What the UK is now doing appears to be the model for the next stage in this bailout, i.e. comprehensive packages to recapitalise the major banks with public money. The Germans are planning something similar and I read in the FT this weekend that the idea is gaining ground in Washington.

The next stage of the reflation is then surely state backed new lending to the real economy. With the retail banking networks part nationalised, hence underwritten by governments, and recapitalised with the printing press, they have all the tools they need to push credit back into the market place and put a bottom under the asset markets.

Will it work?