At the moment, the banks are too scared to lend to each other never mind the general public. How long will it be before governments cut out the middle men and start lending directly to the public? They have the tools to do it (HMG owns Northern Rock for example) and in many countries this would not be seen as an unusual thing to do.

As government are backing the losses of the banks, and implicitly all the deposits, in any case it seems only a short step to fully nationalised state banks providing mortgages and perhaps even buying up real estate. Perhaps this would be a better solution than the current bailout proposal as it would get to heart of the problem, i.e. help to directly underpin house prices and stop the mountain of derivatives going bad. There was speculative talk of HMG taking stakes in private banks yesterday on the BBC so it is on the agenda.

I'm a free market man and I don't like any of this, but we are where we are, and if they have decided to prop things up while they fire up the presses and inflate the debts away maybe this is a better way to go? The current policy is like trying to push a piece of string...