Espen Oeino, the Norwegian designer of such iconic yachts as Microsoft co-founder Paul Allen’s $200 million Octopus, was on a sleek 240-foot craft he had also designed, sailing from St. Tropez to Nice, in the fall of 2008. With him were three European billionaires and their wives, relaxed and happy at the end of yet another summer in a world that seemingly had no limits on luxury or cost. Suddenly the television was blaring with the news that the U.S. credit crisis had put the global economy at serious risk. “Soon they were all stuck to the TV, watching news unfold about how bad things were,” says Oeino, adding, “There were some very nervous people on board.” When they reached Nice, the billionaires rushed off the boat and onto their jets in order to fly home and tend to their businesses. “That is when I realized, Hey, something is really ugly here,” says Oeino.

He shows me renderings in his Monte Carlo office of one of “the victims,” as he calls the super-yachts that were commissioned but never got built. He knew what had happened to the yachting world the last time the economy tanked, in 1929: the boats got small. “It took 50 years for yachts to return to comparable sizes,” he says, noting that the stalemate didn’t break until 1980, when the international arms dealer Adnan Khashoggi launched the 282-foot, silver-hulled Nabila, named for his daughter. “It took a long time to come back to what it was pre-Depression. I was worried it was going to happen again.”

Equally alarmed was veteran yacht broker Nicholas Edmiston, whose clientele includes a number of American, European, and Russian billionaires. When I met Edmiston, in the summer of 2004, while I was writing another yacht article for this magazine, he regaled me with stories of wild extravagance and got me on several of the biggest, most sumptuous boats sailing the Mediterranean. “That was the height of the boom,” he tells me now in his red-leather office in Monte Carlo. Ba...