Why our banks are vulnerable
The most important markets announcement this morning is that the Irish government has placed an unlimited two-year guarantee on all deposits and some debt in six Irish banks, to "safeguard the Irish financial system".
The emergency measure follows an extraordinary 26% fall in Irish bank shares yesterday.
This has huge ramifications for us.
Potentially it puts British banks at a massive competitive disadvantage - especially since other European governments are also taking urgent steps to reassure their citizens that their bank deposits are safe.
There is a widespread perception that the £35,000 limit to deposit protection in the UK, and the proposed increase to £50,000, are inadequate - and that the absence of full protection makes our banks more at risk of a run on retail deposits.
That has two damaging effects.
It spooks giant global money managers and providers of wholesale funding - and if they were to accelerate their withdrawal of cash from UK banks, well we'd see a domino-effect of horrible banking failures.
Second, it undermines the confidence of investors in our banks shares - which is why their share prices have become so vulnerable to sharp falls.
So top of the list of what this government could do to limit the damage to us from Washington's bail-out bungle would be to announce with immediate effect that all deposits in UK banks are 100% guaranteed by the government.
The chancellor did this after the run on Northern Rock last September.
There's a powerful argument that he should do it again.
PS. There is also a perception that our banks remain at a disadvantage compared with those in the eurozone and the US in respect of the assets they can swap for central bank loans.
Although the Bank of England has, over recent months, widened the collateral it will take in exchange for loans, there is a perception (which is as important as the reality in a climate of hysteria) that it is less amenable in the way it provides financial support than either the European Central Bank or the Federal Reserve.
This is something that the Bank of England can and should probably address, fairly speedily, if it wants to shore up the confidence of money markets in the robustness of our banks.