Things are bad – unprecedentedly bad – so we need to consider radical actions and actions that would have been thought lunatic a year or so ago.

Royal Bank of Scotland and Lloyds Banking Group are now in an uncomfortable position. The government is their dominant shareholder, with the taxpayer having 100 per cent of the downside in these banks – even guaranteeing the pensions – but less of the upside. The markets are nervous of their shares. The markets clearly believe that there is a high chance more capital will need to be injected into these banks and this will almost certainly have to come from the taxpayer.

These banks have split and incompatible objectives – maximising profits (there was a time when they used to make them) for their shareholders on the one hand, and obliging the latest political desires on the other. Should they husband capital or should they try to solve the credit crunch for the nation with the lavish levels of lending that caused the crisis in the first place?