The nationalisation of credit
As I said boringly and monotonously on Monday, before during and after the pre-Budget report, the overhang of excessive debt accumulated in the boom years remains the biggest problem for the UK economy and for the world.
The past, current and future write-offs of trillions of dollars of imprudent loans is - as you know - the main reason why there is so little new credit being made available.
Which doesn't mean to say that Alistair Darling's attempt to stimulate economic activity is irrelevant.
But as Mervyn King said yesterday, in a classic case of creating news by stating the bloomin' obvious, it's the massive retrenchment of lending by banks and other private-sector financial institutions that's doing us the most damage.
In response to this failure of the credit-creation system, what we're seeing - particularly in the US and the UK but also in other parts of the world - is a transfer of the risk of lending on a colossal scale from the private sector to the public sector, from commercial investors to the taxpayer.
That's happening because, after the collapse of Lehman, there's been a massive increase in the perception of the dangers of lending to the private sector and to emerging economies perceived to have borrowed too much.
So pension funds, money managers and sovereign wealth funds are demanding punitive returns for investing in pure private-sector entities. Their preference is to lend to countries like the US perceived as too impossibly large to fail.
And because the US state is still perceived to be a good credit risk, the US authorities can borrow to fill the lending gap created by the disappearance of private-sector funding.
Only hours ago, we saw the US Federal Reserve providing $800bn of credit - in effect from taxpayers - to breathe life into the markets for residential mortgages, credit card finance, small-business loans, car loans and student finance.
That brings to more than $8000bn the aggregate amount of loans, guarantees and investments committed by US taxpayers in the past few months - whether they like it or not - to bailing out failing banks and insurers and also unfreezing credit markets.
It's a mindboggling sum, equivalent to around half of the annual economic output of the US.
Some analysts see this as the start of the money printing-presses being turned on with a vengeance, a deliberate attempt to stoke up inflation to reduce the real value of all those excess debts.
I'm not sure we are there yet - though it's probably only a matter of time.
The biggest chunk of the Federal Reserve's recent financial support has been allocated to the commercial paper market - which in effect means that US taxpayers are providing short term loans to the biggest US companies.
There's no reason to assume that we've seen the end of this process of the nationalisation of credit.
The head of one of our largest banks has told me there'll probably have to be sovereign guarantees provided at some point to the corporate bond market, because big companies are increasingly finding it both expensive and difficult to raise longer-term loans in the form of bonds sold to investors.
Here in the UK, the chancellor has signalled that British taxpayers will be called on to underwrite a revival of lending to small businesses and to home buyers - probably to the tune of well over £100bn.
And remember that taxpayers in Britain have already provided £600bn of loans, guarantees and capital for battered British banks.
To reiterate, the credit-creation process has already been nationalised to a great extent - and this process of taxpayers standing in for commercial lenders isn't over.
How far will it go?
Funnily enough, to a large extent that depends not on what happens to credit markets but on what happens to share prices.
As George Magnus of UBS points out, part of the problem for most banks is that they are not perceived to have enough capital, even after the recent injections they've received from governments all over the world.
With recession taking hold in most of the developed world, and with financial crises gripping many emerging markets, investors fear that we've only seen the tip of an iceberg of losses to be incurred by banks from their ill-advised lending splurge of the previous few years.
The big simple point is that banks can only lend what they can borrow. And when money managers provide funds to banks and financial institutions, and when banks lend to each other, they look at how strong the borrowers are: they assess whether the borrowing banks have sufficient capital to weather the storms ahead.
Right now, providers of funds to banks want them to have far more capital than they could ever possibly erode through the write-offs of the loans provided when the banks were infected by an epidemic of blindness about the risks of lending.
For some reason, the Treasury doesn't seem to understand this simple point. It yesterday issued a statement telling banks that they had more capital than they need for the long term - in the hope that this will provide our banks to lend more and take on greater risks.
However, it's almost irrelevant whether the Treasury thinks our banks have enough capital. It's the private-sector holders of trillions of pounds of potential funding for banks who'll determine whether the banks are appropriately capitalised. And at the moment, they'd like the banks to have more capital.
With stock markets on their knees, there only one source of new capital for most banks: us, taxpayers.
So here's the Catch-22 to end all Catch-22s. If we want our banks to lend more, they're going to have to be able to borrow more. And to do that, they're going to need to raise more capital.
Raising more capital, for many banks, means huge further cash injections from taxpayers.
That's why, as the governor of the Bank of England implied yesterday, we may yet see most of the banking system formally nationalised, so that it can do what it's supposed to do - which is to provide the credit that's absolutely vital if we're to avoid a prolonged and very painful slump.