Stringent rules should be imposed to rein in the reckless lenders
The Americans have semi-nationalised a bank. The British are planning a system whereby City workers can grass up their mates suspected of manipulating markets. Central banks everywhere are scratching their heads in an attempt to find a way of purging the market of the most toxic forms of assets. As Mervyn King noted last week, the credit crunch has clearly moved into a "new and different phase".
What the outcome of this "phase" will be is not yet clear. Figures from the United States last week painted a grim picture; plummeting house prices, collapsing consumer confidence, a big drop in investment spending. All of that spells recession - and probably quite a long and deep one at that. In Britain, though, the picture so far is cloudier. Consumer confidence is at its weakest for 15 years and the Nationwide house price index has fallen for five consecutive months, but employment keeps rising and consumers are still spending.
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