I can hear the free market answering a confounded citizen by describing the bank regulators with the same words the Joker used in the movie The Dark Knight, 2008. "You know, they're schemers. Schemers trying to control their worlds. I'm not a schemer. I try to show the schemers how pathetic their attempts to control things really are. So, when I say that … was nothing personal, you know that I'm telling the truth. It's the schemers that put you where you are. I just did what I do best. I took your little plan and I turned it on itself. Look what I did to this city with a few…" collateralized debt obligations.

When I think of a small group of bureaucratic finance nerds in Basel thinking themselves capable of exorcizing risks out of banking, for ever, by cooking up a formula of minimum capital requirements for banks based on some vaguely defined risks of default; and thereafter creating a risk information oligopoly by empowering the credit rating agencies, which was all doomed, sooner or later, to guide the world over a precipice of systemic risks, like what happened with the lousily awarded mortgages to the subprime sector, I cannot but feel deep concern when I hear about giving even more powers to the schemers.

In a word, us.

Who is going to win from this crisis ?

Them and us and Labour by the looks of it.

No, your not alone. "Price conditioning" is a tactic normally used by timeshare, double glazing and kitchen salesmen. The first figures they mention, or quote you, are well in excess of what they want to charge you. Makes the price seem lower. It's haggling basically, in a lot of parts of the world it's the usual way people buy and sell things, but it scares the hell out of Western consumers.

We've been sucessfully 'price conditioned' if you ask me. They started off talking about a few billion here in writedowns, and a few billion there.

We're now so used to these mind boggling figures being banded about that no-one bats an eyelid at a £500 billion 'bailout', 'investment' or bet as I would suggest it would be more accurately defined as.

It's the same with the severity angle. Hardly anyone noticed the first bite of the credit crunch last August, most people shrugged it off in fact. Now the talks all about meltdown and depression everyone is scared enough to go for it.

It might work, maybe it is a good idea, who knows, but you're right to say it has all the classic hallmarks of an elaborate scam.

In other words, printing money causes inflation. Now that the banks have stopped the easy credit binge and are more intent on saving their money, what do they politicians do?

Pander to the homeowners and risk £billions trying to make them print more money.

House prices, our currency and commodities prices are falling to more sensible levels. Yes, it's going to hurt, but just printing more money will only change things if the entire Western world prints enough (and the politics allow) a hyperinflationary price/wage spiral.

In my mind it's one or the other, debt deflation and a time of unemployment and hardship or inflation and uncertain consequences that could get completely out of control.

There's no easy way out of this, the fundamentals all point in the direction of the 'good' times being over. It still surprises me the amount of people who think that 'things will get back to normal soon'. When you question them on what 'normal' is, it turns out they believe house prices rising at 20% per annum is 'normal' in their minds.

p.s. If Cameron had been honest about the economic/tax position even 12 months ago instead of playing a political game he wouldn't be looking (weak -ed) and Brown wouldn't have his event.

That wealth consists of the houses themselves, the mortgages secured on them, the mortgage backed securities created on the back of the mortgages and all the various other derivatives created out of them.

It also includes all the property developers who were building flats that nobody actually wants to live in, but were sold to investors, and all the supporting industries around them.

None of this "wealth" actually was worth anything. All that happened is that people have now realised it isn't worth anything, and they aren't prepared to pay anything for it.

As for what the government is doing at the moment, I can't think of any other policies that would work better, but I don't think what they are doing this weekend will solve the problem and enable us to continue as if nothing had happened. It looks like this is just the beginning of the crisis.

Reply: No I am not saying the authorities want this crash – they did want to cut the rate of private sector lending/indebtedness. NO it's not all caused by Central banks, but it was easy money central banking which allowed the bankers to behave as they did in the good days, and it is tight money central banking which started the unwinding.

One is the unexploded bomb of bad debt. It will explode at some stage; maybe in a series of small pops, maybe as a single huge bang. If the former it is manageable, if the latter it could bring down a bank. Because no one knows when or how the explosion(s) will occur it is hardly surprising that lending to banks has frozen. The guarantees offered by the government seem a sensible way to ameliorate this problem, particularly because all the bad mortgage loans can only suffer a partial loss – many will be repaid anyway and those that default still have a house or flat as security which will give a substantial return of capital.

The other problem is the credit bubble of unsecured lending, including such things as car loans, borrowing on credit cards and unsecured overdrafts. Although the individual transactions are smaller than mortgage loans there are vast numbers of them, many in amounts too small for it to be economic for the banks to sue. Even a short and shallow recession can give rise to very substantial losses.

Restoring lines of credit for sound borrowers will not make the bad debts go away although it can produce new profits to cushion the blow. I doubt that any steps taken by government can do more than help to re-start modest levels of lending. If the main players in the business are not prepared to wait for bad debts to work their way through the system there is nothing government can do to change that.