadian bankers' wives didn't balloon and turn orange overnight.

So we missed that burst of fluid from the elation gland (which has been found in the torso but never in the brain). We missed those party nights when the money flowed into our bank accounts — not old money, which is made of Harris tweed spun with gold and smells of old leather — but new money, which is digital. The resultant zeroes emit a subdued beep as they bump into each other on bank statements.

On the bright side, though, we weren't financially roofied, raped and dumped outside a hospital emergency room, as were the Americans, the Brits and, most weirdly, the Irish and the Icelanders.

And that's what makes Canada the star of John Lanchester's new book, I.O.U.: Why Everyone Owes Everyone and No One Can Pay. Lanchester approves of us, and if you have read his novels about murder (The Debt to Pleasure) and restraint (Mr. Phillips) as well as his memoir Family Romance, about his cautious banker father and his nun-with-a-past mother, you'll see that the approval of John Lanchester is difficult to win.

He is a precise man. His praise is thin on the ground

I have immersed myself in the big financial crash books written by the energetic and prophetic — Gillian Tett of the Financial Times of London, Andrew Ross Sorkin of the New York Times, and of course the great Kevin Phillips — but I sense that Lanchester's book will be the financial memoir we'll still be reading decades from now.

It ranges widely and unexpectedly. It provides what journalists and writers almost never bother to provide now, and that is context.

Under what political and social conditions did the world allow itself to become a many-provinced banana republic run by a tiny financial elite? House prices drove the collapse. But why?

Financial writers often forget that finance is about humans, and we are odd forked creatures driven by we know not what.

For instance, why are homeowners thrilled by soaring house prices? Unless you're moving to a yurt in northern B.C., you'll only sell at a huge profit to buy another house at an equally inflated price. There's no gain.

And why buy a house in the first place? Congressman Barney Frank, a man I love, was the first American politician to dare say it aloud in these times: that home ownership isn't for everyone.

Many people can't afford it, and rootless as Americans are, many aren't suited to it. Only 40 per cent of Germans own their own home, Lanchester reports. Why not rent, as Europeans are happy to do? (And there's your answer right there. It's un-American.)

Lanchester says — and I may be summing him up unfairly here — that modern life, whatever pleasures it may have handed us, is extraordinarily stressful. We can't count on jobs, on marriage, or on religion, the computers and other devices on which we rely go out of fashion laughably quickly, and we are lonely.

Our house is our rock. That is why Americans, who live in personal and national tumult (with added guns), yearn for one. Britain (OK, Scotland) saw the birth of the Industrial Revolution, and the trauma and dislocation of that era made Brits hunker down at home. Canadians, as much as we yearn to get out of the cold, are ambivalent about risk. We were happy when the Liberals maintained strict rules on who could obtain mortgages, and refused to contemplate American-style tax breaks for mortgage interest.

Lanchester devotes a chapter to "funny smells." He noticed it literally in 2007 when visiting Ireland, which was packed with so much private investment money that the government was too busy to maintain the drains. The drinking water contained cryptosporidium and his Galway hotel provided him with bottled water instead.

Shortly thereafter, "Ireland was in the worst economic contraction of any developed country since the Great Depression," Lanchester writes. As the joke went, "What's the difference between Ireland and Iceland? Six months and one letter."

So why didn't anyone notice the obvious signs of trouble to come? An acquaintance of Lanchester had been invited to invest with Bernie Madoff. He declined. "It just didn't smell right," he said.

Funny smells

The collapse's funny smell was in a special category. It reeked of wishful thinking, the way I light candles in the basement to deal with the fact that the mouse poison is not just being eaten, it's being stored up for later snacks.

Alan Greenspan, Moody's, central bankers, investors, all were paid huge sums to check out funny smells. Instead they wished them away, saying the market would decide.

And of course the market did. The market decided that it hates itself, the market is on anti-depressants, the market won't bathe or leave the house, it's eating potato chips in bed and blowing its nose on the sheets.

And now we return to the new banana republics. I always resented the name of that American clothing store. It was a sneer at nations in the southern hemisphere in the chokehold of American capitalist exploitation.

But now the Banana Republic sign reads differently to me. The sneer is directed at the American owners. Lanchester was much taken by the writings of Simon Johnson , an economist at the International Monetary Fund, whose job it was to go to nations in crisis and force them to reform themselves if they wanted IMF aid (see Naomi Klein's The Shock Doctrine). Johnson grew accustomed to visiting countries run by a ruling elite who ran them wholly in their own interests. "His startling conclusion about the current crisis," writes Lanchester, "is that the U.S. has become one of those countries."

The banking sector runs the United States, Johnson says, and Lanchester agrees. Actually, most people agree, but they don't know how to change it. In the case of the American Republicans, they don't know how to enjoy it without being caught.

The U.S. is Central America, and the banking sector is the United Fruit Company.

Change that. We are all Central America now and all we have is our bananas.

For all that Lanchester — and Paul Krugman — praise Canadian caution, ultimately it doesn't matter. All national economies (especially those of China and the U.S.) are so interconnected that, yes, the discredited domino theory that underpinned the Vietnam War is actually applicable now.

If the reckless and unregulated banking sector isn't reined in, we're all going down, further this time.

James Lovelock, the great climate scientist, said the planet needed to have a small heart attack, just to get humanity's attention. A small heart attack smartens you up. You change your diet, you exercise more, you take care.

"The Earth didn't get its small heart attack," Lanchester says, "but the credit crunch is capitalism's equivalent. It's the point at which we all have a chance to take a look at ourselves, our banking systems, and our politicians and make some changes."

You can see that wise Americans tried to do this by electing Barack Obama and it hasn't worked, not yet. But Canadians have that chance in any upcoming election. We have chest pains, we are moving slowly.

So let's do the smart thing, the kind of thing for which people like Krugman and Lanchester have praised us for in the past.

Let's vote on it.