This is not a crisis that will be solved by central bankers. Its length and depth, and the shape of the recovery, will depend almost entirely on how fast we can sort out the banking sector. On that front, the news is not good on either side of the Atlantic.

Maybe that will improve when Tim Geithner, US Treasury secretary, announces the details of his bank rescue plan this week. Judging by his statements so far, I am not hopeful.

Last week's irrational outbreak of optimism in the financial markets appears premature. The Federal Reserve decided to buy long-term bonds, mortgage-backed securities, and other assets with the goal of lowering effective long-term interest rates for households. But I doubt some of the optimistic projections of how much these purchases will affect real-world mortgage rates.