How to blow the head off this crisis?
Last night I mentioned that the economic playbook for scenarios like this had been thrown away. That few politicians, officials or journalists were prepared to contemplate the moves needed to blow the head off this crisis.
Just for the sake of argument I will spell out what the final shocks are that could break the circuit of market panic, interbank Scroogeishness and real world downturn. And then you can scrap about them and vote for or against them all morning while I am filming for the Money Programme; so when I clock on for my day job I will be better informed.
1. Total deposit guarantee
2. Government takes controlling stake in banks
3. Massive interest rate cuts: 3% cut as wished for by Prof Blanchflower?
4. Even more liquidity (but can it work)
5 Quantitative easing: central bank prints money to improve money supply
6 Temporary nationalisation of commercial banks
7 Create central clearing house for credit default swaps
8 Close all offshore tax havens and force all hedge funds onshore
I am sure the Savonarolas among you can think of even heavier blows - but the wierd thing is, to be writing this, is to know how many of these measures are being seriously considered. Indeed...
9 Governmnet takes control of the commanding heights of the economy with the power to hire and fire bosses...
....has been enacted by Iceland. I doubt it will achieve the anti-capitalist cult status of Venezuela overnight however.
10. There is of course an alternative: do nothing. Let market forces rip and the strongest survive.
I am doing my best to get this school of thought onto Newsnight (it's alive and kicking in this blog's comments) - so pile in.