Before the Credit Crunch, we can look back and see much complacency. Hindsight is a wonderful thing. The kinds of financial crisis that hit Asia in the 1990s or Argentina in 2001 were seen as a problem of the developing world. Modern financial instruments in the sophisticated centres of the developed world ensured that these kinds of currency crises and sovereign defaults could never happen.

The on-going crisis in Greece and worries about the potential spread to Spain and Italy dominate the daily news.

Away from the daily incidents, the patient detailed work of learning the lessons and minimising the risk of recurrence go on. Dialogue between bankers and governments with regulators about interpretation of Basel III or with Insurers over Solvency II is an extended debate or game of poker. In caricature, the financiers argue that they’ve learned the lessons and we should move on with minimum fuss. Governments in turn don’t want a recurrence on their patch and want to see something done. So reminiscent of the unfaithful husband who, when, found out, complains that his wife ‘should just get over it’ and ‘has trust issues!

Looking as an outsider, it feels like there is an elephant in the room. I am not arguing whether austerity is the only option, or what an alternative strategy would look like. My question is “can the issue be resolved in principle by these government-finance dialogues?”

I would argue that lessons from history would not be optimistic, and another trend of the last 20 years needs to be considered. But first let me offer an historical precedent.

The collapse of the Bonsignori bankers in Siena in 1298, (they had made loans to political Princes whose repayment they could not enforce!) shifted the powerbase to Florence. Periods of stability and instability followed and out of one crisis emerged the Medici family as the dominant bankers. Siena did not recover and Florence today is a monument to the Renaissance. The Medici, for all their faults, were the godfathers of the Renaissance. Their contributions to the modern world are many. But they too fell, and with them Florence.

Since World War II, the number of countries in the World has increased. The break-up of the Soviet Union, followed by Yugoslavia has increased the number of countries in Europe. South Sudan is the latest new country to be founded, replacing Montenegro as the newest sibling in the UN family. Are we to assume that the break-up of countries, like fiscal crises and sovereign defaults are the exclusive preserve of the developing world? We have the “small” matter of Scotland in our own constitutional arrangements. There are strong regional groups in Spain, the Northern League in Italy and so on. There are regional tensions in India and China.

In the UK we hear arguments that the poor North is paying for the profligacy of the South. I have heard it claimed that it is not Greek debt, but Athenian debt. Similarly, when I was in Turin last year it was argued that the industrious North should not continue to support the idle and corrupt South. Discovering that Greek hairdressers and pastry chefs are allowed to retire at 50 because of the ‘stressful’ nature of their work is likely to raise the hackles of the hard working German on the BMW production line, or the middle class Scandinavians who regard paying their 50% income tax as a badge of social honour.

The Risorgimento that created the modern Italy or Bismarck’s creation of the German Republic may well be reversible.

What would happen if Greek Macedonians decided to merge with the Macedonian Republic and walk away from Greek debt? Or, what would be the consequences if the Basques washed their hands of Spanish debt?

Many global scenarios of 50-100 years hence have one option which is a return to the City state of the Renaissance and a diminution of the nation state. Robert Cooper, a former diplomat gave an intriguing talk on a “world of a 1000 countries” over a decade ago. Evidence for this can be seen by the importance of economic clustering, be it Hollywood, Bollywood, Silicon Valley, or the City of London.

History is littered with many examples of bonds, now tradable only as memorabilia that once backed now defunct institutions.

So, over the next few weeks as Greece jerks from crisis to crisis and attempts to stop contagion mount, consider this.

Are finance and governments on opposite sides of the table negotiating? Should they be on the same side and learn from history? Power doesn’t fade away it lurches and crashes and is hard to rebuild.

At a time when ideas of 100 year bonds have been floated, would you invest in them?

My advice would be to read Machiavelli’s other great book, “The History of Florence”. Governments and Finance need each other. When one side thinks it can win at the expense of the other, they both lose. And millions, if not billions of people whose moderately comfortable everyday existence is dependent on the fragile balance of power between the two, could lose everything too.