Was that it? Can it really be that the violent storm that broke over financial markets this month has turned out to have been no more than a bit of noisy huffing and puffing, an empty squall that blew over at the first sign of a response from central banks? Have the excitable gloom-mongers in the media and parts of the financial markets once again been denied their Apocalypse?

There have certainly been encouraging signs in the past few trading days that, over here in the United States, markets are reverting to a sort of normality. Equities have shaken off the doldrums.

After a strong week, the Dow Jones is 6 per cent above where it started the year and only 5 per cent off its July peak.

Having spent much of the past two weeks bouncing around like a bungee jumper on a thin rubber band, US Treasury markets look comparatively becalmed – the yield on three-month Treasury bills has bounced back up from its low of below 3 per cent last week to a more normal looking 4.5 per cent.

In the interbank credit market, anecdotal evidence suggests that the August panic is giving way to a late-summer calm. Those nasty rumours about imminent bank failures – featuring, in the UK, names such as Northern Rock and, in the US, Countrywide – have dried up. The weird things that were going on in the interbank market two weeks ago – with overnight lending rates shooting up and down in an unprecedented way – have disappeared.

It is tempting for those of us who never signed on to the “sky is falling” hysteria to crow at the sheer dullness of it all.

But in truth even I did not think that it could really blow over this quickly. What kind of a crisis was that?

Central banks step up their overnight repos, the Fed cuts a largely symbolic, as opposed to a real, interest rate and a few big-swinging, money-centre banks make a very public appearance at the discount window, and that is it?

In Washington the euphoria is being held firmly in check.

The Fed is not ready to do a victory lap. When they gather for their annual meeting in the Rocky Mountain redoubt of Jackson Hole this weekend, the US central bank’s policymakers will not be greeting each other with high-fives and shouts of “You Da Man” at Ben Bernanke, the Fed Chairman.

My sources tell me that officials are cautiously pleased that much of the market has been put back together again. But they note that there are still big concerns.

The biggest is probably the commercial paper market – the short-term debt issued by corporations, much of it collateralised with mortgage-backed and other asset-backed securities.

There is no real sign yet that this market has returned to normal. Spreads – the gap between interest rates demanded for those loans and same-maturity Treasury bills – actually widened a little farther towards the end of last week. Banks still seem wary of lending for anything other than the very short term.

Until there is evidence of normality here, officials will not be doing any celebrating.

Second, even if these last gusts from the summer storm ebb in the coming weeks, the bigger question is how much damage they will have done to the broader economy.

The crisis has certainly produced a tightening of credit conditions. Some of this was surely necessary – the fact that lenders had become way too lax in their policies was the main reason for the current crisis. But, as ever, the risk is that markets, as they usually do, will overshoot on the other side now.

This is most obvious in the housing market. So-called jumbo mortgages – those over $417,000, which are not bought up and backed by government-sponsored agencies – are getting much harder to come by, even for creditworthy borrowers.

The last thing the economy needs right now is a further deterioration in the housing market. House prices – the lifeblood of the wealth that animates much of the US economy – are already falling faster across the nation.

Other lending will also be tightened. Consumer credit is going to get harder to obtain. Except for the top-rated companies, corporations are going to have to pay more for their capital.

Consumer confidence is sure to have been hit by the headlines of the last month – causing a further retrenchment in spending plans.

Against all that, there is some encouraging news. The latest economic data – on retail sales and capital goods orders – suggest the economy was a little stronger going into this summer storm than the Fed had thought previously.

A month ago, this would surely have been interpreted by the central bank as a worrying indication that inflation might still not have been licked. Now it looks like a godsend, a suggestion that the US economy maybe had enough momentum to weather the worst of the financial headwinds of the past few weeks.

So the markets are still expecting a cut in the more meaningful Fed Funds rate when Mr Bernanke and his colleagues are scheduled to meet again on September 18.

But they are less confident of that than they were a week ago. My own guess is that there won’t be enough evidence in the three weeks before the next Fed meeting that the economy has survived this summer’s mess completely unscathed.

A precautionary interest-rate cut in September is, therefore, still the most likely next move. But beyond that, nothing is certain. The Fed will have had more time to digest how much of a blow to growth the US has sustained.

One question that will dog the Fed in the next few months will be the accusation that it wasn’t timely enough in responding to the financial markets.

If things really have calmed so quickly after the sort of central bank action we’ve seen in the past couple of weeks, then surely the panic could have been averted altogether if the Fed had moved earlier than it did, with its cut in discount rate on Friday, August 17?

The central bank’s critics assert that it is just implausible to think that things changed so dramatically in the ten days between the last meeting of the interest-rate-setting open market committee – on August 7, when Mr Bernanke and company said everything was fine and that the real threat to the economy was inflation – and the day they cut the discount rate.

But the truth is things really did deteriorate rapidly in that period. In those ten days, remember, the contagion from the US sub-prime mess moved quickly across oceans. The European Central Bank injected unprecedented sums of money into the markets on August 9. The Bank of Japan took similar rescue measures days later.

The speed with which financial markets move these days can be terrifying. What matters is that central banks respond just as quickly.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive